Knowledge report on Driving Sustainable Growth in Civil Aviation in India published by Auctus alongwith Assocham

5. Chairman's Message
It is my privilege and happy to note that ASSOCHAM National Council on Civil Aviation and Cargo is organizing
th
the 12 ASSOCHAM International Conference & Awards on Civil Aviation & Cargo and to the performance in
the Aviation Sector.
The future outlook of India is quite encouraging and promising with huge opportunities with the creation of
Airports Infrastructure, large scale acquisition of aircrafts, growth of Cargo Industry and development of new
airports under UDAN-RCS Scheme there by providing a huge investment opportunity in aviation sector. India
is the only country with the fastest growth in the passenger traffic. Realising the opportunities, available in
Aviation Sector, ASSOCHAM is proposing to have Annual Conference covering the important topics such as
creation of Airport Infrastructure, Airline expansion plans and development of cargo hub in India, besides skill
development in the aviation sector which is one of the most important task to meet the growth in the aviation
sector.
I am sure the deliberations from the conference will help ASSOCHAM to submit the recommendations to the
government i.e.Ministry of Civil Aviation to realise our country's ambitious targets in the aviation sector.
I take this opportunity in thanking Auctus Advisors and the ASSOCHAM Team, for preparing this Background
Paper and convey my best wishes for the success of this Annual Meet.
Regards,
K. Narayana Rao

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1.2.3 Market Analysis: Passenger
Revenue and Growth
.
-15%
0%
15%
30%
0
200
400
600
800
2013 2014 2015 2016 2017 2018 2019F
YoYGrowth(%)
$Billion
Fig 1.2 Air Revenue
Source: IATA June 2019
Revenue (Pax) Revenue (Cargo) Rev Pax Growth Rev Cargo Growth
2.4%
8.6%
6.6%
6.2%
4.0%
5.0%
2.4%
4.7%
6.4%
5.6%
0.0%
4.4%
0%
3%
5%
8%
10%
Africa APAC Europe South America Middle East North America
Fig 1.3 Regionwise RPK Growth
Source: IATA, ICAO June 2019
RPK 2018 RPK 2019 F

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Costs and Profitability
Fig 1.4 Contribution (Avg Ann. growth in RPK)
s

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.
24%
19% 20%
22%
24%
8.6% 8.5% 7.5%
5.8% 5.0%
9.70% 9.70% 9.20%
7.90% 7.40%
0%
5%
10%
15%
20%
25%
30%
2015 2016 2017 2018 2019F
Fig 1.5 Cost and Profitability Trend
Source: IATA Profit Monitor
Fuel Cost (% Rev) EBITDA Return on Investment
6.4%
3.4%
1.8%
4.9%
6.5%
5.7%
-5.2%
0.7%
-6%
-2%
2%
6%
10%
North America APAC Europe South America
Fig 1.6 Regionwise EBITDA (Airlines)
Source: IATA Profit Monitor
Q1 2018 Q1 2019

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.
Capacity
2.4%
4.7%
6.4%
5.6%
0.0%
4.4%
4.6%
1.2%
4.7%
6.3%
4.8%
0.0%
3.6%
4.3%
0%
2%
4%
6%
8%
Africa APAC Europe South America Middle East North America Total
Fig 1.8 Capacity v Passenger Growth
Source: IATA Monthly Analysis June 2019
RPK ASK
Fig 1.7 Airline Profit Global
s

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1.2.4 Market Analysis: Cargo
-1%
0%
1%
2%
2016 Q1 2016 Q3 2017 Q1 2017 Q3 2018 Q1 2018 Q3 2019 Q1
Fig 1.9 World Trade QoQ Change
Source: CPB World Trade Monitor
68.1 68.3
69.8
69.5
79.8
80.5
81.5 82.1
1.8%
2.3%
9.7%
0.0%
0%
3%
6%
9%
12%
65
67
69
71
73
75
77
79
81
83
2013 2014 2015 2016 2017 2018 2019F
CargoGrwoth
LoadFactor
Fig 1.10 Load Factor v Cargo Growth
Source: IATA
Weight Load Factor Passenger Load Factor Cargo Growth (FTK)

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-3.3%
3.1%
-7.8%
-1.5%
3.0%
-2.7%
0.3%
2.4%
11.2%
0.3%
3.7%
10.8%
2.0% 2.2%
-10%
-5%
0%
5%
10%
15%
Total Africa APAC Europe South America Middle East North America
Fig 1.12 FTK v ATK Growth Regionwise
Source: IATA
FTK ATK
Fig 1.11 Contribution (YoY growth in FTK)
s

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2 Indian Aviation Outlook
2.1Indian Macro-Economic Overview
India is the world’s fastest growing large economy which is expected to grow to US$ 10 trillion from the present levels
of US$ 2.3 trillion by 2032. India is expected to displace Germany as the world’s fourth largest economy by 2022. India
is projected to grow at a steep pace to such levels primarily due to the its demographic potential.
Recent Developments
▪
▪
▪
▪
▪

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▪
2.2Indian Aviation Market
2.2.1 Country Overview
0
250
500
750
1000
2001 2004 2007 2010 2013 2016
MnPassengers
Fig 2.1 Air Passenger
Source: World Bank AIr Traffic
China United Kingdom Indonesia India United States
190
220
260 280 300
55
60
65
70
76
0
100
200
300
400
2016 2017 2018 2019 F 2020 F
MnPassengers
Fig 2.2 Air Passenger Trend India
Source: AAI
Passenger Traffic (Dom) Passenger Traffic (Int)

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.
41%
13%
13%
8%
19%
Fig 2.3 Indian Airlines Market Share
Source: DGCA
IndiGo
Spice Jet
Air India
Go Air
Vistara
Air Asia
Others (inc Jet)

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2.2.2 Recent Developments
Airport Development
₹
Privatization of Airports
4.2
5.0
6.3 6.5
7.0 7.3
9.2
0
4
8
12
Malaysia India Turkey Indonesia Sweden South Africa Phillipines
AverageCost($/100km)
Fig 2.4 Air Ticket Affordability
Source: Kiwi.com

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Regional Connectivity
▪
▪
▪
31 29
12 12
27 36
RCS I RCS II
Fig 2.5 RCS Ports Category
Source: AAI
Unserved ports Underserved ports Wellserved ports

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Investments
Cargo
1.1 1.1 1.2 1.3 1.4 1.5
1.5 1.7
1.9
2.1
2.2
2.4
0
1
2
3
4
5
2015 2016 2017 2018 2019 F 2020 F
000MillionTonnes
Fig 2.6 Indian Air Cargo Market
Source: AAI
Dom Cargo Int Cargo

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The policy seeks to make India among the top five air freight markets by 2025, besides creating air transport shipment
hubs at all major airports over the next six years.
National Air Cargo Policy 2019

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2.2.3 Market Analysis
Growth
2.8%
0.6%
3.4%
-0.5%
0.0%
10.4%
4.1%
3.2%
-1.1%
5.4%
0.5%
2.6%
10.4%
3.8%
-2.5%
0.5%
3.5%
6.5%
9.5%
Dom Brazil China India Japan Russian Fed. US
Fig 2.7 Dom Passenger Growth
Source: IATA
RPK ASK
40
60
80
100
Air India (Dom) Jet Airways Spice Jet Go Air Indigo Air Asia Vistara
PLF%
Fig 2.8 PLF Dom Airlines 2019
Source: DGCA
Mar Apr May

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Profitability
Indigo Spice Jet
Fig 2.9 Financial Analysis P&L
s

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Fleet
147
235
106
50
29 21
40
393
242
121
50
21
181
0
100
200
300
400
500
Air India* Indigo Spice Jet Go Air Vistara Air Asia Other
Fig 2.10 Fleet Size and Orderbook
Source:Bangalore Aviation
Current Fleet OrderBook
1.7
0.9
0.8
0.65
0.4
0.35
0.3
0.2
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8
India
UAE
Indonesia
Brazil
China
Japan
UK
USA
Fig 2.11 Orderbook Fleet Ratio
Source:IATA

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3 Industry Recommendations
3.1Overview
-20,000
-10,000
0
10,000
20,000
30,000
40,000
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
RsMillion
Fig 3.1 PBT Indian Airlines
Source: DGCA
Indigo SpiceJet GoAir Vistara
1.02
0.86
1.05
0.00
0.86
1.18
1.08 1.08
0.62
1.06
1.13
1.07
1.13
0.81
0.97
0.00
0.25
0.50
0.75
1.00
1.25
Indigo SpiceJet GoAir Vistara Jet Airways
Fig 3.2 Revenue / Cost
Source: DGCA
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

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3.2 Recommendations
3.2.1 Efficiency in Operations
Relaxation of RDG
Biofuel Usage
Optimized Terminal Operations

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:
Improved airside operations

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.
slot optimization .
Runway Occupancy Time Optimization:
:

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3.2.2 Market Development
Airport Capacity Augmentation
Fig 3.3 Load Factor (Indian Airports)
s

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:
₹
:

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Long and Medium Overhaul Flights
Short Overhaul 72%
Long Overhaul 28%
3.22
4.62
3.45
5.10
0
4
8
12
To India From India
Million
Fig 3.5 Internation Passenger Flow
Source: DGCA
Dom Carriers Int Carriers
Fig 3.4 Int Traffic (India) Breakup
s

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Air Cargo Development
29
14157
218
0
100
200
300
400
To India From India
'000Tons
Fig 3.6 Internation Freight Flow
Source: DGCA
Dom Carriers Int Carriers

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:
29%
27%
12% 10%
13%
Fig 3.7 Indian Air Frieght Market Distribution
(Airport Wise)
Source: AAI
Delhi
Mumbai
Chennai
Bangalore
Kolkata
Hyderabad
Other

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.
MRO Industry
3.2.3 Reducing Cost Impact
Lowering cost of acquisition for new fleet

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Fuel Taxation under GST
3.2.4 Other
Financial Monitor by Ministry of Civil Aviation

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ASSOCHAM
THE KNOWLEDGE ARCHITECT OF CORPORATE INDIA
EVOLUTION OF VALUE CREATOR
VISION
MISSION
MEMBERS – OUR STRENGTH

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expertise of the Aviation market and PPP models for 10+ countries across the globe. Within
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