“I'm flying high and couldn't be more confident about the future”

— Freddy Laker

“Air Transport is just a glorified bus operation”

AVIATION INDUSTRYin

INDIA

Group 1

Best airline award

-Emirates

Our fleet Leader

-Indian (Air India)

History?• First commercial flight on February 18, 1911

• Allahabad to Naini made by a French pilot Monseigneur Piguet covering a distance of about 10 km

• First air route between Karachi and Delhi-1912-by Indian State Air Services and Imperial Airways-extension to LONDON – KARACHI flight

• Airmail Service-Karachi to Madras - Indian Airline, Tata Sons collaboration – No govt. support

Independence and after…• 8 Air transport companies

• Tata Airlines, Indian National Airlines, Air Service Of India, Deccan Airways, Ambika Airways, Bharat Airways, Mistry Airways, Orient Airways

• Air India International Company-Joint Sector-Govt. Of India- June 8, 1948, Mumbai to London

• 2 crores, 3 Lockheed constellation aircrafts

• Nationalization – 1953 – Domestic Civil Aviation under Govt. Of India-Remove operational limitation

• Department of Civil Aviation controls sector and part of Ministry of Civil aviation and tourism

Independence and after…• Public Sector

• DGCA monitors flying, AAI maintains airports• Privatization

• Open Sky policies• Unrestricted access by any carrier into the

sovereign territory of a country • No written agreement specifying capacity, ports

of call or schedule of services • Bilateral treaties

• For a disciplined and regulated aviation system between the nations of the world

• Regularity of operations through scheduled services

• The basis of ownership, number of seats to be utilized, type and certification of aircraft and visiting ports of call

Till 2007• The Indian brand of aviation flew high

• NRI community assisted by civil aviation services

• Busiest traffic point in the world

• Aviation players promise bright prospects to globalization

• Luxury, Economy and budget airlines evolve - Passenger customization

• All International carriers establish route

• 50.74 million passenger max. in 2006

International Air Transport Association (IATA)

• International Industry Trade Group Of Companies, Montreal

• 1945-140 countries

• Fare calculations

• Regulates passenger and cargo freight

• Maintains database of planes, fleet, crew information, passenger documentation

• Airport monitoring and control

Major Players in India

• Air Deccan• Air India Express• Air India• Air Sahara• Go Air• Indian Airlines• IndiGo• Jet Airways• Jet Lite• Spice Jet• Paramount Airways• Kingfisher

Aviation in 2007

• Best growth period for India's civil aviation sector

• Passengers carried by domestic airlines increased by 27.9 per cent (to 64.9 million passengers) in the first three quarters

• Aircraft movements also increased by 23.3 per cent during April-December 2007-08

• International movement was up by 14.8 per cent and the domestic, by 25.4 per cent

• Overall passenger and freight traffic by 25% and 11% respectively

Aviation in 2007• IATA projection - India to be a driving force - US$

5.1 billion to US$ 5.6 billion – Global driving force

• 12% worldwide business jets

• Forecast - Increase of private or business jets at 50% - Ernst & Young Report

• Air Traffic 25%, 6 discount carriers

• Growth forecast surpass global average till 2025

• Domestic air traffic , 86.1 million passengers by 2010, up from 32.2 million passengers in 2007

Aviation in 2007

• 24.62 million people flew on international routes to and from India during April–January 2007–08

• Up 16.2% last fiscal

• Growth at domestic 26.1%, with 72.60 million people availing aircraft services

• Freight Traffic, domestic and International at 8.2% and 12.6%

• FDI to 28 airports – Operation and Maintenance

• FDI upon 100% for Greenfield Airports

• Up to 74% and 100% through special permission

Aviation in 2007• Best year for India and the Aviation Sector

• Employment Opportunities broadened

• Hospitality in aviation on the sharp rise

• Year of Budget airlines and private players going international

• Prospective tourism and services industry

Its operation in a world beset by fuel and

energy crises makes no sense at all.

— Senator Cranston of California

Current Situation• Phenomenon hurting the global economy-

Slowdown

• Skyrocketing fuel prices-Major concern

• Dip in demand for global air travel

• Decline in profits to bankruptcy of a few reported for this fiscal

• IATA revises forecast data from US9.6$ earnings to 5 and recently US4.5$ globally

• Sharp US economic down turn tightening credit crunch

• Passengers and especially business class reduce considerably

• Aviation in Asia still attracting passengers mainly China, and India

• Fuel bill to reach US147$, up 14%

• India, Budget airlines forced to step the accelerator

Current Situation

Indian aviation run into rough weather

• Decelerating profit margins, revenue line with expectations

• Operating costs up

• Inflation

• July-Dip in customer demand following multiple price hikes and reversions

• 65% increase in ATF at Rs. 68/litre

• Airports hike duty, MRO costs go up

Challenges Faced…

• Sharp upturn in demand for allied services including MRO, ground handling, and catering services

• Major talent crunch, boosting opportunities for training service providers

• Airport facilities to be upgraded to meet demand with marginal profits

• Inadequate Infrastructure

• Rising Input Costs

Airlines at crossroads• Jet Airways announcing air fare hike, and

backtracking on the hike

• Deccan airways reverts hike decision following competitors not increasing hike

• Kingfisher and Spice Jet eventually makes a move to increase fares witnessing huge losses daily

• Other Airlines follow suit

• Tourism industry hit-Travel, Terror, Inflation

• Stiff competition from railways

A moment of concern for the carrier

Other Developments…

• Industry demands FDI inflows to be increased

• Budget airlines experience major losses

• Future ready for mergers and acquisitions

• Hospitality and tourism sector witnessing pressure due higher travel expenses

• Business process adopt alternatives to travel viz voice conferencing services etc

Reduction in Flight Activity

Miscalculations…

• Air Traffic considerations neglected in fierce competition

• Airline density uncontrolled

• Growth Beyond expectation pushed expectations

• Insufficient knowledge of new investors in the industry resonated inconsistent decisions

• Profit to Expenditure variation high

Miscalculations…

• Excess orders of aircrafts-Inventory pile up

• Following competitors plan derailed existing plans• Ex-Deccan Airways model following suite

• Uneven route allocation

• Attraction to Market Share forced miscalculation• Jet Airways and Spice Jet were conscious here

• Illogical fare pricing

• Assumptions on demand growth, expansion to new sectors and existing cost culture

Industry Consulting…

• Operations front – Reduce ticketing costs

• Optimize routes – Logistics

• Handle air traffic efficiently, upgrade airports

• Value Added Services (VAS)- Packages,

• Baggage clearance charges - Increases fuel efficiency

• Improve turn around times for maintenance

Industry Consulting…

• Generalize the budget model

• Follow Lean Organization approach

• Do away with travel agent commissions

• Tier2 and Tier3 routes cuts along with shorter haul routes

• Liberalize aviation further

From the headlines

• Satyam, Infospectrum join hands to serve Aviation industry ...

• Aviation industry divided over working hours for pilots- Airlines ...

• Singapore Airlines to introduce measures to shed weight ...

• Malaysia Airlines to cut costs as oil prices bite- International ... –Flexi Employment Programme

• SpiceJet announces scheme for defence personnel

From the headlines

• Hindustan Aeronautics to set up unit in Kerala at KINFRA, Kasargod

• AI planning to curtail int'l flights

• HAL plans lean heirarchy after cutting flab in manufacturing 

• Smarter air traffic control could save 500 kg fuel per flight 

• Aviation panel to meet to examine industry's problems

• SOPS for loss making airlines in the offing

From the headlines

• India set to sign liberal aviation pact with EU

• SRS group to foray into aviation biz in 2-3 years

• Aviation cos. Folding - IATA

• Aviation industry goes 'green' at Farnborough

• Boeing flying low in India» Researching alternatives,Growth expected high,

• Retailing edge in aviation expected

• Haryana may land second international airport in NCR - Jhajjar project

From the headlines

• Air Deccan to fly international

• Kingfisher to make Amsterdam global hub

• Mallya plans in-flight mobile services

• GMR team takes charge of Istanbul airport services » Sabiha Gokcen International Airport

• GMR stakes in Hyderabad International Airport

• Bangalore International Airport lead by Siemens

• India's air passenger traffic up by 10 per cent » Latest News

CONCLUSION…

The future of aviation industry in India is bright and cannot go any worse. The Indian mentality of cure first may come to the rescue since the sector has realized the pitfalls and the better management will survive in this conscious World. The good news however is India is doing much better than anywhere else in the World and so its said…

FLY TO INDIA, ITS HAPPENNING THERE

QUESTIONS/ SUGGESSTIONS

• Aasif• Prajith• Najma• Divakar• Deepthy• Reshmi• Sudeesh• Unnikrishnan