REPORT ON

AVIATION AND DEFENSE SECTOR

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INDIAN AVIATION SECTOR

INTRODUCTION

A country‘s transportation sector plays an integral role in the growth and development of an economy. According to the ―Indian Aerospace Industry Analysis, in terms of passenger traffic, India is currently the ninth largest aviation market in the world. With regards to air cargo tonnage, India leads the South Asian region -consisting of Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Currently, India has 128 airports - including 15 international airports.

Over the past ten years the Indian civil aviation sector grew by 14.2% in terms of domestic passengers and 7.8% in terms of air cargo (in CAGR - compound annual growth rate).In 2010-11 six major Indian carriers with around 400 aircraft catered to 143 million passengers, including 38 million passengers that originated abroad. In 2010-11, Indian airlines carried approximately 1.6 million tons of air cargo. Further growth of the aviation sector between 2011- 2013 is estimated at 15%.The current state of the civil aviation sector in India indicates that air traffic has increased considerably in the past few years and removing historic barriers to entry would infuse competition into the sector and expand the provision of air carrier services as recommended by Naresh Chandra in his "Competition Issues in Civil Aviation Sector Report.” India's domestic passenger air traffic demand in November 2015 grew 25.1%, the fastest in the world. The country was followed by the US at 9.1% and China at 8.4%.

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India has the potential to become the third largest aviation market by 2020 and the largest by 2030. Eyeing big orders from Indian airlines, world's leading aircraft maker Airbus has said that India's aviation market will grow at over 10 per cent annually in next ten years, which would be double the average global growth rate.There is large untapped potential for growth due to the fact that access to aviation is still a dream for nearly 99.5 per cent of its population, indicates the FICCI-KPMG 'Indian Aviation 2014' report.

The report notes that the next generation of aviation growth in India will be triggered by regional airports. At present, there are around 450 used/un-used/abandoned airports and airstrips spread all over the country. Many Indian states, especially in Eastern India, have started taking pro-active measures to promote air connectivity. These initiatives include reduction in Sales Tax on ATF, development of no-frills airports, promotion of aviation academies and supportive policies for airlines and tourism. West Bengal deserves a special mention as it is the first large state in the country to declare zero per cent Sales Tax on ATF at its regional airports and 15 per cent Sales Tax on ATF used by additional flights started at its metro airport in Kolkata. A lot more needs to be done, as several Tier 2/3 cities are still unconnected or underserved. These involve relaxation on regulations, revising the security requirements, allowing domestic code sharing, providing free or discounted utilities and connecting infrastructure. The proposed Essential Air Services Fund (EASF) by Ministry of Civil Aviation (MoCA) needs to be set up immediately. All this will have a multiplier effect in terms of higher growth of local economic activities, tourism and employment. The most significant development in the Indian domestic market is the growing dominance of the low-cost carrier model, which in FY 2013 accounted for almost 70 percent of the domestic capacity. LCCs have driven the growth in aviation and tourism through low fares, introduction of regional routes and periodic discount offers. Full service carriers plan to shift more seats to their low cost offerings in line with market trends. Indian carriers plan to double their fleet size by 2020 to around 800 aircraft.

NEW ENTRANTS AND THEIR MODE OF ENTRY:

Hero Motors plans to produce light aircrafts at its 300 acre aerospace park in Madhya Pradesh, in partnership with an unidentified European manufacturer.

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The Tata group is keen to move into full-scale aircraft assembly and production in both the civil and defence markets. The group sought approval to set up an aerospace manufacturing facility on the outskirts of Hyderabad. The company has already signed deals with several International companies, including one to manufacture components for Boeing. It has assumed a one-third stake in Italy’s Piaggio Aero, while Israel Aerospace Industries and the Tata group signed a memorandum of understanding to establish a new company to develop, manufacture and support a wide range of defence and aerospace products, including missiles, Unmanned Aerial Vehicles (‘UAVs’), radars, electronic warfare systems and homeland security systems.

Mahindra & Mahindra has signed deals with BAE Systems and is jointly developing a five-seat light aircraft with the National Aerospace Laboratories.

Larsen and Toubro is in the process of forming a joint venture with the European EADS to develop high-tech defence electronics in Pune. This venture will focus on developing electronic warfare, radar, defence avionics and mobile systems for defence.

Aircraft manufacturing major, Boeing, is in the process of setting up a USD 100 million MRO facilities in Delhi. The MRO is primarily being set up to take care of the maintenance needs of the 27 Boeing 787 and 23 Boeing 777 aircrafts ordered by Air India.

GE Aviation and Air India will jointly invest USD 90 million to set up a MRO facility in Mumbai.

Indocopters Private Ltd, distributor for Eurocopter helicopters in India, is planning to set up a helicopter MRO facility in Bhubaneswar, the company’s fourth service centre in the country.

Bharat Electronics’ long-planned venture to make missile seekers in India with an Israeli partner may be signed this year. Ashwani Kumar Datt, Chairman and Managing Director, BEL said “We are trying to re-do the business plan and finalize (the details of the proposed joint venture),” The venture, when finalized , may involve technology transfer, manufacturing at any of BEL’s nine facilities, as also co-development of seekers for other missiles. Apart from meeting the needs of the two countries, the MoU of February 2008 also had a provision for exports.

GROWTH DRIVERS :-

Five international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) have been completed successfully under Public Private Partnership (PPP) mode.

Greenfield airport at Navi Mumbai, Mopa (Goa) and some brownfield airports of Airports Authority of India (AAI) and 50 airports under the low-cost model are to be developed all over the country, including under PPP.

Indian aviation is experiencing dramatic growth across the board, from the emergence of LCC/new carriers to a growing middle-class ready to travel by air as well as growth in business and leisure travel.

India’s middle-income population is expected to increase from 160 Million in 2011 to 267 Million by 2016.

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Greater focus on infrastructure development; increasing liberalization – Open Sky Policy; AAI driving modernization of airports, Air and Navigation Systems.

Growth in aviation accentuating demand for MRO (maintenance, repair and overhaul) facilities.

Large scale collaborations/M&A deals – Etihad Airways & Jet Airways; Tata Group & Singapore Airlines, Tata Group & Air Asia.

India plans to increase the number of operational airports to 250 by the year 2030.

CHALLENGES:

Most global tourists bypass India for places such as Bali, Phuket and Genting primarily because of reasons such as poor connectivity, visa hassles, safety issues and poor marketing. In 2014, India’s foreign tourist arrival count stood at an abysmal 7.4 million per annum, as compared to Singapore (12 million), Thailand (25 million), Malaysia (27 million) and China (56 million).

The infamous, oligopolistic ‘5/20 Rule’ of 2004 prevents new Indian airlines from flying abroad till they complete five years and have 20 aircraft. Its abolition is long overdue. A simpler approach of 1 year/5 aircraft or 2 years/10 aircraft may be adopted, if its outright abolition is politically risky. Linking it to the complicated domestic flying credit system should be avoided.

As India embarks on a high-growth phase, safety and security would be key. December 2015 saw a landing aircraft being hit by wild boars in Jabalpur, an engineer getting sucked into a jet engine in Mumbai, a BSF aircraft crashing in New Delhi, and a bus ramming into an aircraft in Kolkata all in a space of one month. Heads must roll, starting from the top.

The Route Dispersal Guidelines (RDG) is an outdated rule that forces Indian carriers to fly to unviable routes. Other key imperatives for 2016 include the long-pending hive-off of Air Navigation Services from the Airports Authority of India (AAI); market listing of AAI; fast-tracking of the second airports in Mumbai, Goa, Chennai and Pune; convincing leading states to pro-actively reduce the high VAT on ATF; launch of the Regional Connectivity Scheme; support to helicopters and private jets; and engaging with global aerospace majors to enhance their contribution to the Make-in-India initiative.

Exceptions apart, a majority of the players in the passenger transport industry are understood to be incurring significant losses.  Other commercial operations in the aviation space such as cargo transport, ‘maintenance, repair and overhaul’ (MRO) and the aircraft manufacturing industry are still at a nascent stage. For instance, the draft National Civil Aviation Policy 2015 indicates that the present spend by domestic carriers on the MRO of their fleet is approximately Rs 5,000 crore with a majority of such spending being done in countries like Sri Lanka, Malaysia and UAE due to lack of adequate infrastructure in India.

It would not be an overstatement to say that the cascading and multi-tiered system of applicable indirect taxes in India copiously contributes to derailing the aviation industry off its high-growth path. Despite the efforts made by the central government, various factors under indirect taxes continue to obstruct the growth of the aviation sector and are yet to be rectified. One such factor is high tax costs on the procurement of Aviation

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Turbine Fuel (ATF). The fuel accounts for nearly 40 percent of the operating costs of a domestic carrier.  With an apparent fear of loss of revenue, ATF was excluded from the purview of Goods and Services Tax (GST) in the initial years of implementation under the draft 100th Constitutional Amendment Bill, 2015. Levy of service tax on airport levies such as Passenger Service Fee and other similar levies, service tax on MRO activities undertaken for foreign airlines etc., swell the costs for airline operations.

INITIATIVES TAKEN BY THE GOVERNMENT:

The Airports Authority of India (AAI) plans to revive and operationalise around 50 airports in India over the next 10 years to improve regional and remote air connectivity.

Gujarat is expected to get a second international airport at Dholera. The state government has formed Dholera International Airport Co. Ltd. and is obtaining approvals from the union government.

The Directorate General of Civil Aviation (DGCA) has given its approval to Air India’s maintenance, repair and overhaul (MRO) unit.

The Government of India approved a proposal to set up a second airport in the National Capital Region.

The Government of India expects to finalize the new aviation policy and revised international flying norms for domestic carriers soon; the government may remove the ‘5/20’ norms for domestic airlines in this new policy.

GOVERNMENT POLICIES/INTERVENTIONS:

Positive developments:

Jet fuel prices continued to be benign due to global softening of crude 

Why the Indian government has been reluctant to help airlines become viable can be easily understood by a simple truism:

India has always seen flying as a luxury, never really coming around to the point that in today's times flying has become a necessity.

Another matter of concern is the lack of emphasis of this government on creating aviation infrastructure. Though the policy speaks of enhanced regional connectivity, it has no firm plans for augmenting airport and other related infrastructure to support regional flying.

Visa-on-arrival expands to more countries, but still forms less than half a percent of tourism arrivals.

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India is geographically perfectly positioned to hub a passenger from Sydney to London, from Frankfurt to Bali, Beijing to Nairobi and Jakarta to Jeddah. Delhi and Mumbai have swank new terminal

ATF (Aviation Turbine Fuel)accounts for about 40 percent of an airline’s operational costs.

 State governments throw up their hands often in this matter, saying they will lose revenue if ATF taxation is brought down. In the end, airlines continue to pile losses despite a good business environment – the only exceptions to this being IndiGo and GoAir.

The Civil Aviation Policy is widely expected to also recommend that all airlines not only participate in the ambitious regional connectivity scheme but also increase domestic connectivity

Need to get more remote locations on the country’s aviation map but the move is fraught with litigation and opposition from airlines since they already deploy a certain specified capacity on non-viable domestic routes.

PROPOSED CHANGES IN RULES AND POLICIES:

The government has proposed a new domestic flying credits (DFCs) rule to decide whether a local airline is eligible to fly on overseas routes, replacing the so-called 5/20 regulation, which put onerous obligations on new airlines seeking to operate international flights.

The new rule aims to encourage airlines to fly to remote destinations within India such as those in the North-east and Andaman Islands to enhance regional connectivity and thereby enabling smaller airports to feed into bigger Indian airports. Airlines can earn more credits by flying to tier II and tier III airports. Airlines can earn five times more credit if they are flying to unused airports, according to the government proposal. Once they have accumulated a certain level of DFCs, they will be permitted to fly abroad.

Under the existing 5/20 rule, Indian airlines had to wait for five years and have a fleet of 20 aircraft before they could fly abroad. With the new guidelines, the aviation ministry hopes to transform the country’s six metro airports into international hubs and reverse the trend of local airlines using hubs in West Asia and South-east Asia for international operations.

The ministry has also mooted the idea of credits trading, under which 25-30% of such DFCs can be purchased from regional airlines. These criteria will apply to new airlines while existing airlines such as Jet Airways and Air India will have to earn more DFCs to get new international routes. Under the proposed rule, an airline desiring to fly on international routes must have earned a minimum of 200 DFCs. Also, it should have a minimum of five airplanes to fly international, against the 20 needed currently.

The government has mooted a waiver of parking and landing charges at all airports for flights with less than 80 seats to promote regional connectivity.

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The government has also mooted a proposal restricting new airlines from flying overseas destinations of less than six hours in the initial phase, putting West Asian and Singapore airports out of the scope.

GROWTH OPPORTUNITIES:

Passenger and air cargo growth are among the key indicators of the well-being of a nation and India’s passenger growth story has been exceptional, despite the vicissitudes of airlines. During the last 10 years, the compounded annual growth rate of passenger traffic has been about 15 per cent. As regards air cargo, which undoubtedly is languishing, there lies enormous untapped potential. In 2011, the total air-cargo volume handled was 2.3 million tonnes by all Indian airports which was far less than that handled by individual airports like Hong Kong, Memphis, Shanghai, Incheon, Anchorage and Paris. The Ministry of Civil Aviation has forecast that the total cargo throughput at Indian airports is expected to grow 7.6 times in the next 20 years (compounded annual growth rate [CAGR] of 11.2 per cent).

As per estimates, domestic air traffic will touch 160-180 million passengers per annum in the next 10 years and the international traffic will exceed 80 million passengers per annum from the current level of 60 million domestic and 40 million international passengers respectively. According to International Air Transport Association’s (IATA) Airline Industry Forecast 2012-16, India’s domestic air travel market would be among the top five globally, experiencing the second highest growth rate.

Domestic air traffic that would be carried by scheduled carriers in India in 2020-21, is set to cross 164 million passengers as against 54 million in 2010-11, suggesting a growth of three times the present traffic in ten years. International passengers to and from India by 2020-21 will be 92 million, implying a growth of about 2.4 times the traffic of 38 million in 2010-11. Forecast for 2030-31 reveals that domestic air passengers to be carried in India will be 438 million and that of international passengers will be 217 million.

Sales of air transport infrastructure services companies such as Airports Authority of India and Delhi International Airport is expected to rise by 11-13 per cent in 2015-16. We expect passenger traffic at Indian airports to grow by 8.9 per cent during this period, which is likely to augur well for these companies. In FY11, an investment of Rs 26.53 bn was planned in ports and Rs 6.63 bn in airports infrastructure. These will be further aided by substantial investments in development of airports in tier-II cities as well as improvement of infrastructure in existing airports.

MROs:

Some of the positive measures taken by the government over the past few years:

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Extension of time period for consumption/installation of parts, and testing equipment imported for Maintenance, Repairs and Overhaul (MRO) of aircraft by MRO units from 3 months to one year.

MRO industry for the first time is allowed to go in for ECB. The Royalty charged by the AAI, from MRO, reduced from 36.3% to 13%. Testing equipment can now be imported duty-free by the MROs. It is expected that IAF would spend around USD 18.79 billion for MRO and related

activities by 2025 and, at present, the work is getting overburdened on HAL alone in the civil MRO market. The Indian civil aviation MRO market is estimated to grow at a CAGR of about 14-15 percent to USD 4.33 billion by 2025.

The latest entry of Reliance Defence and Aerospace (RDA) into the defence and aerospace sector has provoked an understanding and confidence in the industry also, fuelled by the ‘Make in India’ policy.RDA has proudly announced themselves as military helicopter manufacturer and integrator with a plan to develop a USD 1 billion Dhirubhai Ambani Aerospace Park (DAAP).The group is also planning to explore other opportunities is in the naval platforms, air mobility, avionics and Network Centric Welfare (NCW). The group is eyeing on closing potential projects worth USD 22.8 billion in the defence sector.

The Indian air cargo industry will also benefit from evolving MRO industry as it will directly contribute to heavy machinery and spare parts import demand and save high cost incurred when aircraft MRO work is outsourced aboard. In-house servicing facility means faster recovery of aircraft domestically and reduced dwell-time adding to cargo throughput. With international players setting up their MRO facilities in India, this will benefit in more foreign earnings driving more international and domestic airlines into the country.

On a global average, it is recently estimated that the Indian MRO industry will have a potential of USD 30 billion by 2020.

MRO FACILITIES:-

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HANGARS:-

Air Works has three major facilities in India with hangars at its base in Mumbai and Delhi dedicated to GA. A third facility at Hosur, near Bengaluru, handles commercial airline MRO, carrying out C-checks on B737s, A320s and ATR turboprops. The company also has line maintenance centres at nine other locations around the country. Air Works plans to acquire at least two more hangars in India for GA and may look at an opportunity to gain a toehold in the Middle East. Along with this strategy, Air Works is likely to continue to pursue commercial aviation through its narrow body

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hangars and a wide body hangar currently being built at Hosur. Last year, the company also took over the British firm, Air Livery, Europe’s largest aircraft painting business. A new wide body paint shop is being built at Hosur. It will be the only such facility in the Asia-Pacific outside of China.

Another big project is the JV between Malaysia Airlines, GMR Hyderabad International Airport and local carrier, Jet Airways. MAS-GMR Aerospace, as it is known, has already signed a 10-year deal with Jet to provide heavy maintenance for the carrier’s entire fleet. The facility initially will offer C- and D-checks for A320s and B737s before moving onto long-haul types.

Dassault Aviation, a part of French aerospace company Groupe Dassault, has drawn up an ambitious map for expansion in the Indian market. The company, with a majority share in the Indian business jet market, is looking at setting up an MRO centre next year. Its business jets are sold under the ‘Falcon’ brand name.

INVESTMENT OPPORTUNITIES :-

300 business jets, 300 small aircraft and 250 helicopters are expected to be added to the current fleet in the next five years.

Growth in aviation is accentuating demand for MRO facilities. Greenfield airports under PPP at Navi Mumbai and Mopa (Goa). The development of new airports – the AAI aims to bring around 250 airports under

operation across the country by 2020. The North-east region – the AAI plans to develop Guwahati as an inter-regional hub and

Agartala, Imphal and Dibrugarh as intra-regional hubs. The AAI plans to spend USD 1.3 Billion on non-metro projects between 2013 and 2017,

focusing on the modernisation and up-gradation of airports. Indian airports are emulating the SEZ Aerotropolis model to enhance revenues, focus on

revenues from retail, advertising and vehicle parking, security equipment and services. According to data released by the Department of Industrial Policy and Promotion (DIPP),

FDI inflows in air transport (including air freight) between April 2000 and June 2015 stood at US$ 573.12 million.

Key investments and developments in India’s aviation industry include: The Ministry of Civil Aviation has signed Memorandum of Understanding (MoU) with

Finland, Kazakhstan, Kenya, Sweden, Norway, Denmark, Oman and Ethiopia for increased co-operation between the countries in terms of additional seats, sharing of airlines codes, increased frequencies and additional points of call, during the International Civil Aviation Negotiations (ICAN),2015 held in Antalya, Turkey.

Tata Advanced Systems (TASL) has signed a joint venture with American aircraft manufacturing major, Boeing, to establish a centre of excellence for manufacturing aerostructures for Apache helicopter initially and collaborate on integrated systems development opportunities in India in the long term.

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US-based aircraft manufacturer Boeing plans to assemble one of its two helicopters namely, Chinook (heavy-lift) or Apache (attack type) in India, thus becoming yet another global company to invest in India encouraged by the ‘Make in India’ campaign.

Airbus SAS, one of the top two aircraft manufacturers in the world, plans to open aircraft maintenance and repair overhaul (MRO) facility in India.

Airbus, the world’s leading aircraft maker, expects India’s aviation industry to grow at over 10 per cent annually in the next decade, almost double the average growth rate of the global aviation industry.

Eyeing large orders from Indian airlines, Airbus has committed to source products worth US$ 2 billion cumulatively over the next five years from India; the company plans to provide customised maintenance and other services closer to the base for all its airline customers in India.

French drone-maker LH Aviation signed a Memorandum of Understanding (MoU) with India’s OIS Advanced Technologies on June 19, 2015 to manufacture tactical drones in India through an industrial license.

Mahindra Group expanded its partnership with GE Aviation by signing an agreement to manufacture aero structures at the Group’s new aerospace facility in Bengaluru.

SpiceJet plans to enter a deal with Boeing Co. and Airbus Group SE to buy 80-120 jet airplanes which would help to expand their fleet and rebuild its business.

FOREIGN INVESTORS :-

Airbus (France) Boeing International Corporation (USA) AirAsia (Malaysia) Rolls Royce (UK) Frankfurt Airport Services Worldwide (Germany) Honeywell Aerospace (USA) Malaysia Airports Holdings Berhad (Malaysia) GE Aviation (USA) Airports Company South Africa Global (South Africa) Alcoa Fastening Systems Aerospace (USA)

VAROUS SYSTEMS REQUIRING AIR-CONDITIONING IN PLANE:

Aircraft are equipped with several systems that process and accommodate air through all usages needed aboard. Among those systems are to be found in particular:

Engine bleed air Air conditioning Cabin pressure control Ventilation control Wing and nacelle anti-ice Additional cooling of avionics, galleys and hydraulics Humidification and dryer

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Integrated air management systems consist of several hundreds of parts located all across the aircraft (engine, nacelle, pylon, wing, belly fairing, fuselage, cockpit, cabin, tail core) that process all air circulation within the aircraft from the engine bleed port to the cabin.

ALLIED INDUSTRIES

Aircraft leathers: aviation interiors.

Aircraft finish

Custom aircraft cabinetry, floor plan modifications, and aero medical conversions

Ambulance installation for fixed wing aircraft and helicopters

Cab services

Eating joints in airports/lounges

Air Hostess training institutes

Perishable Air Cargo

PERISHABLE AIR CARGO:

Air cargo is used mostly for shipping goods that are highly valuable, time-sensitive and perishable. Globally, more than one third of the value of goods traded internationally is transported by air and therefore air cargo industry is considered as a barometer of global economic health.

Perishable goods (such as fruits, flowers and vegetables) were among the first commodities carried by air. This kind of items deteriorates with time or exposition to adverse temperature and humidity.

With years of operating experience, airlines have developed effective handling techniques for chilled and frozen products, providing shippers with optimum, cost-efficient packaging methods.

The cargo that requires refrigeration and freezing during transport for whole-course temperature control, this is especially applicable for the foods, drugs, reagent, biological products, human organs, frozen embryos and others which are sensitive to temperature and humidity change or to time limit of transport and prone to deterioration.

A new air cargo hub for perishable goods is to be based at Sardar Vallabhbhai Patel International Airport. Gujarat Agro Industries, a government enterprise, is behind the project aimed at capitalizing on the huge amount of perishables, including vegetables, fruits and exotic flowers.

What is important is to enable the growth of this trade by facilitating appropriate infrastructure for handling, storage and faster movement of these goods for exports in the

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cargo terminals. Cool chain processes effectively safeguard product quality and maximize shelf life, thereby enhancing profitability.

Cold chain facilities

The composition of trade in fresh agro-food products is shifting towards horticultural products, fruits and vegetables, fish, and spices which have led to an increase in demand for airfreight to meet the delivery times. The quality of logistics is an essential element of competitive advantage. Cost is equally important and provides an advantage for countries that already have well-developed air freight routes, whether through scheduled freighters or space on passenger flights.

Non-Resident Indian population living in Middle-East and in other parts of the world continues to source a large part of their food stuff requirements including native grown vegetables from India. Belly space available from the passenger aircrafts flying to these destinations provides an ideal opportunity for exporters of such items to supply the perishable items of food at competitive prices. However, what is important is to enable the growth of this trade by facilitating appropriate infrastructure for handling, storage and faster movement of these goods for exports in the cargo terminals. Cool chain processes effectively safeguard product quality and maximize shelf life, thereby enhancing profitability.

Facilities for special cargo handling in other countries

Nairobi has a pair of on-airport refrigerated storage facilities operated by the ground-handling subsidiary of Kenya Airways, as well as a stand-alone cold storage operated by DHL on the airport and Swiss port off the airport. These are highly automated.

Possibly the most advanced cold storage is the Dubai Flower Center, a multi-storey facility located next to the Dubai Cargo Village. It is designed for the storage and processing of flowers imported primarily from Africa for both the local market and for distribution to the region. The initial phase on this center is designed for an annual throughout of up to 180,000 tons of flowers. The perishable handling area in Dubai Cargo Mega Terminal is about 4623 square metres floor space, with 3927 square metres of 218 individual cells of temperature zones.

The 9,000 m² perishable centre, for instance in Cargo City, Frankfurt Airport, offers 20 different climate zones.

Changi air freight terminals offer Dedicated/specialized perishable handling facility that is temperature monitored and humidity controlled to cater to different types of requirements and a wide range of commodities

Source: World Bank Report on Air Freight Study, 2009

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Air Cargo Logistics in India

Benchmarked against these best practices in the world, it is observed in most Indian airports there is need to focus more on these areas so that handling of e.g. agricultural and other perishables/pharmaceuticals for which India has potential is done in the best possible manner to boost their trade. MIAL has claimed there will be no shortage or paucity of space for special handling of cold storage cargo with two dedicated facilities said to be in operation one each by MIAL and Air India for export perishable and Pharma. India should aim to benefit from the benefits of cold chain logistics for air cargo operations like other countries. Ministry of Commerce has set an export target of US$ 42 Billion for 2016-17 for pharmaceutical sector alone.28 This suggests a huge potential for air cargo business in this segment.

WAREHOUSE FACILITIES AT AIRPORTS:-

To better facilitate the shipment of temperature-sensitive goods and pharmaceutical products, Cathay Pacific Cargo has signed a master agreement with DoKaSch temperature solutions for renting the latest-technology active containers, the RKN and RAP Opticooler . The service will be rolled out across the airline’s network in the first quarter of 2015.

The Northeast region of the country is expected to get a dedicated air cargo service soon to cater to the business community's needs for fast movement of goods to and from the region. Mumbai-based Sovika Aviation Services said that it would launch a dedicated cargo airline service to cater to all major airports of the north-eastern states from February 2015.

COMPETITORS IN AVIATION INDUSTRY:

ZECO

Established in 1989, in New Delhi, India, ZECO today has come a long way to become world class manufacturer of air management system, delivering reliable and superior quality products. With incredible expertise in design and selection of air management system, the company is serving the customers according to the application with innovative technology, high quality and cost effective solutions. The company is continuously meeting the demands of the changing and challenging market environment around the globe.

CARRIER

Established in 1986,Carrier is the world's leader in high technology heating, air-conditioning and refrigeration solutions. Carrier experts provide sustainable solutions, integrating energy efficient products, building controls, and energy services for

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residential, commercial, retail, transport and food service customers. Founded by the inventor of modern air conditioning, Carrier improves the world around us through engineered innovation and environmental stewardship.

DAIKIN

Airports present an array of air conditioning challenges with large atriums and concourses connected to the smaller enclosures of terminal gates and administrative offices. As a comprehensive air conditioning manufacturer, Daikin offers an integrated approach that delivers customized solutions for energy savings and comfortable interior spaces in providing precise air control of multiple zones. Leveraging our experience in large-scale projects, Daikin can provide the appropriate solution to all air conditioning needs.

COMPETITORS IN DEFENSE SECTOR:

1. WEISS - MOBILE AIR-CONDITIONING SYSTEMS FOR THE DEFENCE MARKET

Mobile air conditioning systems

Weiss' mobile air conditioning systems are essential military and disaster prevention equipment. Compact, indestructible, reliable and simple to operate, our air conditioning units are particularly useful in situations where it is necessary to combat extreme climatic conditions.

The systems and their individual parts are furnished with NATO stock numbers (NSN) and in many cases have special technical documentation.

Military tent air conditioning units

Weiss' tent air conditioning units suitable for military use include type ZKB 10/6 MFA and the 15/10 MFA (split AC system). The systems are available in a condenser and evaporator module and can be installed as a complete system (all modules outside the tent) or a split-system (evaporator module inside the tent). The units can operate sufficiently as an air recirculation system for use in harsh environments.

Our units are easily transportable with a compact construction and integrated frames for military camps that are always on the move. They are easy to maintain and have easily removable covers to access the system. The system integrates a fully hermetic refrigerant circuit with a scroll compressor and an airflow section with filter, cooler and supply fan.

The units have a cooling / heating (electrical) option. There is a separate heating module available, which can be used as a fuel heater (diesel) with a complete water-glycol circuit and pump.

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Compact air conditioning system

Weiss has expanded its proven series to include a new model, distinguished by two innovative features: even better air conditioning performance / capacity and optional use with integrated fuel heater.

Special features include:

Compact design with transport frame Operation as an air recirculation system Electric heater optional with fuel heater available Tested to military standards

2. LLOYD ELECTRIC AND ENGINEERING - HEATING, VENTILATION AND AIR CONDITIONING FOR THE RAILROAD INDUSTRY

Air conditioning systems for defence applications

Lloyd has extended its capability to design, develop and manufacture defence application ACs, from 2TR to 4TR capacity with a rugged design that is suitable for cross-country terrains (-20°C to 60°C).

Lloyd's defence application ACs comply with JSS 55555 environmental specifications, while being made from lightweight aluminium alloy with chemical agent resistive coating (CRCA). The product is eco-friendly, R134A refrigerant, part of the safety group A1 and has a zero ozone depletion potential (ODP) level.

3. SIGMA

SIGMA is a world leader for over 30 years in the design, manufacture, supply and service of specialized air conditioning equipment suitable for the transportation rail, mining, industrial and defence industries, where high ambient temperatures, severe vibration, dense particulate and corrosive environments prevail.SIGMA have developed a comprehensive range of air conditioning and filtration equipment now manufactured for the transportation, industrial, mining, and defence markets on a global basis. The innovative and unique SIGMA designed equipment has attracted worldwide interest and acceptance, and many enquiries have been received from major industries throughout the world.SIGMA is a leading global company in the development of Transport and Heavy Duty HVAC Systems for the Rail, Mining, Industrial and the demanding Defence markets.The World of SIGMA truly covers the Globe across several market groups. The products are produced with over 30 years of broad experience in the air conditioning markets.SIGMA provides a "whole of life" outlook for its products and provides tailored system solutions that deliver true value to our customers.SIGMA is a Quality Assured company to ISO9001 at all its operations and has extensive Research and Development facilities to ensure SIGMA's equipment delivers maximum performance, value and reliability with minimum overall life cycle cost to our customers.

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4. DC AIRCO

Military Air Conditioning

Standard or custom made Air conditioners for Military and Defence

DC Airco is supplying standard and custom made products to defence companies inthe EU and USA to cool equipment and / or people. Several defence contractors have selected DC Airco as their supplier for cooling solar/diesel powered equipment shelters (DC 12500HA 24-48 VDC) and radar trucks (DC 9300HA 24-48 VDC) in remote areas.

For unmanned border patrol the DC12500 telecom unit is mainly used in 24 or 48 VDC in desert areas.

For vehicles also the DC9300 split unit is used (same unit as in mining refuge shelters)The DC 9300 split unit is developed in 2007 to cool fuel cell powered  telecom sites and is later used for railway projects, mining and defence. A larger version of the DC 9300 is called DC 17000.

The benefits of DC AIRCO products:

DC Airco's products operate trouble free in hard environments ranging from hot and dirty mining applications to hot and dusty deserts. These DC powered direct current air conditioners are robust and reliable, ideal for use on vibrating vehicles.

TRENDS IN AVIATION TO WATCH OUT FOR IN 2016:

Air Asia: The sudden slowdown in Air Asia’s growth plans seems fairly mysterious. The excuse they are clutching on to—waiting for a change the 5/20 rule—doesn’t hold water as the plans for growth were based on the domestic market. It points to a cash crunch with the parent company in Malaysia, as is evidenced by deferred aircraft deliveries and lower profit. Air Asia should also get rid of its stubbornness and start operating flights into the financial capital. Once Air Asia gets rid of its stubbornness and its confusion in its strategy in India, as well as its financial issues, it should get into the growth path in the Indian market. Further, flying international is not going to be the elixir for Air Asia. India is not yet a market for international low-cost travel, as is seen by the small proportion of international low-cost capacity versus the full-service hub-and-spoke model.

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Vistara: Watch out for the downsizing or the scrapping of the premium economy class, a misfit in a domestic market that is hungry for low fares and is used to a seat being commoditized rather than marketed. Vistara’s pricing is hurting its load factors, but its measured growth strategy, waiting for the five-year sentence to end to fly international, will help cut its losses.

The others: 

IndiGo: It has 97 operational aircraft, 180 more already ordered for which deliveries begin later this year and then these 250 aircraft which start coming in by 2018. Till 2026 or roughly in the next decade, some of the total 530 odd aircraft would be used as replacements. How many that will be we know not but it is fair to assume that within the next 10 years, IndiGo's fleet alone may well be the size of the combined fleet size of all airlines operating in India at present.

SpiceJet: The second largest airline by passengers, has a fleet of 18 Boeing 737s and 14 Q400 aircraft as per information available on the airline's own website. It has 42 Boeing 737Max planes on order and claims to have begun negotiations for another 100 aircraft with both, Airbus and Boeing. Clearly, even if this 100 aircraft order is finalized and deliveries begin over the next few years, SpiceJet's fleet plans are nowhere near IndiGo's ambitious ones.

GoAir: It has 72 Airbus 320neos on order which begin coming in by 2016 and continue till 2020. Its present fleet is just 19 aircraft. So even after the deliveries of the 72 aircraft are completed, Go Air is unlikely to be a serious threat to IndiGo in the near future.

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International carriers: They will continue with their organic growth into India, with secondary cities such as Amritsar, Jaipur and Tiruchirappalli coming into focus.

SOURCES:http://www.ibef.org/industry/indian-aviation.aspx

http://www.daikin.com/products/ac/applications/modals/17_airport/index.html

http://www.cmie.com/kommon/bin/sr.php?kall=wclrdhtm&nvdt=20150515093314850&nvpc=099000000000&nvtype=ANALYSIS+%26+OUTLOOK&ver=pf

http://www.livemint.com/Industry/vaocwLAx5EvO6o3aOpeSlM/The-irony-of-the-Indian-aviation-industry.html

https://www.crisilresearch.com/CuttingEdge/Content/Economy/HeadLinePDF/Airlines.pdf

http://www.sps-aviation.com/story_issue.asp?Article=1131

http://www.financialexpress.com/article/fe-columnist/right-policy-push-can-help-aviation-grow-20-pct/188823/

http://forbesindia.com/blog/economy-policy/is-the-indian-aviation-industry-finally-airborne/

http://www.firstpost.com/business/for-the-aviation-sector-to-grow-in-india-it-needs-handholding-by-the-policy-makers-2561934.html

http://www.businessair.com/aviation-business-directory/aircraft%20related%20industries

civilaviation.gov.in/sites/default/files/moca_001669.pdf

http://aviationspaceindia.com/content/aviation-mro-india-opportunities-and-challenges

http://www.stattimes.com/index.php/make-in-india-mro-makes-it-happen/

https://www.pwc.in/assets/pdfs/industries/general-aviation-070312.pdf

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