Commercial Aircraft Manufacturing India Business Case

Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context.
Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 1 of 64
Commercial Aircraft Manufacturing;

A Business Case Analysis in
The Indian Context
A
Dissertation submitted to Indira Gandhi National Open University in partial
fulfillment of the requirements for the award of
Masters Degree in Business Administration in Finance Management
Under the Guidance of

Dr.M.Jayadev, Associate Professor
Finance & Control
Indian Institute of Management
Bangalore, 560076
Submitted By
Venkateswara Rao.G
Enrollment No: - 061488037
October 2010
School of Management
Indira Gandhi National Open University
Maidhangarhi, New Delhi.
Certificates
Declaration
I hereby declare that this dissertation titled “ Commercial Aircraft Manufacturing: A Business Case Analysis
in the Indian Context” under the guidance of Dr. M.Jayadev, Associate Professor, Finance & Control, IIM
Bangalore, has been prepared independently, by collecting and referring information , pertaining to my topic.
I further declare that this Dissertation has not been submitted to any other University or Institution
for the award of any other degree of diploma.
Date: 02.10.2010
Place: Bangalore (Venkateswara Rao.G)

Acknowledgement
“Any Man what he becomes tomorrow is entirely depends upon the thought processes he is learning
today from the Surroundings with which he is in interaction”
Iam Grateful especially to my Guide, Dr. M.Jayadev, Associate Professor (Finance & Control), IIM,
Bangalore, for sharing his thoughts by accepting my request for guidance and advising me to do challenging
dissertation work related to Indian Commercial Aircraft Manufacturing Industry and Indhira Gandhi National
Open University founders & it’s staff for giving me the opportunity to do this work for fulfillment of my
MBA Course and my surroundings. And also thankful to Mr.Sandeep, Financial Analyst, M/s.Covensys Inc.,
Bangalore and Mr.Venkata Ramana, Aircraft Maintenance Engineer, M/s.JetAirways, Mumbai for
suggestions and kind support during my work.
I would like to place on record my gratitude, love and affection to my family members and friends
for their constant support and encouragement throughout my life.

Synopsis
Rational of the Study:-
So far in India manufacturing of Commercial Aircraft business not started. Because of no manufacturer in
India, the Commercial Aircraft Acquiring Cost, Maintenance, Repair & Overhaul Costs are quite high
compared to that if it is done in India with already known, and realized examples of many products
manufactured, repaired in India can save 50% of the Cost incurring for buying from Western Countries,
because of Standard Man Hour rates are very less than the Western Countries. And there are examples of
incidents happened that for Repair Work of Rs.10, 000, Indian Airline Operators spending lakhs of rupees for
going to Singapore or Western countries. And the present Population of India using Air-Transport facility is
very less because of high Air-Fares due to the above mentioned costs.
Many major manufacturers like Airbus, Boeing, ATR, Sukhoi, etc companies had plans of starting
Manufacturing, Maintenance, Repair & Overhaul facilities, but theirs plans are limited to papers without
taking into action. The Indian Government research laboratory, National Aerospace Laboratories also had
efforts for having indigenously designed, developed Commercial Aircraft, but still project has not rolled out
as reality, still it is under Type Testing & Approval stage to meet Civil Airworthiness standards, required by
Directorate General of Civil Aviation (DGCA, India), Joint Aviation Authorities (JAA, Europe) and Federal
Aviation Authority (FAA, USA), also the passengers capacity of that Aircraft is limited to 14 no.s only.
Objectives of the Study:-

The basic reason and purpose of this study is laying foundation stone or initiate the Manufacturing of
Commercial Aircrafts in India by suggesting best suitable model of Aircraft for present and future Indian
Aviation Market. Feasibility factors finding for Commercial Aircraft manufacturing in India.
Research Methodology used for carrying the Study:-
a) Existing Models Study: - For finding out best model, primarily study of Indian Airliner’s fleet sizes
for Regional & Domestic transport is analyzed.
b) Scope of Modifications proposed for New-Aircraft: - Found out the more utilized Commercial
Aircraft Model India as A320-200, next B767-800 models. Further modification recommended for the
Aircraft model to make it more suitable for Indian Aviation Market. Technical modifications are proposed
and among these one will be selected, for future research. The proposed New-Aircraft best suites for
Indian Market (For Total Population, Airports, and Landing, Passengers, effecting Environment,
Airliners, Government and Employment) after studying the customer needs in Market from data of
secondary sources.
c) Demand & Supply for proposed New-Aircraft:- For the proposed model, estimated the expected
no. of proposed New-Commercial Aircrafts required to meet the traffic demand by studying & analyzing
the Market research reports of Airbus, Boeing, Embrarer, Sukhoi, and etc reliable research organizations
related to Air Traffic Projections, Demand and Supply, Airliners Industry growth etc.
d) Commercial Viability of the Project: - Production capacity of 30 aircrafts proposed for New-
Commercial Aircraft and calculated the Acquiring or Developing the Aircraft. And various costs incurred
in Manufacturing, Operations, & Marketing and Working Capital are estimated.
e) Financial Viability of the Project: - Evaluated the Financial Viability using Break Even Analysis,
Calculation of Internal Rate of Return, and Net Present Value at the Cost of Capital 11%, investment in
the project is financially viable.
f) Risk Analysis: - Project related risks analysed. Sensitivity Analysis and Scenario Analysis carried out,
the investment in this type of project is less risky as per the present prevailing situation
g) Strategic Analysis: - Competition issues like present foreign suppliers business strategies in India and
High-Speed Rail projects in India, their effects on Commercial Aircraft Manufacturing business in India
project explained with the example of past case of European Low Cost Airliners competition with High-
Speed Rail Operators.
Summary & Conclusions: -
a) Best suitable New-Commercial Aircraft for India suggested, Optimum capacity for Manufacturing,
Commercial Aircraft Manufacturing Business Opportunity in India, Commercial & Financial viabilities
information, Risks, and Strategic Issues Information presented in the report.
b) The Expected Contribution from the Study:-More suitable proposed New-Aircraft, Technology
Independence, Advantages & Benefits to more Indian population, Economy, Idea for Commercial
Aircraft Manufacturing Business, Cost benefits for MRO given. Less risky Air-Travel Business, even
common man also can get the opportunity of exciting air travel with further reduced Air-fares; Valuable
time of population will be saved, etc.
c) Limitations, If Any and The Scope of Future Research:-

Time and Secondary data sources are the limitations for completing this Thesis Work.
Further with Market Research, etc. primary data, and development of new “Take-off and Landing
System” will be the future research work.
List of Tables
Table-1: A320-200 Present Specifications ……………………………................................................ 10

Table-2: A320 Family Deliveries …………………………………………………….…………….…. 13
Table-3: Indian Economic Survey 2009-10 Key Indicators ……..………..……….………..….…... 15
Table-4: Air-Traffic Projections ………………………….……………………….……………….…. 30
Table-5: Boeing Current Market Outlook 2008-2027 for India ………………….…………...….… 33
Table-6: Boeing Current Market Outlook 2009-2028 ……………….…………………........…….... 34
Table-7: Key Indicators & Demand by Region ………………………………….…....….………..… 34
Table-8: Single Aisle 90 to 175 Seats ……………………………………………………………..….. 34
Table-9: Single Aisle 90 to 175 Seats ……………………….………………………..………..…….. 35
Table-10: Region-Wise Comparison …………….….………………………………………..…….. 36
Table-11: Growth Measures & Market Size ………………………………………………..……… 37
Table-12: Deliveries & Market Share by Size ………..…………………………………….……….. 38
Table-13: RPKs and Annual Growth ……………………..…………..…………………………….. 38
Table-14: Cash Flows without discount ………………..………………………………………….…50
Table-15: Assumptions & Output …………………..…………………………………....…….……. 50
Table-16: Discounted Cash Flows yearly (in US$ millions) ………….…….………..…………….. 51
Table-17: Aircraft and parts: Market data (in US$ million) …..………….………..……….……… 53
Table-18: Selling Price Vs. NPV Analysis ……………..…….……………………..…..…….……… 54
Table-19: Sold Aircrafts yearly Vs. NPV Analysis ……………….….……………..…….…….…… 55
Table-20: Scenario Analysis …………………….……………..…………………….……………..…. 56
List of Charts
Indian Air-Traffic Annual Passengers 2001/02 – 2007/08 ……………………………….………….. 29

Top 15 Indian Airports 2007/08 ……………………………………………………………….……… 29
India Domestic Passengers and Growth: Oct-2008 to Oct-2009 ……………………………………. 32
Indian Carriers Domestic Market Share: Oct-2009 …………………………………………….…… 32
Indian Carriers’ Load Factor: Oct-2009 ……………………………..….…….……………….…….. 33
Boeing Market Outlook-2009 India Market Growth Rates ………….…………………..……..….... 39
Top 5 Counties in Aircraft Demand 2009-2028 …………………….……………..…………….……. 40
Typical Aerospace Supply-Chain ……………………………………………………………..…….…. 47
Value Added by Suppliers ………………………………………..…………………………..…..……. 48
Break Even Analysis without Discount …………………………………………..……………..…….. 49
NPV vs. Selling Price ……………………….…………………………….…………………….……… 55
NPV vs. No. of Aircrafts Sold yearly ……………………………………..……..…..………………… 56
Table of Contents
I. Title Page ………………………………………………………………….…… 1
II. Certificates ……………..…….………………………………………….......… 2
III. Declaration …...………………………………………………..…………….…. 3
IV. Acknowledgement.……………………………………………………...…..……. 4
V. Synopsis …………………………………………………….…………..…….…. 5
VI. List of Tables …………………………………………………………………..... 7
VII. List of Charts …………………………………………………………….…..… 7
VIII. Table of Contents …………………………………………………….….….…. 8
1. Chapters ………………………………………………… …………….……….... 9
1.1 Existing Models Study 9

1.2 Scope of Changes Proposed for New-Aircraft …..……….… ………….……….9
1.2.1 Existing Technology 9
1.2.2 Deliveries 13
1.2.3 Required modifications for New-Commercial Aircraft 14
1.3 Demand & Supply for proposed New-Aircraft …….……………..………...… 15
1.3.1 Indian Economy and Aviation Industry Growth Study 15
1.3.2 India’s Economic Outlook by IMF and Global Insight 16
1.3.3 International Air Transport Association (IATA) Review 16
1.3.4 Economic Growth during 2008-09 17
1.3.5 Centre for Asia Pacific Aviation (CAPA) Review 18
1.3.6 ACEXC (Aviation Center of Excellence India) Review 19
1.3.7 Indian Aviation Industry 20
1.3.8 Aircrafts & Parts Market 21
1.3.9 Partnerships & Mergers 22
1.3.10 Airports 23
1.3.11 Government’s Role 24
1.3.12 Forecasts for Aviation Market 26
1.4 Air-Traffic Projections, Demand and Supply ……………………….…….…. 29
1.4.1 Air-Traffic Study 29
1.4.2 Aircraft Demand & Supply Study 33
1.5 Estimating no. of Orders/Sales Expected ………… ………………….……….. 42
1.6 Commercial Viability of Project …………………………………………...….…. 42
1.6.1 Estimating New-Aircraft Project R&D Cost & Target Time 43
1.6.2 Manufacturing Plant with Production Capacity 44
1.7 Financial Viability of the Project ……………………………..………………..… 49
1.7.1 Break Even Analysis without Discount 49
1.7.2 Break Even Analysis with discount 50
1.8 Risk Analysis …………..…………………………………………………….…… 52
1.8.1 Project Related Risks 52
1.8.2 Sensitivity Analysis 54
1.8.3 Scenario Analysis 56
2) Strategies Analysis …..………………….……...……………….……………..… . 57
2.1 Aviation Industry SWOT Analysis 57
2.2 Air Transport versus Railroad Transport 59
3) Conclusions ...………………………………………………………….…..……….. 61
4 References ………………………………………………………………………….. 62
1. Chapters
1.1) Existing Models Study

The existing models Survey for Regional & Domestic Market in India carried-out. At present as per the
present usage & placed orders by Airliners in India, A320-200 type 216 no.s; B737-800 type 88 no.s,
ATR72-500 type 87 no.s; A321-200 type 69 no.s aircrafts were used more for Regional and Domestic
Transportation (Short to Medium Range Hauls).
For Long-Range Services A330-200 type is 39; B787-800 type is 37 aircrafts were preferred.
But, For Regional & Domestic Market, out of the above available models A320-200, B737-800, ATR 72-500
is the most popular1.
1.2) Scope of Changes Proposed for New-Aircraft

From the fleets available & orders placed by Indian Airliners, Aircraft A320-200 is 216no.s. This is the more
preferred for Indian Domestic and Regional Passengers Market.
1.2.1) Existing Technology
The Airbus A320 family is Low-Wing Cantilever Monoplanes with a conventional tail unit with a single Fin
and Rudder. They have a retractable Tricycle Landing Gear and are powered by Two Wing Mounted
Turbofan Engines. Compared to other Airliners of the same class, the A320 features a wider Single-Aisle
Cabin of 155.5 inches (3.95 m) outside diameter, compared to 148 inches (3.8 m) in the Boeing 737 and
131.6 inches (3.34 m) in the Boeing 717, and Larger Overhead Bins, along with Fly-By-Wire Technology. In
addition, the aircraft has a Spacious Cargo hold equipped with large doors to assist in expedient loading and
unloading of goods.
The A320 features an ECAM (Electronic Centralized Aircraft Monitor) which gives the flight crew
Information about all the Systems of the Aircraft. With the exception of the very earliest A320s, most can be
upgraded to the latest Avionics Standards, keeping the Aircraft advanced even after Two Decades in service.
The flight deck is equipped with EFIS with side stick controllers. At the time of the aircraft'
s introduction, the
behavior of the Fly-By-Wire system (equipped with full flight envelope protection) was a new experience for
many pilots. Three suppliers provide Turbofan Engines for the A320 series: CFM International with
their CFM56, International Aero Engines, offering the V2500 and Pratt & Whitney whose PW6000 engines
are only available for the A318 variant.
The Airbus A320 family is the first to fully feature the Glass Cockpit and Digital Fly-By-Wire FCS in a Civil
Airliner. The only analogue instruments are the RMI (backup ADI on earlier models, replaced by
digital ISIS on later models) and brake pressure indicator. The first fully Digital Fly-By-Wire FCS in a Civil
Airliner, see A320 flight controls. Fully Glass Cockpit rather than the hybrid versions found in aircraft such
as the A310, Boeing 757and Boeing 767.The first Narrow Body Airliner with a significant amount of the
Structure made from Composites. The ECAM (Electronic Centralized Aircraft Monitoring) Concept, which is
included in all Airbus aircraft produced after the A320. This system constantly displays information
concerning the aircraft'
s engines, as well as other key systems such as flight controls, pneumatics and
hydraulics, to the pilots on the two LCD displays in the centre of the flight deck. ECAM also provides
Automatic Warning of System Failures and displays an Electronic Checklist to assist in handling the failure.
Newer Airbus used LCD (Liquid Crystal Display) units in the flight deck of its A318, A319, A320, and A321
flight decks instead of the original CRT (Cathode Ray Tube) displays. These include the main displays and
the backup artificial horizon, which was an analogue display prior to this. LCDs weigh less and produce less
heat than CRT displays; this change saves around 50 kilograms on the plane’s total weight. Early A320 planes
used the Intel 80186 and Motorola 68010, in 1988 Intel 80286 family CPUs. The Flight Management
Computer contained six CPUs, running in three logical pairs, with 2.5MB of memory. Digital Head-Up
displays are available. The A320 family is improved continuously, in the A320 Enhanced program and
the NSR, for "New Short-Range aircraft" as a far future replacement.
Table-1: A320-200 Present Specifications

A319-100 /
A318-100 A320-200 A321-200
A319LR /A319CJ
Cockpit
Two
Crew
132 (1-class, max) 156 (1-class, max) 180 (1-class, max) 220 (1-class, max)
Seating
117 (1-class, typ) 134 (1-class, typ) 164 (1-class, typ) 199 (1-class, typ)
Capacity
107 (2-class, typ) 124 (2-class, typ) 150 (2-class, typ) 185 (2-class, typl)
Length 31.44 m (103 ft 2 in) 33.84 m (111 ft 0 in) 37.57 m (123 ft 3 in) 44.51 m (146 ft 0 in)
Wing Span 34.10 m (111 ft 11 in)
Wing Area 122.6 m2 (1,320 sq ft)
Wing
25 degrees
Sweepback
12.56 metres
Tail Height 11.76 m (38 ft 7 in)
(41 ft 2 in)
Cabin
3.70 m (12 ft 2 in)
Width
Fuselage
3.95 m (13 ft 0 in)
Width
Cargo 27.62 m3 (975 cu ft) 37.41 m3 (1,321 cu ft) 51.73 m3 (1,827 cu ft)
21.21 m3 (749 cu ft)
Capacity 4× LD3 7× LD3 10× LD3
Empty 40,800 kg
39,500 kg (87,000 lb) 42,600 kg (94,000 lb) 48,500 kg (107,000 lb)
Weight, (90,000 lb)
typical
Maximum
Take-Off 68,000 kg 75,500 kg
78,000 kg (170,000 lb) 93,500 kg (206,000 lb)
Weight (150,000 lb) (166,000 lb)
(MTOW)
Cruising
Mach 0.78 ( 828kmph / 511mph at 11,000m / 36,000ft )
Speed
Maximum
Mach 0.82 ( 871kmph / 537mph at 11,000m / 36,000ft )
Speed
3,600 nautical miles
Maximum (6,700 km; 4,100 mi)
3,000 nautical
Range, 3,100 nautical miles LR: 5,600 nmi (10,400 km; 3,200 nautical miles
miles (5,600 km;
Fully (5,700 km; 3,600 mi) 6,400 mi) (5,900 km; 3,700 mi)
3,500 mi)
Loaded CJ: 6,500 nmi (12,000 km;
7,500 mi)
Take-Off
Run at
MTOW (at 1,355 m (4,446 ft) 1,950 m (6,400 ft) 2,090 m (6,860 ft) 2,180 m (7,150 ft)
Sea
Level, ISA)
24,050 litres
(5,290 imp gal;
6,350 US gal)
Maximum 24,210 L
24,210 L (5,330 imp gal; 6,400 US gal) standard standard
Fuel (5,330 imp gal;
30,190 L (6,640 imp gal; 7,980 US gal) optional 30,030 L
Capacity 6,400 US gal)
(6,610 imp gal;
7,930 US gal)
optional
Service
12,000 m (39,000 ft)
Ceiling
Pratt & Whitney
Engines PW6000 series
IAE V2500 series/CFM International CFM56-5 series
(×2) CFM International
CFM56-5 series
133–147
96–106 kilonewtons 98–120 kilonewtons (22,000– 111–120 KiloNewtons kilonewtons
Thrust (×2)
(22,000–24,000 lbf) 27,000 lbf) (25,000–27,000 lbf) (30,000–
33,000 lbf)
A320 Enhanced, A320 Enhanced (or A320E) is the working title for a series of improvements of the A320
series. The Improvements incorporate Engine Improvements, an Aerodynamic Tidy-Up, partly by adding
Large Curved Winglets, Weight Savings and a New Cabin.
Re-Engined A320, Airbus proposed a re-engining of the A320 to achieve the same 15% improvement in fuel
burn over the existing CFM56 and V2500 power plants as proposed by the Bombardier CSeries. Possible
engines include the CFM International LEAP-X and the Pratt & Whitney PW1000G.
New Winglets, Airbus A320 first class Enhanced Cabin Virgin America, In 2006, Airbus tested three styles
of Winglet, intended to counteract the wing’s Induced Drag and Wingtip Vortices more effectively than the
previous Wingtip Fence. The first design type to be tested was developed by Airbus and was based on work
done by the AWIATOR program. The second type of winglet used a more blended design and was created by
Winglet Technology LLC, a company based in Wichita, Kansas as well as the third type.
Two aircraft were used in the Flight Test Evaluation campaign, the prototype A320 F-WWBA which had
been retained by Airbus for testing and new F-WWDL which later delivered to JetBlue Airways and
registered as N636JB, which was fitted with both types of winglets. Despite the anticipated Efficiency gains
and development work, Airbus announced that the new Winglets will not be offered to Customers, claiming
that the weight of the modifications required would negate any Aerodynamic benefits.
On 17 December 2008, Airbus announced it was to begin flight testing a new Blended Winglet design
developed by Aviation Partners as part of an A320 modernization program. The aircraft used for the test
program is MSN001 (F-WWBA) the original A320 prototype airframe, powered by the CFM56 engine. On
15 November 2009, Airbus announced that it would be adding the Winglets, called '
Sharklets'
, to A320
aircraft commencing in 2012 with Air New Zealand. The Winglets reduce fuel burn by 3.5 percent and offer a
Payload increase of 500 kg or increase the aircraft'
s Range by 100 nm at the original Payload. This
corresponds to an annual CO2 reduction of around 700 tonnes per Aircraft.
New Enhanced Cabin, The Cabin was fitted to more than 600 Aircrafts (March 2009) since 2007. Airbus
claims it is offering better luggage Stowage and a quieter Cabin packaged with a more modern look and feel.
Additional improved Cabin Efficiency by a New Galley Concept, reduced weight, Improved Ergonomics and
Food Hygiene and Recycling requirements. LED ambience lighting is optionally available. Anytime LEDs
are used for the Passenger Service Unit (PSU) and passengers can get information with Touchscreen
Displays. Older A320 series aircraft can be updated.
Replacement Aircraft, Airbus is studying a future replacement for the A320 series, tentatively dubbed NSR,
for "New Short-Range aircraft". Airbus is possibly considering partnering with Embraer for a Replacement
Aircraft for the A320 series. In July 2007 it was reported that it may be built in "8-9 years" or "2017 or later".
The expected follow-on aircraft to replace the A320 is named A30X. Airbus North America President Barry
Eccleston states that the earliest the aircraft will be available is 2017. In January 2010, John Leahy, Airbus'
s
Chief Operating Officer Customers, stated that any all new single aisle craft is unlikely to be constructed
before 2024/2025.
The A320 family pioneered the use of digital Fly-By-Wire Flight Control Systems in a Commercial Aircraft.
Although there was a continuously improvement process since introduction, currently the A320
Enhanced program includes greater improvements. With over 4,000 built and an additional l 2,400 on order as
of November 2009, the Airbus A320 family is Airbus’s best-selling aircraft to date. It is also the currently
best-selling jet airliner family.
1.2.2) Deliveries
By the end of February 2010 a total of 6,539 aircraft of the A320 family has been ordered and 4,181
delivered. The following Chart shows the number of aircraft, by type, delivered to customers in a particular
year. The bottom row is the total yearly production of all A320 family aircraft.
Table-2 : A320 Family Deliveries
Type A318 A319 A320 A321 Total
1990 58 58
1991 119 119
1992 111 111
1993 71 71
1994 48 16 64
1995 34 22 56
1996 18 38 16 72
1997 47 58 22 127
1998 53 80 35 168
1999 88 101 33 222
2000 112 101 28 241
2001 89 119 49 257
2002 85 116 35 236
2003 8 72 119 33 232
2004 10 87 101 35 233
2005 9 142 121 17 289
2006 8 137 164 30 339
2007 17 105 194 51 367
2008 13 98 209 66 387
2009 6 88 221 87 402
2010 1 45 212 42 300
2010 Data is Incomplete; Source2
1.2.3) Required modifications for New-Commercial Aircraft;
Among these one to be selected, & Scope of Technical/Architectural/Landing at many Airports, Terminal
Size suitability, etc improvements to be recommended for making the proposed New-Aircraft best suites for
Indian Market (For Total Population, Airports, Landing, Passengers, Effecting Environment, Airliners,
Government, and Employment).
Take-Off & Landing: - Instead of Rolling-Wheels Landing Gear integrated to the Aircraft Fuselage,
which weights nearly 4% of MTOW3. Incase of A320-200, 4% of 78000kg is 3100kg. At least 2000kg weight
can be reduced. And also instead of TurboFan Engines with extra Fan, high strength Compressors & Turbine
rotating parts, can be replaced with Turbojet Engines (Less Weight), more fuel saving, reduced CO2
emission, etc.
a) ElectroMagnetic Propulsion for Take-Off and Braking for Landing
In similar way as in High-Speed Mag-Lev (Magnetic Levitation) trains, with created ElectroMagetic field
Aircraft will be levitated in the air, Magnetic repulsion & GasTurbine Engine propulsion forces can be
used for obtaining Take-Off speed 275 kmph in 32 seconds for rolling distance, 2.440km incase of A320-
200 Aircraft4. But presently incase of trains, picking-up 300kmph in 2.25 minutes time duration5.
Modifications to be done for this system suitable to A320-200 aircraft take-off speed.
b) Detachable and Attachable Wheeled-Carrier for Take-Off & Landing
Wheeled-Carrier with TurboShaft Engines requires less rolling distance will be carrying the Aircraft with
TurboJet engine and picks-up the Take-Off speed of 300kmph in 35seconds, after that Wheeled-Carrier &
Aircraft will be separated. At the time of Landing both speeds will be matched and attached together,
Wheeled-Carrier will be slowly braking.
c) Landing on Constructed Hydraulic Reservoirs OR in Sea for Sea-Shore Cities
Like in above cases, here Hydraulic reservoirs will be used for Take-Off & Landing purposes.
Winglets: - Long Streamline Wire body at the trailing edge of the winglets to further reduce the Vortices.
Fuselage:- Along the Fuselage longitudinal Fins, around circumference at specific pitch for guiding airflow
in streamlines to improve it further aerodynamically effective by attracting air close to fuselage by avoiding
air separation.
Engines: - Engines with more Power to Weight Ratio; Instead of more Power rated & Heavy Weight
Turbofan Engines, Less Weight & Power rated TurboJet Engines can be used. Reduces Weight of Aircraft,
improves Aircraft Performance.
1.3) Demand & Supply for proposed New-Aircraft
1.3.1) Indian Economy and Aviation Industry Growth Study;
Table-3: Indian Economic Survey 2009-10 Key Indicators
Data Categories & Components Units 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
1. GDP & Related Indicators

Rs. 5574449 6164178
GDP (Current Market Prices) 3239224 3706473 4283979 4947857
Crore QE AE
Growth Rate % na 14.4 15.6 15.5 12.7 10.6

Rs. 4154973 4453064
GDP(factor cost 2004-05 prices) 2967599 3249130 3564627 3893457
Crore QE AE
Growth Rate % na 9.5 9.7 9.2 6.7 7.2

% of
Savings Rate 32.2 33.1 34.4 36.4 32.5 na
GDP
% of
Capital Formation Rate 32.7 34.3 35.5 37.7 34.9 na
GDP
Per Cap.Net National Income
Rs 24095 27183 31080 35430 40141 43749
(factor cost at current prices)
2. Production
Mn
Food Grains 198.4 208.6 217.3 230.8 233.9 a na
tonnes
Index of Industrial Production
% 8.4 8.2 11.6 8.5 2.6 na
Growth
Electricity Generation Growth % 5.1 5.2 7.3 6.3 2.7 na
3. Prices
%
Inflation (WPI) (52-week average) 6.5 4.4 5.4 4.7 8.4 1.6 b
Change
%
Inflation CPI (IW) (average) 3.8 4.4 6.7 6.2 9.1 11.4 b
Change
4. External Sector
%
Export Growth (US$) 30.8 23.4 22.6 29 13.6 (20.3) c
Change
%
Import Growth (US$) 42.7 33.8 24.5 35.5 20.7 (23.6) c
Change
Current Account Balance (CAB)
% -0.4 -1.2 -1 -1.3 -2.4 (3.3) d
GDP
US$
Foreign Exchange Reserves 141.5 151.6 199.2 309.7 252 283.5 e
Bn.
Average Exchange Rate Rs/US$ 44.93 44.27 45.25 40.26 45.99 47.94 f
5. Money & Credit
%
Broad Money (Ma) (annual) 12 16.9 21.7 21.4 18.6 16.5 g
Change
Scheduled Com. Bank Credit % 27 30.8 28.1 22.3 17.5 13.9 g

(growth) Change
6. Fiscal Indicators (Centre)

% of
Gross Fiscal Deficit i 3.9 4 3.3 2.6 5.9 h 6.5 j
GDP
% of
Revenue Deficit i 2.4 2.5 1.9 1.1 4.4 h 4.6 j
GDP
% of
Primary Deficit i 0 0.4 -0.2 -0.9 2.5 h 2.8 j
GDP
7. Population Million 1089 1106 1122 1138 1154 1170

AE - Advance Estimates of GDP figures for 2009-10;
QE - Quick Estimates
na - not yet available/released for 2009-2010
a - for 2008-09 the figures are the 4th advance estimates as on July 21, 2009.
b - Average Apr. - Dec.2009.
c - Apr. - Dec.2009
d - CAB to GDP ratio for 2009-10 is for the period Apr.-Sept. 2009
e - as of December 31. 2009.
f - Average exchange rate for 2009-10 (Apr.-Sept.2009)
g - As on January, 2010.
h - Fiscal indicators for 2008-09 are based on the provisional actual for 2008-09.
i - Fiscal indicators are as per revised GDP at current market prices based on National Accounts 2001-05 series.
j - Fiscal deficit, revenue deficit and primary deficit were envisaged at 6.8, 4.8 and 3.0 per cent of GDP
6
respectively at the time of presentation of the 2009-2010 .
1.3.2) India’s Economic Outlook by IMF and Global Insight
• India’s GDP of over US $1.21 trillion makes it one of the 12 largest economies in the world, 4th largest in
terms of purchasing power parity.
• The 20-year India economic Gross Domestic Product (GDP) forecast at 6.5 percent per year is the second
highest in the world for large-GDP nations and is over double the world GDP forecast of 3.1 percent.
• One of the fastest growing economies in the world - growing at over 7% per year for the last 10 years
• India’s economy growth of 6.7% for 2008/09 exceeded expectation and the World Bank has projected its
economic expansion for 2010 at 8%7.
1.3.3) International Air Transport Association (IATA) Review
For the first time since 2000, in 2007 the Global Airline Industry turned profitable. Asian carriers have seen
minor drops in profitability but robust traffic growth to and within Asia to partially insulate carriers from the
impact of the crunch. The decrease in fuel prices helped operating profits. For the three months ending in
December 2009, Airlines spent nearly 32%-33% of operating revenues on fuel. Last year, the companies had
spent about 38%- 48% of operating revenues on fuel.
India’s airlines, more than the rest of the world, suffered severe losses with massive deliveries of aircraft and
falling yields following the economic slowdown. Hope seems to be on hand as airlines start to narrow losses
and come close to returning to 2007 figures. According to a survey carried out by the International Air
Transport Association (IATA), Airline Business confidence was up, though it did not necessarily mean a
return to profit8.
• Global Airline Industry loss of $9.0 billion forecasted for 2009, slightly lower than the $10.4 billion
loss in 2008, first quarter 2009 loss of more than $3.0 billion.
• Passenger demand is expected to contract 8%, cargo demand to fall 17% and revenue to decrease
15% compared to 2008.
• 2009 fuel cost is expected to fall back to $106 billion from a high of $165 billion in 2008. However,
this reduction will be more than offset by $80 billion (15%) revenue decline.
• The trend away from premium seats to more affordable economy seats, and budget carriers, is global.
• While the full service carriers (FSCs) are scaling back and consolidating, their LCC rivals are
expanding and gaining market share9.
1.3.4) Economic Growth during 2008-09
a) Overall GDP Growth, The overall growth of GDP at factor cost at constant prices in 2008-09, as per
revised estimates released by the Central Statistical Organisation (CSO) (May 29, 2009) was 6.7 per cent.
This is lower than the 7 per cent projection in the Mid-Year Review 2008-09 (Economic Division,
Department of Economic Affairs (DEA), December 2008) and the advance estimate of 7.1 per cent,
released subsequently by CSO in February 2009. The growth of GDP at factor cost (at constant 1999-
2000 prices) at 6.7 per cent in 2008-09 nevertheless represents a deceleration from high growth of 9.0 per
cent and 9.7 per cent in 2007-08 and 2006-07 respectively;
The deceleration of growth in 2008-09 was spread across all sectors except mining & quarrying and
community, social and personal services. The manufacturing, electricity and construction sectors
decelerated to 2.4, 3.4 and 7.2 per cent respectively during 2008-09 from 8.2, 5.3 and 10.1 per cent
respectively in 2007-08. The slowdown in manufacturing could be attributed to the combined impact of a
fall in exports followed by a decline in domestic demand, especially in the second half of the year. The
rise in the cost of inputs during the beginning of the year and the cost of credit (through most of the year)
reduced manufacturing margins and profitability. The growth in production sectors, especially
manufacturing, was adversely affected by the impact of the global recession and associated factors. The
electricity sector continued to be hampered by capacity constraints and the availability of coal,
particularly during the first half of the year. As long as the coal sector remains a public sector monopoly
(the only remaining nationalized sector), it could remain a bottleneck for accelerated development of the
power sector.
The construction industry consists of different segments like housing, infrastructure, industrial
construction, commercial real estate, etc. While the industry went through a boom phase with growth as
high as 16.2 per cent in 2005-06 and continued to grow thereafter (albeit with moderation), the increase in
the costs of construction due to a rise in the prices of inputs like steel and cement and interest costs had
started impacting the industry. In certain segments of the industry, there was an excessive price build up
in the form of a speculative bubble, related to limited supply of urban land for those segments. The rise in
interest rates and the slowdown in housing loans also moderated demand. The double squeeze on the
costs, as well as the demand side, and the fall in the liquidity in mid-September 2008 precipitated a sharp
downturn in this sector. There followed a period (in the second half of the year) when demand had
already moderated, but costs remained high.
b) SUMMING-UP, The fallout of the global financial crisis on the Indian economy has been palpable in the
industry and trade sectors and has also permeated the services sector. While some segments, especially
the export-oriented industries, suffered during the second half of the year, the Indian economy has
withstood the adverse global economic situation and posted a growth rate of 6.7 per cent in 2008-09.
The economy continues to face wide-ranging challenges— from improving its social and physical
infrastructure to enhancing the productivity in agriculture and industry and addressing environmental
concerns. Meeting these challenges will be critical for improving India’s social and human development
indicators and the quality of life.
At the same time, the Indian economy has shock absorbers that will facilitate early revival of growth.
First, the banks are financially sound and well capitalized. The foreign exchange reserves position
remains comfortable and the external debt position has been within the comfort zone. The rate of inflation
has since abated and provides a degree of comfort on the cost side for the production sectors. Agriculture
and rural demand continue to be strong and agriculture production prospects are normal.
While there are indications that the economy may have weathered the worst of the downturn, in part, due
to the resilience of the economy and also various monetary and fiscal measures initiated during 2008-09,
nevertheless, the situation warrants close watch on various economic indicators including the impact of
the economic stimulus and developments taking place in the international economy. Taking policy
measures that squarely address the short and long-term challenges would help achieve tangible progress
and ensure that the outlook for the economy remains firmly positive10.
1.3.5) Centre for Asia Pacific Aviation (CAPA) Review
The Centre for Asia Pacific Aviation (CAPA), a Sydney-based consulting firm, also estimates a 15% increase
in passenger volume in 2009. IATA had earlier predicted that Airline net losses will halve from $11 billion in
2009 to $5.6 billion in 2010. In the four years to March 2010, CAPA estimates Indian Carriers will have
accumulated operational losses of in excess of INR.260 billion, of which the three large Airline groups (Air
India, Jet Airways and Kingfisher Airlines) account for almost INR230 billion. It says losses for the current
financial year will be around INR 65 - 70 billion. Although it might take longer to get over total accumulated
losses, India’s private domestic airlines are expected to make a combined profit of $250million by the end of
the fiscal year ending in March 2011, says a recent report by CAPA.
The profitable and privately owned airline, budget carrier Indigo, is expected to have a higher profit (around
$17.6 million in 2009) than in previous years. The carrier is said to have the best on-time performance record-
82% for the year. Even national carrier Air India, which releases limited financials and operating metrics,
posted a net loss of $318 million, a 9.7% improvement from the October-December quarter in 2008. The rise
in traffic to 43.8 million passengers carried last year on Indian carriers was up from 42.8 million in 2007,
contributed to the improving financial state of the three listed Indian airlines. They benefited from an increase
in passenger traffic in the December quarter as well. Year-On-Year, Kingfisher flew 2.74 million passengers,
an increase of 4%, while Jet Airways carried 3.41 million passengers, a growth of 33%. SpiceJet’s passenger
traffic also reached 1.5 million during this year’s fiscal third quarter from nearly 1 million in the year-ago
period. Air India posted a 24.8% year-over-year increase in passenger numbers to 3.17 million and a 14.4-
point surge in load factor to 69.7%11.
1.3.6) ACEXC (Aviation Center of Excellence India) Review
India is starting to see a more favourable environment as the Economy appears to be recovering earlier than
expected, with GDP growth of 7.9% in the last quarter, ahead of expectations. The World Bank projects an
annual growth of 8% per annum from 2011 to 2014, says Kapil Kaul CEO, Indian subcontinent & Middle
East; CAPA. Indian Economy maintained its momentum of good growth. With positive indicators such as a
stable 8 to 9 % annual growth, rising foreign exchange reserves, a booming capital market and a rapid rise in
FDI in the last year, India has emerged as the second fastest growing major economy in the world.
2007 was a memorable year for the Indian Aviation in many ways; The Industry continued to witness strong
growths despite rising Aviation Turbine Fuel (ATF) prices, Infrastructure bottlenecks, shortage of Pilots and
Qualified Manpower. Indian carriers continued placing sizeable aircraft orders and expanded their domestic
and international networks. The first non-stop flights to the US by Air India and the first international flights
to US and Canada by Jet Airways were a welcome connectivity to both the national traveler as well as the
large Indian diaspora in North America. Carriers remained optimistic to turn profitable, with increased
operational efficiencies, cost management and, for some, synergies that would be derived through
consolidation. For the first 7 months of the fiscal year 2007-08, April - October 2007, the overall passenger
traffic stood at 65.57 million, with Domestic at 49.35 million and International at 16.22 million respectively.
The total cargo traffic recorded 989 thousand tones, with Domestic at 325 thousand tonnes and International
at 664 thousand tonnes in the same period. The total aircraft movement numbers were 736,703 with Domestic
at 599,346 and International at 137,357 during the same period.
New Aviation Policy paved the way for improved Infrastructure, better Connectivity, an increased number of
Aviation Carriers and new Regional Airlines and Freighters taking off into the Indian skies. The airlines
much-awaited SOPs from the government on the ATF prices; Airport development policy directives for
Green field and Merchants Airport Projects. Travelers’ looking forward for cheap airfares, on-time arrivals
and departures, new in-flight entertainment, retailing and internet connectivity in the skies12.How far these
will be fulfilled remains to be seen, with crude oil prices not showing signs of any let-up, and airlines more
focused on returning value to their shareholders. Along with the other players in the Industry, Realty and
Information Technology companies will benefit greatly by participating in the development of the Indian
Aviation Industry.
1.3.7) Indian Aviation Industry

The Indian Aviation Industry is one of the fastest growing aviation industries in the world with Private
Airlines accounting for more than 75 per cent of the sector. With a CAGR at 18 per cent and 454 airports, of
which 16 are designated as international airports, Union Civil Aviation Minister Praful Patel has stated that
aviation sector will witness revival by 2011. With an increase in Traffic movement during December 2009
and increase in revenues by almost US$ 21.4 million, the Airports Authority of India seems to accrue better
margins this fiscal, as per the latest estimates released by the Ministry of Civil Aviation. This is being
primarily attributed to increase in the share of revenue from Delhi International Airport Limited (DIAL) and
Mumbai International Airport Limited (MIAL) along with increase in airport charges.
The Hyderabad International Airport has been ranked amongst the World'
s Top Five in the annual Airport
Service Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing.
The Hyderabad International Airport is managed by a Public-Private joint venture consisting of the GMR
Group, Malaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and Airports
Authority of India (AAI).Airports Authority of India (AAI) is also spending US$ 427.5 million on developing
the airports in Kolkata and another US$ 384.7 million on Chennai airport. The AAI is also looking at
upgrading and modernising Non-Metro Airports. Both Chennai and Calcutta airports will be completed by
next year. In addition to actual Airport Infrastructure, the government is also looking at building infrastructure
in the air in terms of Air Traffic Control (ATC) and CNS systems. Safety and surveillance is another huge
area being worked upon. The Civil Aviation ministry has prepared a blueprint to convert Delhi airport into an
international hub for passenger airlines with effect from August 2010 to help the airport, which is being
expanded by a GMR-led consortium, utilise large amounts of additional capacity that will be ready by July
2010.
Under the plan, NACIL will set up its hub in Delhi (Delhi currently serves as the hub for domestic operations
and Mumbai for international operations).The Government is also planning to make Delhi a regional hub to
connect South-East Asia to Europe by capitalising on the capital’s strategic mid-point location, according to
ministry sources. State governments too are taking interest in setting up special economic zones (SEZs) for
the Aerospace Industry.
Investment Policy, with the draft FDI compendium being finalised in end of March 2010, changes are
expected in the aviation policy too.
• Foreign equity participation in Airport Infrastructure is permitted upto 74 per cent with automatic
approvals and upto 100 per cent in special permission.
• FDI upto 40 per cent is permitted in Domestic Air-Transport Services.
• Foreign investors are allowed to have representation (upto 33 per cent in Domestic Airline companies).
The Road Ahead, Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$
80 billion in new Aircrafts and US$ 30 billion in development of Airport Infrastructure, according to the
Investment Commission of India.
• Indian aerospace companies are growing too. Hindustan Aeronautics Limited (HAL) was ranked 40th in
Flight International'
s list of the top 100 Aerospace Companies last year.
• Aircraft manufacturing major, Boeing is in the process of setting up the US$ 100 million proposed
Maintenance Repair Overhaul (MRO) facilities in Delhi. Air India is also in the process of launching
Cargo Hub in Nagpur while Deccan Aviation has already started one from the city.
• North India'
s first private sector Greenfield international airport, Aerotropolis, will soon come up near the
industrial hub of Ludhiana in Punjab. Aerotropolis will be built with an allocation of almost US$ 3.77
billion covering an area of 3000 acres by Messrs Bengal Aerotropolis which has partnered Changi
International Airport of Singapore.
• Punjab will also become the first state in the country to set up a Maintenance, Repair and Overhaul
(MRO) hub at Ropar, 45 km from Chandigarh, for the Civil Aviation sector at a cost of US$ 6.4 million.
• The country'
s first SEZ dedicated to the Aerospace, Hattaragi, 37 km from Belgaum, in Karnataka was
also inaugurated. The SEZ is spread over 300 acres of land and will come up with an investment of US$
32.06 million in November 2009.
An Aerospace and Precision Engineering Special Economic Zone with a proposed investment of US$
641.2 million has also come up at Adibatla, Hyderabad, Andhra Pradesh. Exchange rate used: 1 USD
= 46.79 INR (as on December 2009)13.
1.3.8) Aircrafts & Parts Market
India’s new draft Civil Aviation Policy puts greater emphasis on private sector participation to ensure
promotes investment in this sector. It also aims to woo foreign investors. The proposed new civil aviation
policy will open up vast Indian market for aircraft, Avionics equipment and other related businesses for
foreign investors. The Global giants of Aviation Industries, Gulfstream, EuroCopters, Airbus, Bombardier or
Boeing, all are flocking towards the Indian market. They were all likely to be seen at the Indian Aviation
2010 show. Their motive of attending the show was to display their products, sell their products, do corporate
marketing and search for the prospective clients along with the curiosity to know about the prospering Indian
economy. Aviation market in India has shown humongous growth in the last 10 years and in the next 20 years
it is expected to fulfill the demand of around 1000 aircrafts as most of the aviation giants are projecting India
for their requirements. The market has been able to pump in $100 million from American manufacturers to set
up an MRO facility in Nagpur. Airbus is also expected to peg $138 billion in Indian market for the
manufacture of 1032 aircrafts. Same is expected from other aircraft giants14.
a) GE Aviation to spend $300 mn in India, Commercial and military jet engine maker GE Aviation, a
unit of General Electric Co., plans to spend some $300 million (around Rs1, 368 Crore) in India ahead of
deadline to fulfill its obligations for engine purchases by flag carrier Air India, said country director Nalin
Jain. The so-called offset obligation is part of an order placed by Air India for 111 Airbus and Boeing
aircraft in 2005 and 2006, valued at $11 billion at list prices. GE Aviation is the key engine supplier for
these aircraft together with CFM International, it’s 50:50 joint venture with France’s Snecma SA. GE
Aviation undertook to source aircraft engine components from Indian suppliers and invests in India part
of the value of the deal to the tune of $300 million in offsets. The timeline is till 2020, Jain said in an
interview on the sidelines of the India Aviation 2010 air show in Hyderabad earlier this month. Jain said
GE had tied up with a dozen manufacturing firms, including Godrej Group and state-owned military
plane maker Hindustan Aeronautics Ltd, to source Aeronautical components for engines to meet the
offset obligations. These include parts for CFM engines15.
b) Indigenous Development & Manufacturing, The National Aerospace Laboratories (NAL),
Bangalore, has prepared Rs.12 billion preliminary proposal to build technologies for a 50-70-seater
'
regional'aircraft designed to suit India'
s specific needs. According to NAL projections, the market for a
50-70 seater Turboprop Aircraft, RTA-70 in the country would increase over the next two and a half
decades, with an overall requirement building up for nearly 200 aircraft of all various sizes over the next
5 years. To date, NAL has developed the two-seater trainer aircraft, HANSA, presently being used by a
dozen flying clubs in the country, as well as the SARAS, a multi-role light transport aircraft development
started in 1990, which has already completed 100 flight tests and is expected to go into commercial
production by 2008, but still to date is in Proto Type-2 is in testing. For very light aircraft (2-19 seats)
India is in the process of establishing a domestic industry with both Indigenous production and
manufacture through collaborations with mainly European manufacturers. For aircraft engines, players
include GE Aircraft Engines, Pratt and Whitney of USA and Rolls Royce from the UK, Snecma from
France, & EuroJet from Germany.
1.3.9) Partnerships & Mergers
While many international companies expressed interest and are evaluating options to forge alliances with
Indian Aviation companies, many inked varied deals this year. Among them were:
• ATR and Deccan to set up new Flight Training Centre at Bangalore.
• L&T and EADS for exploring joint opportunities in aerospace and defense Indian formed an alliance with
CFM international, GMR - Hyderabad International Airport, Airbus, and Jupiter Aviation for an MRO
centre.
• Jet Airways signed a MoU with Lufthansa Technik AG for its Aircraft Maintenance, and a Code-share
agreement with Brussels Airlines and American Airlines.
• Hawker Beechcraft signed a sales and services agreement with InterGlobe Aviation, owners of IndiGo.
• Kingfisher signed a frequent flyer partnership programme with Continental Airlines.
• Air India was invited to join the Star Alliance group of Airlines, which will give Air India an access to a
network of 17,000 daily flights to 897 destinations in 160 countries.
• HAL tied up with CAE to set up helicopter simulator training centre in Bangalore, going to have Joint
venture with Rolls-Royce, UK, for Civil Aircraft Engines.
• Boeing along with Air India is to set up a MRO in Bangalore.
• Punj Llyod and New York-based private investment firm Global Technology Investment firm picked up a
stake in Air Works Engineering, an organization involved in aircraft maintenance, to expand their
aviation infrastructure and services started at aerospace manufacturing site of TAAL, Hosur.
The year marked three major mergers in Indian Aviation history: Air India, the national carrier, and Indian
(formerly Indian Airlines), the state owned domestic carrier, creating a unified, public-owned entity under the
name National Aviation Company India Ltd (NACIL).The merger will create an airline that will have over
125 new-generation aircraft by 2010. Its fleet size would also see the merged entity break into the top 30
airlines in the world, and amongst the top 10 in Asia. It will also become India'
s first airline with a fleet of
over 100 aircrafts.
Private Carriers: Jet Airways and Air Sahara
Jet Airways bought over its smaller rival, Air Sahara, for Indian Rupees 14.50 billion ($363m), at a discount
of 34% from the earlier agreed price of Indian Rupees 22.00 billion, after clearance by a three-member
arbitration panel, ending months of animosity and legal dispute. Air Sahara was renamed to JetLite.
Air-Deccan, India'
s first Low Cost Carrier (LCC), with Kingfisher Airlines, the high profile Airline
promoted by the liquor baron, Mr.Vijay Mallya; Kingfisher Airlines (a company of parent United Breweries
Holdings Ltd) acquired 26% of Air Deccan parent, Deccan Aviation Ltd, and subsequently made an offer to
acquire an additional 20% of Deccan priced at the same price of Indian Rupees 155 ($3.82) per share. The
combined fleet of 71 aircraft consisting of A320 family and ATR aircraft will operate 537 flights to 69 Indian
cities.
1.3.10) Airports
There was heightened interest in airports during the year, and a collective effort by the government together
with private participation to develop and improve the infrastructure that is so sorely needed by the industry
for its future growth. The airport modernization programme took wing in Delhi and Mumbai, and the two
Greenfield Airports of Bangalore and Hyderabad were completed in March 2008, though with some degree of
trepidation at Bangalore. The anticipated long commute over the inadequate approach road to the new
Bangalore International Airport (BIAL) appears to have been omitted from the development plan, raising
protests from potential users.
Modernisation and expansion of Chennai and Kolkata are projected to begin in the first half of 2008;
besides, as many as 35 non-metro airports are planned to be modernised at an estimated cost of about Indian
Rupees 50 billion. These are expected to be complete by March 2010. The target is to upgrade all 35 airports
by 2012, according to Praful Patel Minister of Civil Aviation, answering a query in Rajya Sabha. New
airports are also being constructed and developed at Vishakhapatnam in Andhra Pradesh; Shimoga, Bijapur,
Gulbarga, Hassan and Karwar in Karnataka, Kannur in Kerala; Chennai in Tamil Nadu; Itanagar and Tawang
in Arunachal Pradesh; Chiethu in Nagaland; Kokrajhar in Assam; Greater Noida and Agra in Uttar Pradesh;
Ajmer (Kishangarh) and Kota in Rajasthan; Halwara in Punjab; Surankote and Kishtwar in Jammu &
Kashmir; Durgapur in West Bengal; Sindhudurg, Shirdi and Chakan in Maharashtra, also given an
‘inprinciple’ approval for setting up new Greenfield Airports at Navi Mumbai, Sindhudurg in Maharashtra,
Mopa in Goa, Bijapur, Simoga, Hassan and Gulbarga in Karnataka, Pakyong in Sikkim, Durgapur in West
Bengal and Datia/Gwalior in Madhya Pradesh. International Airports at Bagdogra and Mohali, Secondary
airports at Sriprembadur near Chennai, Noida near Delhi, Merchant Airports or Small, Private Airports
developed and owned by private players, are all the subject of interest and discussion. Several players, both
Indian and International, have evinced interest in participating in the airport development program, also
Mobile Airports coming soon to India.
Airports Authority of India (AAI) plans to incur expenditure of Rs.12434 Crores for modernisation of
Airports and Air Traffic Services across the country during XIth Five Year Plan period (2007-2012).Two
Greenfield Airports each at Bangalore and Hyderabad with an investment of Rs. 2400 Crores and Rs. 2920
Crores have been made operational in 2008 under Public Private Partnership. Besides, development of IGI
Airport, New Delhi and CSI Airport, Mumbai with estimated cost of Rs. 8975 Crores and Rs. 9802 Crores
respectively has been undertaken under PPP.
1.3.11) Government's Role
To benchmark international standards and practices, the government brought out an amendment to the
Aircraft Act 1934.With the objective of creating a level playing field and fostering healthy competition
amongst all airports, and regulation of tariffs of aeronautical services, the government has decided to set up an
Airport Economic Regulatory Authority (AERA), The government also increased the entry barriers for
the industry by raising the minimum equity base needed to start an airline from the current requirement of
INR.100 million to INR.200 million for smaller aircraft, and INR 500 million from INR 300 million for larger
aircraft with takeoff weight of more than 40,000 kgs.
In order to expand air connectivity to Tier-II and Tier-III cities and to promote regional air connectivity, a
separate category of permit, Scheduled Air Transport (Regional) Services, has been introduced by the
government. Three airlines, one from the South, Star Aviation, and two from the North, Jagson and MDLR
Airlines, have been granted the No Objection Certificate to operate scheduled transport services. To meet the
growing demand of pilots, the government has tied up with leading Canadian aviation firm, Canadian
Aviation Electronics (CAE) Inc, to set up a flight-training institute at Gondia in Maharashtra, and to manage
operations at Indira Gandhi Rashtriya Udaan Academy (IGRUA) in Rae Bareilly.
Air Services Agreements; The government also did their bit to sustain the growth of Indian Aviation.
Taking forward the policy of liberalization, the government signed Air Services agreements and enhanced
traffic rights with the USA, Singapore, Cambodia, Jordan, UAE (Abu Dhabi, Dubai, Sharjah), Kuwait,
Uzbekistan, Malaysia, Chile and Hong Kong, leading to more flights and better connectivity between these
countries and India. Also the government opened up the Gulf sector to private carriers by granting Jet
Airways the traffic rights to the Gulf and Middle East routes.
International Airlines; Recognising the potential of the Indian market, various international airlines
including Air Arabia, Qatar Airways, Continental Airlines, Oman Air, Emirates, Egypt Air, Silk AIR, Tiger
Airways, China Eastern, Srilankan Airlines, Malaysian Airlines and Finnair, boosted and expanded their India
operations. British Airways listed India as their second largest market next to US.
Air-Cargo; Air Cargo experienced renewed interest demonstrated by government and private companies. In
August, India Post launched its freight operations from Kolkata to Guwahati, Agartala and Imphal. Air India
launched dedicated cargo services to Europe, and signed a wet lease pact with GATI for domestic operations.
Several players, SAFEX, AVICORE and Quick Jet are said to be planning a foray into the domestic airfreight
market which is currently dominated by BlueDart Aviation. First Flight, which launched its freighter
operations in July 2006 and retreated from operations this year, has announced its plan to re-enter the market
with Boeing 737-300 freighters. Deccan Chronicle promoted Flyington Freighters is expected to launch
International Operations in the coming year. The Government also succeeded in reducing cargo dwell times at
airports from five to three days. Logistics Services are also on the growth path in line with Global
developments. Courier Companies like DHL, BlueDart, Elbee, and SkyPak are expanding their infrastructure
along with expansion of their markets both within and outside India.
Business Jets; According to a new analysis from Frost & Sullivan on World Business Jets Markets, both the
demand for business jets and the increase in corporate profits rise in tandem. Our India Inc illustrates this
insight very well. The Aircraft Acquisition Committee of the Ministry of Civil Aviation has provided its '
No
Objection Certificate'to the Mukesh Ambani-promoted Reliance Commercial Dealers Private Ltd., for the
import of a Boeing Business Jet (BBJ), one Global XRS and two Falcons. GVK Aviation Private Ltd. has
been permitted to import three aircraft including one Global 5000, one Learjet 45 and one Bombardier
Challenger 604.
Other companies buying such planes for business and private use include Sun TV Network Ltd., Taj Air,
Emaar MGF Land Pvt. Ltd, Bharat Forge Ltd., Raymonds Ltd., VRL Logistics Ltd., Hindustan Constructions
Ltd., DS Constructions Ltd., and Punj Lloyd Ltd. The Air Charter market is also growing, with demand for
renting out of aircraft growing in the recent years. Invision Projects Pvt. Ltd. has signed a contract for 18
Phenom 100 and two Phenom 300 executive jets at the Dubai Air Show 2007.
Fuel Prices; Fuel prices continued to zoom to staggering heights. As per a report compiled by the
Federation of Indian Airlines (FIA), “Improving the financial health of India'
s Airline Industry through
reduction in the cost of ATF”, the estimated annual fuel bill for the industry, based on the September 2006
rates (INR.43, 989 per kilolitre) is around $1.7 billion. The cost of ATF in India remains the highest in the
Asia–Pacific region. According to a report released by ASSOCHAM, Domestic aircraft operators pay over
eight times more taxes on Aviation Turbine Fuel (ATF). The fuel used by Jetliners is loaded with various tax
levies, as a result of which Domestic Airlines pay a total of 66% tax on ATF, compared with the 8% paid by
International Airlines that fuel ATF in India. The largest component of operating expenses for airlines, ATF
accounts for almost 35 to 40% of the total Operating Costs.
Online Travel Booking; The growing online travel booking is driven by easy access and convenience. The
added benefit is that it is cheaper to book air tickets online. According to a recent media report, the online
travel segment is expected to grow at a rate of 30% and reach INR.70 billion by the end of 2007-08 Online
portals like makemytrip.com, yatra.com, ixigo.com, cleartrip.com and ezeego1.com, among others, are all
enjoying strong, positive growths coupled with stiff competition, and enabling wider choice and quality of
service to the increasing internet audience.
1.3.12) Forecasts for Aviation Market
ACMG; A forecast by the Air Cargo Management Group (ACMG) projects that the Global Freighter fleet
will be more than double in size from 1,801 units now to 3,883 units in 2026.
Airbus Inc.; With orders for over 300 aircraft from Airlines like Kingfisher Airlines, Air Deccan, IndiGo,
GoAir, Indian Airlines and a Freighter company, European aircraft major Airbus has projected that India will
need 1,000 new planes over the next 20 years16.
Boeing Inc.; Though it has orders worth $275 billion for supplying 3,700 aircraft to various airlines across
the world, taking at least five years for the company to meet the demand. Boeing is eyeing up $20 bn in
defence orders from India. Bullish about India’s growing aviation market, Boeing sees a $20 billion
opportunity in the defence sector alone over the next decade. The company is also eyeing $105 billion worth
of orders for over 1,000 commercial airplanes from various Indian carriers over the next 20 years. Indian has
defence orders pending worth $15-$20 billion for F/A-18 Super Hornet combat jets, P8I maritime
surveillance aircraft and Apache combat helicopters. Air India has purchased airplanes worth $25 billion
during last three years. Boeing already has collaborations with Hindustan Aeronautics Limited, Bharat
Electronics Limited, the Tatas and other companies for manufacturing aerospace components. Boeing
recently entered into a $500 million joint venture with the Tatas to manufacture aerospace components on the
back of a $1 billion tie-up with Hindustan Aeronautics Limited in the same sphere.
Heavy Maintenance MRO Facility Delhi; During 2008, Air India announced its intention to set up a
heavy maintenance facility in Delhi. In a joint venture with European Aeronautic Defence and Space
Company (EADS) they are to set up an Aircraft’s Maintenance, Repair and Overhaul (MRO) centre in Delhi,
the state-owned carrier’s Airbus aircraft. The Centre, which was planned to start operations from early 2009
at the India Gandhi International Airport, will become a member of the Airbus MRO Network. The
Government’s National Aviation Company of India Ltd (NACIL) owns Air India, while Airbus is an arm of
EADS. The two firms will initially be 50-50 equity partners in the joint venture, but possibly, a third Airbus
network partner, a local EADS affiliate company, will join later. The total Project Cost has been estimated at
$40 million spread over five years.
As per the agreement, the joint venture will initially undertake Airframe Maintenance and Repair of NACIL’s
Airbus aircrafts. Later, the facility will service other types of aircraft like the ATR, Aircrafts of other Airlines,
and Aircrafts outside the Airbus family, as well as entering the Component Maintenance Business. NACIL is
currently in the process of inducting 43 new A320 aircrafts from Airbus into its fleet. The induction program,
which started last year, will continue till early 2010. Currently, it operates 74 Airbus aircraft. EADS officials
said the MRO facility would also cater to the markets in South Asia region and neighbouring countries. By
2013, over 100 single-aisle aircraft and around 10 wide body aircraft would be maintained and the centre
would employ 250 to 300 Indian technical personnel.
Aircraft MRO at Nagpur; Air India said the airline was setting up four MROs in the next couple of years.
Another MRO, TATA Group joint venture with Boeing is under progress at Nagpur. Air India, which placed
orders for 111 aircraft in 2005, will also set up MROs for engines and components. The aircraft will be
inducted in a phased manner by 2012. Aircraft maker Boeing signed a land lease agreement with Maharashtra
Airport Development Co. (MADC) for setting up a $100-million maintenance, repair and overhaul (MRO)
facility. The state-run MADC will provide land for the project. Boeing chose Nagpur for setting up the
facility as there is ample availability of manpower and land. The city also provides favourable climatic
conditions for the facility. All this makes India an exception. While Boeing announced that it would slash
10,000 jobs worldwide, demand in India, makes that location the exception to the rule. Up to now, Indian
Carriers got their aircraft serviced at MRO facilities in the US, Europe and West Asia. India is expected to
have over 500 aircraft by 2010.
Air Works MRO at Hosur; Air Works with Taneja Aerospace Aviation Ltd, at Hosur started services
such as line and base maintenance, aircraft painting, component and structural repairs as well as cabin and
avionics upgrades. Air Works also became India'
s first DGCA approved independent Airline MRO in
November 2008 for its commercial operations in Hosur (near Bengaluru). Air Works is among the country'
s
leaders in the Air Transport Services sector. With an extensive and skilled work force of over 450 employees
across 10 airports in the country, Air Works manages India'
s largest aviation technical staff and provides
comprehensive services for fixed and rotary wing aircrafts. India’s first aircraft overhauling facility is already
started at Hosur.
Mumbai-based Aviation Service provider, Air Works has begun commercial operations of its MRO
(Maintenance, Repair and Overhauling) facility at Hosur near Bangalore, eventually employing over 300
Aircraft Engineers. No other MRO facility has come up yet in India so far. An opportunity exists to hire good
aircraft engineers now, while there is so much chaos in the aviation sector elsewhere, owing to Global
Economic slowdown. M/s.Air Works is also in the process of bidding for setting up an Original Equipment
Manufacturer (OEM) facility at the Delhi and Mumbai airports, and has tied up with Zurich-based Jet
Aviation, an MRO service provider for Business Jets and other Small aircraft. At present, Air Works plans to
invest upward of $50 million for setting up the infrastructure to support the commercial MRO initiative.
Initially, Air Works will provide services for ATR 42/72 mid-sized aircraft; currently, India has 80 such
aircraft. In the first year, the company handled 12 aircraft, mostly ATR types, and expects to earn $50 million
in the next two years. M/s.Air Works provides a broad range of aviation related services covering three main
verticals:
• General Aviation Maintenance, Repair & Overhaul (GA MRO); Full-line maintenance and modifications
for fixed and rotary wing business and general aviation aircraft.
• Airline Maintenance, Repair & Overhaul (A MRO); India'
s first independent Airline MRO with initial
capabilities for line, base and AOG support for ATR 42/72, B737 series and A320 series.
• Aircraft Sales, Management & Charters; Aircraft Sales (Gulfstream & Pre-owned), Aircraft Operational
Management Services, Aircraft Charters, Flight Support Services17.
Sukhoi Inc., Moscow-based Russian Aircraft, an arm of United Aircraft Corporation, expects to sell 100 of
its Ilyushin series of aircraft, IL114, in India over the next 3 years. The company, through its marketing
agency Hindavia Aeronautical Services Limited, is talking to scheduled Regional Carriers across the country
to sell the TurboProp aircraft which can seat 44-64 people. The Low-Flying Aircraft (around 7000 metres)
can fly at its best efficiency up to 1000 km. "These aircraft are best suited to Short-hauls and most suitable to
Regional Airlines. Mr.Pavel Melnikov spoke at Indian Aviation 2008 Expo, according to him, the market for
such small aircraft in India is 500 airplanes over the next 3 years. The older versions of IL series, which will
compete with ATR twin TurboProp Aircraft, have so far been deployed in Russian Airliner Viborg and
Uzbekish Airlines18.
1.4) Air-Traffic Projections, Demand and Supply
1.4.1) Air-Traffic Study
Domestic traffic is bouncing back to previous levels though yields continue to take a beating. The country’s
major airlines – SpiceJet, Kingfisher Airlines and Jet Airways released their quarterly earnings for three
months ending December 2009. Jet Airways led in market share at 26.9% for the main line carrier and JetLite
combined. It posted a profit of $23 million, up 149% from the same period last year. Kingfisher Airlines
captured a market share of 20.8% and recorded a loss of $91 million widened by a marginal loss of 2%,
compared with the third quarter of fiscal 2008. SpiceJet garnered a market share of 12.9% and registered a net
profit of $24 million, up from a net loss of $3.8 million in the same quarter year-ago period.
Passenger numbers through India’s Airports have trebled in just six years from 40 million in 2001/02 to
almost 120 million in 2007/08.While International Traffic has more than doubled; the driver for this
phenomenal growth has been the deregulated Domestic market which has seen demand more than triple to 87
million passengers. Delhi and Mumbai are by far the country’s busiest airports with a similar mix of
international and domestic traffic. Last year Mumbai passed 23 million passengers, enabling it to rank in the
Top 15 of Asia/Pacific airports for the first time19.
According to a forecast by National Council of Applied Economic Research, about 200 million households
will be able to afford air travel by 2010. By 2005 Indian airports are estimated to handle 60 million
international passengers; 1.2 million tonnes of international cargo; and 300,000 tonnes of domestic cargo.
Over next 7-10 years from 1999, Growth in domestic passenger traffic is estimated to grow by 12.5 percent
per annum. Growth in international passenger traffic during this period is expected to be around 7 percent per
annum. Domestic cargo traffic is estimated to grow at 4.5 percent per annum. Growth in international cargo
traffic is estimated at 12 percent. Air-Cargo traffic is rapidly increasing in India. A number of major
international air carriers including Lufthansa, KLM, and British Airways have increased their cargo capacities
from India20.
Table-4 : Air-Traffic Projections

International
Domestic Passengers Increase
Year Passengers Increase (in %)
(in million) (in %)
(in million)
1996 -97 (Actual) 12.00 10.5 10.8 7
1997-98 13.26 10.25 11.6 7
1998-99 14.65 10.5 12.4 7
1999-2000 16.2 10.5 13.3 7
2000-01 17.57 10.5 14.1 7
2001-02 19.06 8.5 14.9 6
2002-03 20.68 8.5 15.8 6
2003-04 22.44 8.5 16.8 6
2004-05 24.35 8.5 17.8 6
2005-06 25.05 7 18.8 5.5
2006-07 27.87 7 19.8 5.5
2007-08 29.82 7 20.9 5.5
2008-09 31.91 7 22.1 5.5
2009-10 34.15 7 23.3 5.5
2010-11 36.54 7 24.6 5.5
2011-12 39.09 7 25.9 5.5
2012-13 41.44 6 27.2 4.9

2013-14 43.93 6 28.5 4.9
2014-15 46.56 6 29.9 4.9
2015-16 49.35 6 31.4 4.9
2016-17 52.32 6 32.9 4.9
21
Source
Airlines fly to Smaller Cities for Growth in Passenger Traffic; India’s Airlines are charting new routes to
connect neglected, smaller cities that have some tourist or business potential, as the economy brightens and
passenger numbers rise. Airlines saw a spurt in passenger traffic, growing by 5.45% to 39.96 million between
January and November, according to the regulator Directorate General of Civil Aviation (DGCA).The
number had contracted as much as 4.84% to 42.85 million in 2008.Kingfisher Airlines Ltd and regional
airline Jagson Airlines Ltd are among those planning to harness the potential of smaller Airports. “The bigger
airlines have a focus on Category-I (Metro) routes by default, but category-II routes like smaller capital cities
make a lot of sense,” said M/s.Jagson CEO, Mr.Koustav M. Dhar. It will connect Srinagar to Leh with a daily
flight starting. So far, only Air India has a weekly flight between the two cities.
“Those (Connecting State Capitals and Smaller Cities) are the sectors to be in and they are consistent all year
around at Rs.4000 - 4500 (Average Fare),” said Dhar, comparing the average fare on the Delhi-Mumbai route,
which can drop below Rs.3000 due to competition. “(However), if you put 180 seats on category II, they are
not viable.” Jagson will also connect New Delhi to Shimla and Dharamshala, and operate flights to Ranchi
and Patna in summer on alternate days. Kingfisher Airlines has also started flights between Chennai and the
industrial town, Salem in Tamil Nadu, and Jharkhand’s capital Ranchi and Chhattisgarh’s capital Raipur
recently. It has also received permission to start services to Uttarakhand’s Pantnagar from New Delhi. Also on
the cards are flights to the hosiery and garments hub of Ludhiana in Punjab from New Delhi. A Kingfisher
official said the airline is waiting for regulatory clearances before it can take off to Pantnagar and Ludhiana.
“Since these are new airfields, DGCA is still to clear them,” he said. National carrier Air India already flies
between several small towns in the country22.
Indian Domestic Growth Momentum continues in Oct-2009; The Indian market has rebounded in the
second half of this year, as the domestic Economy remained strong. Despite some improvement in airline
yields, domestic Indian air traffic continued its very powerful recovery in Oct-2009, with India’s Ministry of
Civil Aviation (MoCA) reporting 27% growth in domestic passengers to 4.0 million in Oct-2009.
India Domestic Passengers and Growth: Oct-2008 to Oct-2009
The market, which contracted for 12 consecutive months to Jun-2009, is showing signs of recovery off the
lower base levels in the 2008 period. Traffic growth bottomed out in Dec-2008, when passenger numbers
slumped 22%.
Indian Carriers Domestic Market Share: Oct-2009
Among the LCCs, IndiGo had the highest domestic market share, at 13.6%, followed by SpiceJet (12.4%) and
GoAir (5.4%), while a combined Jet Airways/JetLite, whose passenger levels fell last month due to its pilot
strike, had a combined 27.7% Market share, followed by Kingfisher Airlines followed at 20.7%. Air India
also gained market share in the month, to 18.6 %.
Indian Carriers’ Oct-2009 Load Factor
Air India had the lowest domestic load factor in the month, at 72.8%, 13.4 points behind the highest,
Paramount, which had an 86.2% load factor in the month. Jet Airways and other airlines in the Indian market
have started to raise fares over the last few weeks to improve the yield position, with JetAirways stating these
increases “have not shown any negative impact on traffic”, Executive Director, Mr.Saroj Datta, stated, “the
current Capacity-Demand situation is improving, Capacity growth has been under check, while demand
continues to grow at a healthy pace. This coupled with a stable business scenario and steady GDP growth is
an ideal environment for yields to go up from current levels"23.
1.4.2) Aircraft Demand & Supply Study

Aviation market in India has shown humongous growth in the last 10 years and in the next 20 years it is
expected to fulfill the demand of around 1000 aircrafts as most of the aviation giants are projecting India for
their requirements. The market has been able to pump in $100 million from American manufacturers to set up
an MRO facility in Nagpur. Airbus is also expected to peg $138 billion in Indian market for the manufacture
of 1032 aircrafts. Same is expected from other aircraft giants24.
Table-5 : Boeing Current Market Outlook 2008-2027 for India
Year 2007-2026 2008-2027 2008

Type (Units) (Units) Dollars* (Billions)
Regional Jets 55 59 $2.10
Single Aisle 672 728 $56.70
Twin Aisle 173 203 $43.10
747 and Larger 11 11 $3.10
TOTAL 911 1,001 $105
* In 2008 dollars catalogue prices25
In the Boeing 2009 Current Market Outlook for India, the projected country’s need is for 1000 new
commercial airplanes (passenger and freighter), worth more than $100 billion at current list prices, over the
next two decades (2009 through 2028).The demand for aircraft is mainly for Short-haul and Single-Aisle
aircrafts, A320-200 & B737-800 types. Of this, Short-haul will account for 65 percent of the additional
demand for passenger aircraft. Boeing and Airbus are two dominating aircraft to the Indian fleet of civil
aircraft. The list of aircraft suppliers to India also includes British Aerospace, ATR-42, Dauphin, Dornier,
Fokkar, Partenavia, deHavilland, Beechcraft, Bell and Cessna.
Table-6 : Boeing Current Market Outlook 2009-2028
Airplanes in Service 2008 and 2028 Demand by Size 2009 to 2028
Size 2008 2028 Size New Airplanes Value ($B)
Large 870 1,070 Large 740 220
Twin Aisle 3,510 8,080 Twin Aisle 6,700 1,510
Single Aisle 11,360 24,230 Single Aisle 19,460 1,420
Regional Jets 3,060 2,220 Regional Jets 2,100 70

Total 18,800 35,600 Total 29,000 3,220
Table-7 : Key Indicators & Demand by Region

Key Indicators 2008 to 2028 Demand by Region 2009 to 2028
Growth Measures Region New AirPlanes Value ($B)
World Economy (GDP) 3.10% Asia Pacific 8,960 1,130
Airplane Fleet 3.20% North America 7,690 680
Number of Passengers 4.10% Europe 7,330 800
Airline Traffic, Revenue Passenger
4.90% Middle East 1,710 300
Kilometer(RPK)
Cargo Traffic, Revenue Traffic Kilometers Latin America 1,640 150

5.40%
(RTK) R&CA* 1,050 90
Current Market Outlook 2009-2028 Africa
*Russia and Central Asia Total 29,000 3,220
Table-8: Single Aisle 90 to 175 Seats

Fleet in Market value (2008 $B)
Region Fleet in 2028 New deliveries
2008 2009-2028
Asia Pacific 2,080 5,820 4,430 300
China 870 2,740 2,210 150
Oceania (Australasia) 270 560 400 20
Northeast Asia 220 480 380 30

Southeast Asia 450 1,080 810 60
Southwest Asia 270 960 630 40
North America 3,030 5,800 4,830 330
Europe 2,550 4,740 4,530 290
Middle East 320 670 620 40
Latin America 850 1,840 1,230 80
Africa 360 660 330 18
Russia & Central Asia 560 810 450 30
World 9,750 20,350 16,430 1,080
The Boeing 737-800 is in the 90 to 175 seats Single-Aisle sector. Data is for the 90 to 175 seats single aisle
sector NOT the airplane type.
Table-9 : Single Aisle 90 to 175 Seats

Share of Fleet in Share of Fleet in Share of New Market Value
Region
2008 (%) 2028 (%) Deliveries (%) Share (%)
Asia Pacific 21.3 28.6 27 28
China 8.9 13.5 14 14
Oceania
2.8 2.8 2.4 1.9
(Australasia)
Northeast Asia 2.3 2.4 2.3 2.8
Southeast Asia 4.6 5.3 4.9 5.6
Southwest Asia 2.8 4.7 3.8 3.7
North America 31.1 28.5 29 31
Europe 26.2 23.3 28 27
Middle East 3.3 3.3 3.8 3.7
Latin America 8.7 9 7.5 7.4
Africa 3.7 3.2 2 1.7
Russia, Central Asia 5.7 4 2.7 2.8
World 100 100 100 100
Table-10: Region-Wise Comparison

Russia
South
Asia North South North Middle Latin &
Growth China East Europe
Pacific East Asia West Asia America East America Central
Asia
Asia
GDP
Growth 4.4 7.2 1.3 4.6 6.1 2.4 1.9 3.8 3.8 3.7
Rate
Traffic
Growth 6.5 7.8 4.3 6.6 7.5 3.2 4.1 6.6 6.5 5.1
Rate
Cargo
Growth 6.2 6.6 6.4 5.5 7.1 4.6 4.8 6.3 6.3 5.3
Rate
Fleet
Growth 5.4 6 3.7 5.3 6.7 1.8 3 4.1 4.1 1.3
Rate
Ratio
RPK/
1.5 1.1 3.3 1.4 1.2 1.3 2.2 1.7 1.7 1.4
GDP
Growth
Market size
New
Deliveries 8,960 3,770 1,180 2,160 1,180 7,690 7,330 1,710 1,640 1,050
(units)
Market
Value 1,130 400 190 330 120 680 800 300 150 90
($B)
Average
Airplane
130 110 160 150 100 90 110 180 90 90
Value
($M)
Forecast new airplane deliveries
Large 330 70 60 150 10 40 200 130 10 20
Twin
2,590 780 560 860 190 1,130 1,480 850 290 170
Aisle
Single
5,600 2,670 480 1,130 900 5,630 5,310 680 1,260 610
Aisle
Regional
440 250 80 20 80 890 340 50 80 250
Jets
Total
8,960 3,770 1,180 2,160 1,180 7,690 7,330 1,710 1,640 1,050
Deliveries
Forecast new airplane market value (Catalog Prices, $ 2008)
Large 100 20 19 50 3 12 60 40 1 4
Twin
600 170 130 200 40 250 340 200 60 30
Aisle
Single
420 190 40 90 70 390 390 50 80 50
Aisle
Regional
14 8 3 1 3 30 11 2 2 8
Jets
Total
Market
1,130 400 190 330 120 680 800 300 150 90
Value
($B)
Fleet in 2008
Large 400 80 130 130 20 140 190 70 10 40
Twin
1,010 250 300 290 100 1,010 660 360 130 200
Aisle
Single
2,330 1,010 250 490 310 3,780 2,970 370 880 620
Aisle
Regional
170 90 20 20 20 1,850 510 40 50 350
Jets
Fleet Size 3,910 1,430 700 930 450 6,780 4,330 840 1,070 1,210
Fleet in 2028
Large 500 120 110 220 10 120 230 150 10 40
Twin
2,980 940 660 910 250 1,720 1,580 900 340 250
Aisle
Single
7,230 3,300 610 1,450 1,290 6,980 5,620 750 1,900 1,030
Aisle
Regional
460 250 80 20 100 880 340 60 140 250
Jets
Fleet Size 11,170 4,610 1,460 2,600 1,650 9,700 7,770 1,860 2,390 1,570
Table-11 : Growth Measures & Market Size

Growth Measures (%) Market Size Units
GDP Growth rate 6.1 New Deliveries 1,180
Traffic Growth rate 7.5 Market Value 120 ($B 2008)
Cargo Growth rate 7.1 Average Airplane Value 100 ($M 2008)
Fleet Growth rate 6.7
Ratio RPK/GDP Growth 1.2
Table-12: Deliveries & Market Share by Size
New airplane deliveries 2009 to New Market Share by Size Fleet in Fleet in
2028 Deliveries (%) 2008 2028
Large 10 1 20 10
Twin Aisle 190 16 100 250
Single Aisle 900 76 310 1,290
Regional Jets 80 7 20 100
Total 1,180 100 450 1,650
Strong Growth in Short-haul Market; The combination of a high level of economic development and
market liberalization is driving remarkable growth in air travel demand in Southwest Asia. Air traffic within
Southwest Asia is expected to grow at an astonishing 8.7 percent annually over the next 20 years -a higher
rate of internal growth than in any other region, including China. A crucial need for intercity travel within the
region will drive robust demand for modern, efficient short- and medium-haul airplanes. More than 900
deliveries of a new single-aisle airplane are projected over 20 years. The traffic table below is not a complete
list of all traffic flows related to "Southwest Asia" as some are too small to display.
Table-13 : RPKs and Annual Growth

Traffic
2008
flow 2000 2001 2002 2003 2004 2005 2006 2007 2008 2028
to 2028
(Billion)
Europe -
26 28 28 30 36 44 54 54 54 175 6.1%
SW. Asia
Middle
East - SW. 29 30 31 34 36 38 44 49 58 188 6.0%
Asia
SE. Asia -
11 12 13 13 15 17 19 20 22 101 7.9%
SW. Asia
Within
16 17 17 18 21 25 30 39 44 236
SW. Asia
Travel and Tourism Contribute to the Economy; Economic development spurs demand for air travel.
Travel and tourism, in turn, directly contribute to economic output within the region. A recent study by the
World Travel & Tourism Council projects that by 2019 about 6 percent of India’s total GDP will come from
travel and tourism. This equates to nearly US $100 billion in economic value (in year 2000 dollars). Travel
and tourism will account for more than 7 percent of total employment in India by 2019, equating to about 40
million jobs. The numerous economic benefits of air travel are manifest, both in terms of the life-enriching
experience of travelers and the financial benefits for those employed by the travel industry.
Young, Expanding middle-class drives Growth; India’s vibrant middle class is expected to grow, not only
in numbers but in spending power over the coming years. McKinsey Global Institute estimates that India’s
middle class will be 600 million strong by 2025, with a four-fold increase in spending power. With half of
India’s population currently under the age of 25, there will be an abundant supply of new customers for
airlines to tap over the next 20 years. Strong price competition among the region’s airlines will serve to
stimulate new demand, drawing millions of passengers away from the extensive rail network to much faster
air services.
Infrastructure investment critical; Wide-scale investment in airport and airspace infrastructure is

imperative to Southwest Asia’s projected air travel market growth. Fortunately both governmental and private
entities have recognized the need for modernization and have begun a massive infrastructure overhaul. Key
projects include the recently completed airports at Hyderabad and Bangalore, with critical future airports in
Mumbai and 35 other “Greenfield” sites in the early planning stages.
Boeing Market Outlook-2009 India Growth
Source26
Airbus raises Forecast for India Aircraft demand, European Aircraft maker Airbus S.A.S. raised its
forecast for the number of planes it expects to sell in India between 2009 and 2028 to 1,032, valued at $132
billion.
It had earlier said India would need 992 planes in 2008-2027 at a cost of $105 billion. Both estimates include
passenger and freight aircraft. US-based rival Boeing Co., however, increased its forecast for the same period
by only one plane, from 999 for 2008-2027. Boeing said it would revise its forecast in July and indicated that
the expected improvement in earnings at domestic carriers may lead to a rise in orders. The total number of
aircraft orders, projected by Airbus and Boeing, however, falls far short of the rather optimistic
projection of 3,000 aircraft, within a time frame of 10 years by Civil Aviation minister Praful Patel on
Tuesday, as opposed to the aircraft manufacturers’ timeframe of 20 years. “The Indian Economy is
showing signs of rebounding and this will translate to new aircraft orders by 2012. Long term, the potential
for growth in India’s aviation sector remains exceptional,” said Miranda Mills, Airbus’s India vice-president
(sales) at Indian Aviation 2010, the second International Conference on Civil Aviation being held in
Hyderabad.
The Airbus demand growth numbers are based on its projection that India will be the fastest growing market
for air travel for the next decade, with domestic traffic increasing by an average 12.2% annually. Traffic
growth will also be among the world’s highest, averaging 7.3% over the next 20 years compared with
the currently global average of 4.7%. A Report from global consulting firm Ernst and Young said that
domestic and international passengers from India are expected to increase over the long term at annual
rates of 20% and 16%, respectively. This, the report added, would result in an “overall increase of around
19% per year”. Domestic airlines in India, the ninth largest aviation market globally, currently operate 336
aircraft, with another 293 that have been ordered and are expected to be delivered over the next three years.
Airbus’s Mill said the new estimate comprises 638 single aisle (medium size) planes from the A320 family,
287 twin aisles (large size) such as the A350 and A330, and 68 very large aircraft such as the A380, which is
also the world’s largest passenger aircraft. Additionally, 39 new aircraft such as the A330-200F are expected
in the cargo segment. She said the estimated number of new aircraft required by Indian carriers is the world’s
fifth largest. “By 2028, Indian passenger fleet will almost quadruple to 1,163 aircraft…. The freighter market
will grow nearly 20-fold by 2028, mushrooming to 210 aircraft comprising of 39 new freighters and 171
conversions from passenger aircraft,” she said. Unlike Airbus, which envisions larger planes entering the
fleet, Boeing’s India president Mr.Dinesh Keskar said the country would largely need midsize planes and that
there is no scope for bigger planes as airlines are increasingly opting for more point-to-point connections.
“The good thing is that domestic passengers’ traffic has recovered from 2008-09 slumps. India has witnessed
record traffic of 4.09 million passengers in January 2010,” Mr.Keskar said, adding that he hoped domestic
airlines would not again create excess capacity, as they did last year and which led to a $2 billion loss in last
financial year. Akbar Al-Baker, chief executive officer of Qatar Airways, also cautioned that carriers should
not get carried away by the recent recovery in civil aviation. “I think people should not get carried away by
the illusion that there is an upturn in traffic,” he said, adding that the more important factor was yields. He
warned a second economic dip globally was likely in the second half of 2010 and that pressures on yields
would continue for the foreseeable future. “So airlines should pull their stockings and be ready for difficult
and bumpy 2010,” Al-Baker said27.
Airbus increasing A320 Family Production Rate, year 2010 total deliveries to match previous year’s record
level. Airbus will increase the monthly production rate for its single-aisle A320 Family from the current rate
of 34 to 36, starting December 2010. The production rate for the long-range A330/A340 Family will be
maintained at the current level of eight per month. Airbus’ decision to raise its single-aisle production rate is
driven by the continuing demand for its eco-efficient aircraft and a record backlog in excess of some 2,300
A320 Family aircraft. “Leading economic indices and business confidence indicators are showing an upward
trend again. We see this reflected in the continuing solid demand for our eco-efficient products and our robust
backlog.
Thanks to our proactive order book management we have been able to keep production stable during the year
of the downturn, but now it is definitely time to think ahead,” said Tom Williams, Executive Vice President
(Programs). “Aviation is a long-term growth industry. With our prudent decision we will be ready when the
market recovers.”Airbus delivered a total of 498 aircraft in 2009, including 402 A320 Family aircraft, both
new company records for a single year. The company target for deliveries in 2010 is to remain at a similar
level to 2009.The A320 Family, which includes the A318, A319, A320 and A321, is recognised as the
benchmark single-aisle aircraft family. More than 6,500 Airbus A320 Family aircraft have been sold and
nearly 4200 delivered to more than 300 customers and operators worldwide, making it the world’s best selling
commercial jetliner ever28.
1.5) Estimating no. of Orders/Sales Expected

With reference to the Table-6, World wide total Single Aisle 150 Seater category Aircrafts in demand are
19,460 no.s of Value $B 1,420. With reference to the Table-7, Asia Pacific region, in which India is
accounted, demand for New Airplanes of all category is 8,960 no.s of value $B 1,130.
Airbus Demand Forecast; A320-200, Single-Aisle demand projections for 2007-2026, 2008-2027 years
duration are 672, 728 respectively for India. For 2009-2028 are 1,032 aircrafts, valued at $132 billion,
globally 16,977 aircrafts at the value of $1206 billions.
Boeing Demand Forecast; B737-800, Single-Aisle Aircraft category demand for 2009-2028 projected as
19,460 at the value of $1420 billion globally.
But, Civil Aviation minister Praful Patel’s optimistic projection of 3,000 aircrafts for India, within a time
frame of 10 years.
1.6) Commercial Viability of Project: -

Indian Commercial Aviation Suppliers Market to Grow Exponentially Spurred by Low Labor and
Manufacturing Costs, Says Frost & Sullivan. The commercial aviation suppliers market in India is set to grow
exponentially at a compound annual growth rate (CAGR) of 16.1 percent from 2007 to 2014. Low
manufacturing and labor costs are expected to boost outsourcing to India. Labor costs in India are relatively
lower when compared to the western countries. India also enjoys a geographical advantage over other
countries that enables it to cater to the demands of countries in South Asia as well as the Middle East. The
offset policy of the Government can help India attract significant investment in the sector. New analysis from
Frost & Sullivan (www.financialservices.frost.com), Indian Commercial Aviation Supplier Market Outlook
reveals that this market earned revenues of US$1,360.00 million in 2007 and is anticipated to reach
US$3,888.60 million in 2014.
The three segments covered in this research are component suppliers, design suppliers, and maintenance,
repair, and overhaul (MRO). Component suppliers are projected to be the fastest-growing segment. “The
recent opening of the market to private participation and India’s ability to attract foreign direct investment
(FDI) has been the main driver in market expansion,” says Frost & Sullivan Financial Analyst R.
Madhusudanan. “Indian participants can leverage on the advantages of lower labor costs and strategic
location to make India an export hub.” A major restraint for market participants is the competition from the
South East Asian and Middle Eastern countries. The inconsistent order flow and longer gestation period also
act as deterrents. The lack of technical know-how is another challenge faced by the participants. India should
build sufficient excess capacity to cater to the demands of the South East Asian and Middle Eastern countries.
Although the gestation period for the projects tends to be longer, the returns are usually high, in the band of
between 15.0 to 20.0 percent. “Local participants lack the technical expertise to execute complex tasks on
their own,” concludes Madhusudanan. “Therefore, joint ventures with foreign participants will enable local
firms to more effectively confront challenges, by ensuring the transfer of technology.”Indian Commercial
Aviation Supplier Market Outlook is part of the Financial Benchmarking in the Aerospace & Defense
Industry subscription, which also includes research services in the following markets: Global Financial
Outlook - 2009 and Global Commercial Aviation Electrical Power Systems and Infrastructure Market and
Infrastructure Market - Investment Analysis.
All research services included in subscriptions provide detailed market opportunities and industry trends that
have been evaluated following extensive interviews with market participants. Frost & Sullivan’s Business and
Financial Services group serves clients around the world in all aspects of financial analysis, market research
and monitoring, due diligence, idea generation, opportunity analysis, investment valuation, and other
proprietary research. Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth
and achieve best in class positions in growth, innovation and leadership. The company’s Growth Partnership
Service provides the CEO and the CEO’s Growth Team with disciplined research and best practice models to
drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan
leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the
investment community from more than 35 offices on six continents. To joins our Growth Partnership29.
1.6.1) Estimating New-Aircraft Project R&D Cost & Target Time
R&D Cost Estimation;
The Cost of Greatness, Airbus has spent an estimated $20 billion on the development of the A380. The
price for a single plane is listed at $300 million30. Industry experts point out that airlines rarely pay full list
price, especially if they order large numbers of planes, so it is difficult to determine exactly how many planes
Airbus needs to sell to recoup the development costs. It'
s important to remember that a new airplane design
will be modified and upgraded for decades. Airbus has said that it'
s looking toward 2020 in designing the
A380. The Boeing 747 has been flying since 1970.
A380 R&D Cost to Selling price ratio is 67 ($20000 million / $300 million)
Similar way for A320-200 type, 150 passengers New-Aircraft R&D cost can be estimated from the Ratio 80,
20% more assumed by considering lackness of Civil Aircraft Technology knowledge in India & its Selling
Price. A320-200 or B737-800 present Selling Price is around Rs.370 Crores ($82 million, $1 million= INR
4.47 Crores as of 05/10/201031).
Time period for New-Aircraft Development is assumed as 4-5 Years.
The New-Aircraft made in India can be fixed at the Selling Price, Rs.300 Crores or $67.10 million.
From the above Ratio & Selling Price, R&D Cost can be estimated as $6560 million = 80 x $82 million,
$6.56 billion, approximated to US$7 Billion, Development Cost.
Local Raw-Material Supply Sources Development; Present aerospace parts manufacturers in India
importing maximum Raw-Materials, so there is necessity to develop Raw-material supply sources
development.
Development Project through Public-Private-Partnership; Project development can be taken-up as

Public-Private-Partnership from Govt. Organisations NAL, ADA, HAL and Private Organisations such as
TATA, TAAL, L&T, Mahindra, Godrej, Infosys, HCL, Infotech, Reliance etc firms sharing different
assemblies’ development works for 3-4 years target period.
National Aerospace Laboratory (NAL) Developments; SARAS, 14 seater development cost Rs.139
Crores, Unit Aircraft price Rs.34 Crores. Time period? Started in 1991, PT1 completed in 2004, PT-2 started
in 2008, still in process, and PT2 crashed, not completed32. NAL’s 70 seater aircraft, RTA-70 development
cost estimated as Rs.5000 Cr for 6-7 years, and 70-110 seater aircraft planning with estimated development
cost of $40 billion for time period 6-7 years33.
With reference to my past productivity studies, the planning defects are the root-causes in PSUs/Central Govt.
Organisations, which resulting in productivity around 30% only. The above cost $40 billion for 70-110 seater
aircraft development is nearly 8 times higher. A320-200 type 150 seater aircraft can be developed with US$7
billion by utilizing maximum productivity of 90% with Public-Private-Partnership effectively.
1.6.2) Manufacturing Plant with Production Capacity
No. of Aircrafts required to be produced are 2.5 aircrafts per month, yearly 30 aircrafts
a) Capital Expenditure Estimation;
Airbus Total Investment in China Assembly

Tianjin assembly line is scheduled to deliver 11 A319 or A320 planes this year, with planned production of
four aircraft per month by the end of 2011, the company said. The assembly plant, opened in September, is a
joint-venture between Airbus and a Chinese government-backed consortium. Chinese state media last year
said total investment in the plant was between 8 billion and 12 billion Yuan (1.2 billion to 1.8 billion
dollars)34.
With reference to the above, Capital Expenditures for New-Aircraft Assembly Plant in India estimated
as $2 billion. Land Acquiring, Office, Machine, Assembly Shops, Assembly Hangar Building Costs and etc
for developing 30 New-Aircrafts per Annum.
b) Machinery, Heat-Treatment/Process & Assembly Facilities;
Machines; 5 axes 3 spindle heavy-duty Gantry type CNC profiler, 3 axes CNC milling machines, Vertical
machining Centre etc.
Turning, Milling, Grinding, Thread Rolling, Broaching, Honing etc.
Composites/Plastics; Hot Air Autoclave, Vacuum Forming and Deep drawing machine.
Sheet-Metal, Welding and Surface Treatment; Rubber press, Break press, Pipe bending machine, Routers,
and Horizontal Stretching machine. Gas, Argon and Spot Welding, Anodising, Chrome plating, copper
plating, Cad Plating Electro Chemical Milling, Control temperature paintings
Assembly and Paint Hangar; Large and spacious hangars for assembly, overhaul, repair and maintenance of
Transport aircraft. Exclusive Paint hangar with dust free and controlled environment
Servicing of Rotables; Mechanical items like propellers, landing gears, actuators, wheel, brake etc.
Instrument items like flight instruments, fuel quantity and fuel flow system, pressurizations system.
Electrical items such as Alternators, Invertors, Motors, Regulators, Control, and Protection units etc.
Avionics parts of Communication, Navigation, Intercom Systems, Weather Radar and Antenna.
Quality Control Facilities; 3D Co-Ordinate Measuring Machine, Computerised Cable Loom Tester,
Universal Testing Machine, Accelerated Weathering Tester, Hot and Cold Chamber, Particle Counter, Nikon
Inverted Microscope, Omnimet Image Analyser, Cold Light Rigid Endoscope, Flexible Boroscope, Chemical
Testing facilities, NDT Facilities.
Re-Design and Development; Role Modifications, Upgrades, and Repair Schemes
c) Working Capital Estimation;
Tianjin-Airbus'
s assembly plant in north China'
s Tianjin Municipality plans to roll out 48 A320 aircraft in
2012, nearly doubling its current production capacity, said senior executives of the joint venture Wednesday.
Airbus Tianjin to deliver 26 A320 family jets in 2010, Jean-Luc Charles told China News Service their
target for this year is delivering 26 A320 family aircraft and they plan to improve the production capacity to
four aircraft per month in 2012 from the current two per month35.
With reference to above, Production Capacity estimated to be yearly 30 no.s New-Aircrafts.

For yearly 30 no.s New-Aircrafts manufacturing, Working Capital estimated as follows,
Method
From the Present Selling Price (Imported Price, $82 million) of the A320 aircraft, taking the 40% of the
Selling Price (Imported Price) as Working Capital for one aircraft manufacturing, because for our Imported
parts Indigenisation activity we are taking local manufacturing price as 50% of the Imported price, if we
remove 10% profit margin of Indian Local Vendor, then the vendor Operating Cost may be 40% of the
Imported Part price, So Working Capital for 30 no.s New-Aircrafts production estimated as follows,
Total Working Capital = 0.40 x 30 x Rs.370 Crores ($82 million) = Rs.4440 Crores ($ 984 million),
approximated to Rs.4470 Crores ($1 billion).
d) Plant Location;
It can be selected from cities Nagpur, Hyderabad, and Bangalore by considering more established Aerospace
supplier availability, Skilled Manpower, Higher Technical education institutes, and Transport facilities
connected by Road/Rail/Air.
e) Aerospace Parts Suppliers for Local Outsourcing
For the successful players, the coordination and integration of Supply-Chain practices and processes
are becoming increasingly important, and requires lots of attention. This requires an organization-wide
expansive learning process followed by development of a whole new network of next level (Tier-2/3)
partners. It is a strategy that will involve major changes in aircraft production.
The Aerospace industry continues to be challenged by increasing competition and cost pressures as well as
rising energy costs, high raw material prices and a weak US Dollar. To combat these challenges, airframe
manufacturers, aerospace OEMs and Tier-1 suppliers are leveraging the advantages arising from the
globalization of the aerospace supply chain. They are adapting to these challenges by outsourcing more
elements of technology, design and component/sub-assembly manufacture. For the aerospace supply chain,
this is an opportunity as well as a threat. It is an opportunity for those suppliers who can innovate, adopt high
level technologies, implement best practices and invest in change; such suppliers will win larger amounts of
work from their customers.
Those suppliers who cannot do this, could find themselves removed from the airframe
manufacturer/OEMs’ supply chain. For the successful players, the coordination and integration
of supply chain practices and processes are becoming increasingly important, and requires lots of attention.
Traditionally the large aircraft manufacturer would define and specify exactly what their Tier 1 suppliers
should produce for them The airframe manufacturers would do the total aircraft design, and give their
suppliers detailed specifications and drawings for the manufacture of sub structures and sub systems. This is
changing. Airframe manufacturers and Tier 1 suppliers have become large scale integrators (“Super
integrators”) and coordinators of airplane production.
Typical Aerospace Supply Chain
Aircraft Demand
(Passenger & Cargo)
Demand Fulfillment
(Airlines, Logistics Industry, Leasing
Airframe Manufacturers
(Jumbo Jets, Twin Aisle, Single
Tier-1 Suppliers (AeroStructures, Avionics

Special Raw Systems, Engines, Aircraft Interiors,
Processing Material Landing Gears, Actuators, etc)
Shops Suppliers /
Tier-2 Suppliers (AeroStructures, Avionics
Systems, Engines, Aircraft Interiors, Landing
Jigs & Standard
Gears, Actuator Sub Systems/Assy’s)
Tooling Parts
Tier-3 Suppliers
Suppliers Suppliers
(Components & Parts)
Engineering
Design Services
Low Cost Region

Suppliers
New strategies adopted by the aerospace industry to achieve this include greater dependence on Tier-1s,
increased risk sharing by suppliers, adoption of low cost region suppliers, increased aero structures
outsourcing, and an increased transparency in their aircraft program plans and schedules. RFPs are shared
openly, and proposal making is more a joint process between customer and supplier. There is more focus on
systems integration, less internal production capability, a desire to work with a lesser number of Tier-I
primes, and significant reduction in direct dealings with Tier-2 and Tier-3 suppliers (except when developing
such suppliers in low cost regions like India).
Some examples of this happening have been studied by management consulting company AeroStrategy
(www.AeroStrategy.com) – they describe how Embraer had about 350 suppliers for their EMB 145 aircraft,
of which 4 were risk sharing, compared to 38 suppliers for the EMB 170/190, of which 16 were risk sharing.
Similarly, Rolls Royce had about 250 suppliers for their Trent 500 engine, which went down to 140 suppliers
for the Trent 900, 75 suppliers for the Trent 1000, and it is estimated that there would be only around 25 to 35
suppliers for the engine being developed for the next generation single aisle/narrow body (the Boeing 737 RS
or the Airbus NSR).
Global Competitiveness: Aerospace Machined parts & Assembly (QuEST analysis based on McKinsey Institute study)
Area in which value added by Indian Suppliers is in Design, Assembly, & Maching. But still Indian Suppliers
importing Aerospace grade Raw Materials. QuEST Global (the holding company of QuEST Global
Engineering and QuEST Global Manufacturing) has taken a further step by creating QuEST Global SEZ
(Special Economic Zone). In this precision engineering SEZ, best-in-class facilities and infrastructure for the
global aerospace industry will be provided. The SEZ is spread over 300 acres at Belgaum in Northern
Karnataka and will provide an ecosystem for OEMs, their suppliers, all ancillary and related end user
industries to set up precision manufacturing and engineering units.
The Strategic advantage of having players across the value chain in aerospace manufacturing in the SEZ,
would be the amount of time saved for logistics which is highly time consuming in the case
of aerospace systems and assemblies. Since each unit in the SEZ would be a specialist in their own segment,
this would be more of a win-win situation where everyone would gain. The theoretical business opportunity
for Indian aerospace supply chain players is huge. What companies need to do, is to enlarge the size of the
pie, by doing things to move up the aerospace value chain, thus gaining the confidence of aerospace OEMs
and Tier-1s, and converting the potential into reality36.
The investment in the project is commercially viable in India on the basis of the above feasibility study.
1.7) Financial Viability of the Project
1.7.1) Break Even Analysis without Discount;
Break Even Analysis without Discount
Units Required for Break-Even: 303

Dollar Sales Required for Break-Even: $19,112.36
Variable Costs Per Unit: $33.33
Total Variable Costs: $10,100.00
Total Fixed Costs: $9,000.00
Years to Break-Even: 10 Years 1 Month
Payback Period (N) = SC / (P*x - VC*x)
SC - Start-Up Costs; P - NewAircraft Selling Price; x – Production Capacity Yearly;
VC- Variable Cost Yearly for 30 Aircrafts Production Capacity.
= 9000 / (63*30 - 1000) = 10.11 (Approximately 11 years from 2017, i.e. breakeven year 2028)
Break-Even Sales (S) = P*x*N = 63*30*11 = US$ 20.79 Billion.

Table-14: Cash Flows without discount

Number of Total Fixed Costs Total Variable Costs Total Sales
Year
Airplanes (million) (million) Revenue(million)
R&D
0 $9,000 $0 $0
2012-16
1st Year
Mfg 30 $9,000 $1,010 $1,890
2017
2018 60 $9,000 $2,000 $3,780
2019 90 $9,000 $3,000 $5,670
2020 120 $9,000 $4,000 $7,560
2021 150 $9,000 $5,000 $9,450
2022 180 $9,000 $6,000 $11,340
2023 210 $9,000 $7,000 $13,230
2024 240 $9,000 $8,000 $15,120
2025 270 $9,000 $9,000 $17,010
2026 303 $9,000 $10,100 $19,089
2027 330 $9,000 $11,000 $20,790
2028 360 $9,000 $12,000 $22,680
2029 390 $9,000 $13,000 $24,570
1.7.2) Break Even Analysis with discount
Table-15 : Assumptions & Output

Key Assumptions as of 2010 Discount Rate Assumptions
Price per Plane (US$ mn) 63 Risk-free Rate 6.0% 10-year US Treasury yield
Number of Planes 30 Asset Beta 0.84
Operating Margin 23.50% Risk Premium 6.0%
w.r.t HAL 's 23.47% Discount Rate 11.0%
General Assumptions as of 2010 Output
Inflation Rate, July 2010 9.8% Results from the Model up to the year 2038
Tax Rate 34.0% NPV US$ 389 mn
Required Investment as of 2010 ($mn) After-tax IRR 11.10%
Research & Development $7,000 Pre-tax IRR 17.80%
Capital Expenditures $2,000 No. of planes sold by 2038 690
Working Capital per Annum $1,000 Capacity Constraint Violated? No Max = 48 planes/year
Table-16: Discounted Cash Flows yearly (in US$ millions)

Year R&D Cost Capital Cost No. Of Aircrafts Revenue FCF DFCF
2011 -700.00 0.00 0 0.00 -462.00 -416.07
2012 -1400.00 500.00 0 0.00 -1557.00 -1262.79
2013 -1400.00 700.00 0 0.00 -1883.20 -1375.49
2014 -1400.00 700.00 0 0.00 -1859.40 -1223.08
2015 -840.00 100.00 0 0.00 -786.40 -465.85
2016 -560.00 0.00 8 391.92 -156.23 -83.34
2017 -420.00 0.00 23 1294.22 132.08 63.45
Year 1 2018 -280.00 1000.00 30 1890.00 -679.19 -293.87
2 2019 0.00 1000.00 30 2075.22 -464.44 -180.97
3 2020 0.00 1000.00 30 2278.59 -431.55 -151.44
4 2021 0.00 1000.00 30 2501.89 -395.44 -124.97
5 2022 0.00 1000.00 30 2747.08 -355.80 -101.26
6 2023 0.00 1000.00 30 3016.29 -312.27 -80.04
7 2024 0.00 1000.00 30 3311.89 -264.47 -61.05
8 2025 0.00 1000.00 30 3636.45 -211.99 -44.07
9 2026 0.00 1000.00 30 3992.83 -154.36 -28.90
10 2027 0.00 1000.00 30 4384.12 -91.09 -15.36
11 2028 0.00 1000.00 30 4813.77 -21.61 -3.28
12 2029 0.00 1000.00 30 5285.52 54.67 7.48
13 2030 0.00 1000.00 30 5803.50 138.43 17.05
14 2031 0.00 1000.00 30 6372.24 230.39 25.55
15 2032 0.00 1000.00 30 6996.72 331.37 33.10
16 2033 0.00 1000.00 30 7682.40 442.24 39.78
17 2034 0.00 1000.00 30 8435.28 563.98 45.68
18 2035 0.00 1000.00 30 9261.93 697.65 50.89
19 2036 0.00 1000.00 30 10169.60 844.42 55.47
20 2037 0.00 1000.00 30 11166.22 96370.48 5701.63
21 2038 0.00 1000.00 30 12260.51
The planned full scale production 30 aircrafts is from the year 2018.
If Discounted Free Cash Flows (DFCF) not considered;
The Payback Year is 2026 & no. of Break Even Aircrafts is 303.
If Discounted Free Cash Flows (DFCF) considered;

The Payback year is 2028.
No. of Break Even Aircrafts is 361.

For 2009-2028 Single Aisle 150 seats Aircrafts total projected demand for India is 1032, breakeven quantity
361 no.s is nearly 35% of the projected demand, may be achieved, maximum by 2028, further more demand
may be expected from other country’s market also if production capacity from 30 no.s to upside increased.
Net Present Value at the cost of capital 11%;

NPV = - (Initial CF) + CF1 / (1+r) + CF2 / (1+r)^2 + …….etc
Initial Cash out Flow, CF; Total period, T; Cash inflow 1st year, C ; Discount factor, r;
NPV is US$ 128 millions
Internal Rate of Return;

Internal Rate of Return is calculated by assuming NPV as zero value and solving for the variable ‘r’ gives the
IRR.
After-Tax IRR is 11.10 %
Pre-Tax IRR is 17.80 %
The project NPV is positive and IRR is also more than Capital cost for the year considered up to 2038,
so the investment in the project is financially viable in India.
1.8) Risk Analysis
1.8.1) Project Related Risks
Industry Risk is assumed to be '

the difficulty, or otherwise, of the business operating environment.
The report looks at the operational risk associated with this industry. Three types of risk are recognized in our
analysis. These are: risk arising from within the industry itself (Structural risk), risks arising from the
expected future performance of the industry (Growth risk) and risk arising from forces external to the
industry (external Sensitivity risk).
Industry Definition
The industry includes businesses which manufacture aircraft, aircraft engines and frames. These aircraft are
used for both civilian and military purposes. Industry services also include aircraft maintenance, repair and
overhaul (MRO).
Structural Risk
The Structural Risk chapter looks at risk arising from within the industry itself and provides a detailed
discussion of the industry’s level of exposure to seven key indicators. These key indicators are below,
a) Barriers to Entry: - For new Investment activities in Indian Commercial Aerospace Industry is high due
to technology not developed, still depending upon the Western Countries. So, huge investments required
to enter in to this sector. But, in the perspective growth expected in future, many private players now
started entering the Aircraft Manufacturing Business in India.
b) Competition: - So far in Indian Commercial Aircraft manufacturing industry no firm is operating, HAL,
Defence Public Sector Enterprise, is only having expertise in Defence Aerospace industry. It is also
planning to enter the Commercial Aircraft manufacturing business. But with foreign companies local
manufacturers can compete well because of less cost man power availability and many companies
successful in Automobile & IT sector, these skills will also contribute for Commercial Aircraft
manufacturing business.
c) Industry Exports/Imports:-
Table-17: Aircraft and parts: Market data (in US$ million)

1997 1998 1999*
Total market size 700 800 1190
Locally manufactured 70 75 80
Total exports 25 30 35
Total imports 655 755 1145
Exchange rate: US$ 1= Rs. 37.5 39 41
37
Source : Unofficial estimates of US Trade Dept. * 1999 figures are estimates
d) Level of Assistance: - Govt.of India taken initiatives of applying offset policy to foreign suppliers to
encourage local manufacturers grab the Commercial Aircraft Manufacturing Technology. Because of this
policy many Automobile/Manufacturing giants in India, TATA, Mahindra, L&T, Godrej, and etc.,
organisations started newly the aerospace manufacturing operations.
e) Life Cycle Stage: - Commercial Aircraft Manufacturing Industry in India in the stage of start-up, there
are expectations of many research organisations that Industry growth will be more in another 5-6 years
time period.
Growth Risk
Aerospace Industry growth risk in India is very less, because Indian Govt. encourages & providing Tax
benefits for Defence parts local manufacturing, created offset policy to provide business for local players.
Even Top players of Aerospace Industry, Boeing & EADS projected more positive demands in the Indian
Market. Many other research organisations also projected India as the future Aerospace supplier for various
aerospace parts.
Sensitivity Risk
Sensitivity Risk looks at risks arising from forces (sensitivities) external to the industry. The Overall External
Sensitivity Risk Score is less for aerospace industry in India, because Low Cost Airlines saving more time by
making passengers reach their destinations earlier than High Speed Rails similar to situation in Western
countries. Indian Economy is more robust than the western economies; there is a scope of growth for
Aerospace Industry in India. Indian Government initiating many start-ups to encourage the players in Indian
Aerospace Industry38.
1.8.2) Sensitivity Analysis: - It is the study of how the variation (uncertainty) in the output of a
mathematical model can be apportioned, qualitatively or quantitatively, to different sources of variation in the
input of a model. Put another way, it is a technique for systematically changing parameters in a model to
determine the effects of such changes. It is useful for a range of purposes mentioned below,
• Support decision making or the development of recommendations for decision makers (e.g. testing
the robustness of a result);
• Enhancing communication from modellers to decision makers (e.g. by making recommendations
more credible, understandable, compelling or persuasive);
• Increased understanding or quantification of the system (e.g. understanding relationships between
input and output variables); and
• Model development (e.g. searching for errors in the model).
Selling Price versus NPV Analysis

The aircraft unit selling price taken as variable and NPVs calculated.
Table-18: Selling Price Vs. NPV Analysis
Sl.No Selling Price (US$ mn) NPV (US$ mn)
1 53 -2184
2 55 -1819
3 57 -1455
4 59 -1090
5 61 -725
6 63 -361
7 65 4
8 67 369
9 69 733
10 71 1098
11 73 1463
12 75 1827
13 77 2192
14 79 2557
15 81 2921
For the unit aircraft Selling price, US$ 65 mn above, the NPV calculated by considering period up to the
year 2038 is positive.
NPV versus Sold Aircrafts yearly Analysis

The aircrafts sold yearly taken as variable and NPVs calculated.
Table-19: Sold Aircrafts yearly Vs. NPV Analysis
Sl.No Sold Aircrafts yearly NPV (US$ mn)
1 10 -7769
2 12 -6954
3 14 -6138
4 16 -5322
5 18 -4507
6 20 -3691
7 22 -2875
8 24 -2060
9 26 -1244
10 28 -429
11 30 389
12 32 1203
13 34 2018
14 36 2834
15 38 3649
16 40 4465
17 42 5281
18 44 6096
19 46 6912
20 48 7728
For the planned yearly production capacity 30 aircrafts onwards, the NPV for the year up to 2038 is
positive.
1.8.3) Scenario Analysis: - It is a process of analyzing possible future events by considering alternative
possible outcomes (scenarios).The analysis is designed to allow improved decision-making by allowing
consideration of outcomes and their implications.
Assumptions for following 3 type Cases,
1. Pessimistic (24 units, Selling Price US$ 56 mn, Probability 0.25%);
2. Base (30 units, Selling Price US$ 67.10 mn, Probability 0.50%);
3. Optimistic (36 units, US$ 71.60 mn, Probability 0.25%);
Calculated the NPVs and E (NPV) using below equation,
Expected (NPV) = p1*NPV1 + p2*NPV2 + p3*NPV3
Table-20: Scenario Analysis

Sold Aircrafts Selling Price (US$ NPV (US$
Cases Probability
yearly mn) mn)
1.Pessimistic p1=25% 24 56.00 -3,679
2.Base p2=50% 30 67.10 389
3.Optimistic p3=25% 36 71.60 3,818
E (NPV) US$ 228.50 mn; considered upto the year 2038
The Expected NPV is positive, so the project in India is robust and can sustain the related risks. Investment
in the project is less risky.
2) Strategies Analysis
2.1) Aviation Industry SWOT Analysis
The volatile Airline industry is no exception. While individual airlines each analyze and make decisions based
on their own situations, there are overall industry similarities that all airlines face, with each endeavoring to
maximize Strengths and Opportunities while minimizing Weaknesses and Threats.
Strengths
A major strength of any airline is the product itself, Air travel. Despite downturns, over time air travel
continues to grow, not only due to population growth, but also due to an increased propensity to fly.
Airline staff is highly trained and experienced, from pilots and flight attendants to mechanics and ground
staff. Business-wise, airlines have the ability to segment the market, even on the same routes. This allows
airlines to establish different levels of service and make associated pricing decisions39.
Rising income levels; Due to the rise in income levels, the disposable income is also higher which are
expected to enhance the number of flyers. Govt.of India Strategic Initiatives for Public Private
Partnerships40
Weaknesses
Airlines have a high "spoilage" rate compared to most other industries. Once a flight leaves the gate, an
empty seat is lost and non-revenue producing. Aircraft is expensive and requires huge capital outlays. The
return on investment can be different than planned.
Large workforces spread over large geographic areas, including international points, require continual
communication and monitoring. This can be exacerbated during operational irregularities, e.g. Bad
weather. While the business climate can change quickly, airlines have difficulty making quick schedule
and aircraft changes due to leases, staffing commitments and other factors.
Under penetrated Market; the total passenger traffic was only 50 million as on 31st Dec 2005 amounting
to only 0.05 trips per annum as compared to developed nations like United States have 2.02 trips per
annum. Infrastructural constraints, the infrastructure development has not kept pace with the growth in
aviation services sector leading to a bottleneck. Huge investment requirement for physical infrastructure
for airports
Opportunities:-
Before 2000, state-owned firms such as Hindustan Aeronautics dominated the local market. These
companies also helped the development of an indigenous aerospace industry by subcontracting much of
their work to other firms in the country. As a result, private sector firms such as Larsen & Toubro,
Mahindra & Mahindra and the Tata Group began to acquire the capabilities in the market as well.
The doors inched open a little bit in 2001, when the government allowed 100% domestic private
investment in the defense sector upon obtaining an industrial license and foreign direct investment of up
to 26% with conditions. The rules have been further relaxed over the period in the defense sector, with the
private sector now allowed to become Tier-1 suppliers in military contracts and giving foreign firms
greater flexibility in their choice of local partners.
Boeing expects a demand of between 900 to 1,000 commercial aircraft worth USD 100 billion
approximately in the next 20 years. This also suggests that a significant portion of business opportunity
could accrue to India, due to the associated offsets. The defense offset policy has been under
implementation and a formal civil offset policy is also expected to follow shortly. The total spending in
the next 5 years is expected to be between USD 25 billion (assuming uniform demand) for commercial
aircrafts and USD100 billion as defense expenditure. As per the Govt.of India offset Policy of 30 percent
for the civil sector too, the total offset opportunity for the aerospace sector is valued to be at least USD
10-15 billion.
As India moves ahead, fuelled by an economy growing at near double digits, its policies and plans for
aerospace industry clearly indicate a desire to attain a higher level of self reliance. The requirements in
terms of aircraft and infrastructure in the military and civil sector provide an exciting opportunity for
local and foreign companies.
The MRO market could be a major beneficiary, with PWC estimating that it will grow by 10% annually
and reach $1.17 billion by 2010 and $2.6 billion by 2020. PWC estimates that the aerospace industry
spends more annually on MRO than on manufacturing or research and development, and the rapid growth
s airline industry means that demand is increasing41.
of India'
Indian labour costs are an advantage, says Frost & Sullivan, at $30-35 per man-hour. This compares with
$55-60 in South-East Asia and Middle East and even higher in the USA and Europe. "India has the
potential to service not just Indian aircraft, but also those from neighboring regions"42.
Price pressure is the reason most often given for the major aerospace companies’ need to play the role of
system integrators. While it may be a good ploy for using this argument for price negotiations with
suppliers and service providers. What started as supplier partners along the direct supply chain axis has
extended to design and engineering service providers along the product lifecycle. The new manufacturing
paradigm helps companies protect their margins, cut down design and product lifecycle time, reduce
capital expenditure, and gain access to low cost high-quality resources43.
Further with new Technical features recommended, Aircraft weight can be reduced up to 2000Kgs. So,
that Airlines operating costs will be reduced, similarly Air-Fares also, LCCs will get advantage compared
to Rail/Road transportation. Airline market growth offers continual expansion opportunities for both
leisure and business destinations. This is particularly true for international destinations.
Technology advances can result in cost savings, from more fuel efficient aircraft to more automated
processes on the ground. Technology can also result in increased revenue due to customer-friendly
service enhancements like in-flight Internet access and other value-added products for which a customer
will pay extra.
Threats
A global economic downturn negatively affects leisure, optional travel, as well as business travel. The
price of fuel is now the greatest cost for many airlines. An upward spike can destabilize the business
model. A plague or terrorist attack anywhere in the world can negatively affect air travel. Government
intervention can result in new costly rules or unexpected new international competition.
Huge investments are expected to take place in aviation sector in near future. It is estimated that by
2012. There is a shortage of trained pilots, co-pilots and ground staff which is severely limiting growth
prospects. Shortage of Airports; There is a shortage of airport facilities, parking bays, air traffic control
facilities and takeoff and landing slots. Though enough number of low cost carriers already exists in the
industry, majority of the population is still not able to fly to other destinations, resulting in high ticket
prices44.
2.2) Air Transport versus Railroad Transport
Airline fares are nearly equal to Railway AC fares after LCCs like AirIndia Express, Kingfisher Red (Air-
Deccan), JetLite, SpiceJet, IndiGo, GoAir, Yamuna-Air, Paramount started the Low-Cost operations. At
Present LCCs importing aircraft, spares from foreign countries. For even Rs.10, 000 costing maintenance
works, spending in lacs rupees reflecting in high Operating Costs. After local manufacturing, LCC’s aircraft
Acquiring & Maintenance costs will reduce appreciably, so that LCC air-fares further will be reduced than
Railway AC fares, results in more passenger traffic. Out of nearly 700 Single-Aisle 150 seater aircrafts
demand for 2010-2029, at least 50% orders & foreign orders will be expected due to low price Rs.250 Crores
for one aircraft, further MRO supporting spares business may increase.
Indian Railways Plans $9 billion in Investments for 2010, Advances High-Speed Rail; Railways Minister,
Ms.Mamata Banerjee committed to the development of High-Speed Rail corridors throughout the country,
even as she reaffirmed her promise to ensure continued investment in India’s conventional train network,
which she framed as a social necessity. Her budget includes $9 billion in spending on the maintenance and
upgrading of existing rail corridors, up 2.8% from last year’s budget. Plans for high-speed corridors have
been discussed for years, but Minister Banerjee’s budget is the first to include a plan to establish a National
High-Speed Rail Authority, which would coordinate planning and eventually construction on selected lines.
Indian Railways’ Vision 2020 proposal, released late last year, selected six priority routes (“Golden Rail
Corridors”) designated for trains to operate at speeds above 250 km/h, or 155 mph. These six lines would
connect the nation’s largest cities, including Delhi, Mumbai, Bangalore, Chennai, and Calcutta. High-speed
trains in India would operate in corridors reserved for passenger trains, unlike the mixed routes shared with
freight trains that slow down the system today. Most of the running ways would likely to be constructed
elevated over the surrounding cities and countryside45.
Strategies of European Low Cost Carriers;

There are basically two types of low cost business models in Europe: that of EasyJet, on the one hand, and
Ryanair on the other. Ryanair serves secondary airports at relatively low frequencies and focuses on new
leisure markets with no direct competition. The Ryanair model focuses on costs rather than on markets, which
includes strongly persuading suppliers and airports to reduce charges. EasyJet serves primary - high costs
airports at high frequencies and focuses on existing, business and leisure, markets and also new markets,
accepting competition from incumbent carriers. The other low cost carriers try to follow one or other of these
models, although they tend to be offshoots of major carriers, so lack the cost advantages of EasyJet and
RyanAir46.
European railway companies have used two approaches to address competition from Low-Cost Airlines:
1. Applying pricing strategies to their regular networks
2. Organizing subsidiary companies to offer new services
European railroads have reacted to increased competition by introducing strategies, modelled after low cost
airlines, intended to increase ridership and revenues including:
Reducing operating costs;
Yield management;
Reducing perceived ticket costs;
Increasing revenues by offering amenities47
It’s not clear what European Rail Operators can do about this;
• For short journeys (less than 3 hours) rail is likely to remain dominant: air journey times longer,
particularly if (inconvenient) secondary airports used. For longer journeys, rail operators could try to cut
costs - but this is difficult, in a heavily unionised environment
• Internet sales could cut ticket costs significantly (currently 6-10% of total fare), improve load factors and
help passengers find lowest fares. SNCF is pioneering here - you can print your own ticket, which is
scanned on board the train; some trains (idtgv) are internet booking only
• A few niche services have successfully competed on quality (France-Spain Hotel Trains), but others are
just withdrawing services: SNCB and NS have both withdrawn all the international long-distance trains
they operated. However, so far, low-cost airlines are only competing with rail on the longest distance
routes. Ferry operators (and Eurotunnel) also severely hit: have had to cut prices by up to 80%.
In Europe High-Speed Rail operating from many years, still in India High-Speed Rail projects in planning
stage only, it is also requiring more investments & many years’ for starting operations. In Europe how Rail
Transportation facing the competition from Low Cost Airlines, in India also same competition scenario is
developing.
3) Conclusions
In Indian Aviation Market more in demand by Indian Airliners are first one is Airbus’s A320-200, second
one is Boeing’s B737-800, is Single-Aisle 150 seats aircraft type.
The demand for the above type aircraft is nearly 1000, as per Boeing & Airbus forecasts 2009-2028.
Many market research organisations projected India as future Aerospace Market, serves international
requirements.
The technical modification for reducing the weight nearly 2000Kgs of the Single-Aisle 150 seats category
aircraft by replacing the present method of aircraft’s “Integrated Mechanical Wheeled-Carrier Landing &
Take-off System” with “Disintegrating Mechanical Wheeled-Carrier/Electromagnetic Propulsion &
Baking System (disintegrates from the aircraft at the time of take-off & integrates with aircraft at the time
off landing). Further research will be focussed for developing this new system.
Total R&D cost is estimated as US$ 7 Bn, Capital Expenditures required to setup the manufacturing plant
is estimated as US$ 2 Bn, and working capital required for producing 30 aircrafts per annum is US$ 1 Bn.
As per the present situation prevailing in Indian Aviation Market, Commercial Aircraft Manufacturing
Business is commercially viable even the Entry Barriers are high, that is proven as already TATA,
Mahindra & Mahindra, L&T, and etc. companies entered into this sector.
The investment in the project of Manufacturing Commercial Aircrafts is also financially viable & it is
having robustness to encounter the various risks.
Indigenised Commercial Aircraft in India can give the following benefits,
• Saves nearly Rs.60 Crores per one aircraft acquired.
• Saves the aircraft spares & MRO costs for the operators
• Reduces the “Aircraft on the Ground” time by reducing maintenance lead time & cost
• Results in low airfares, further many middle class people can get access for the exciting air travel by
saving their journey time.
• Employment will be generated, more self reliance for nation.
• Imports will be reduced helping Indian Economy growth.
The competition for Low Cost Airliners is mainly from High Speed Rail operators, but it is for journey
time below 3 hours only like completion scenario explained in European Union.
This project report made on the basis of information collected from secondary resources only, further
work for accuracy we are planning with primary source information.
Time, Secondary data sources are the limitations; Further with primary data, Research issues like Marketing
Research, etc can be carried-out in future.
4) References
1 www.wikipedia.com, Indian Airliners Current Fleet
2 The A320 family, wikipedia.com, http://en.wikipedia.org/wiki/Airbus_A320_family
3 Page-32, Aerospace Engineering desk reference by Butterworth-Heinemann (Firm), Howard Curtis, Antonio
Filippone
4 http://www.aerospaceweb.org/aircraft/jetliner/a320
5 http://magnetbahnforum.de/index.php?Transrapid-Maglev-Shanghai
6 Indian Economy Survey 2009-10; http://indiabudget.nic.in/es2009-10/chapt2010/chapter01.pdf
7 http://pmindia.nic.in/Economic_Outlook_2010-11.pdf
8 http://www.indiastrategic.in/topstories490.htm
9 http://www.iata.org/pressroom/pr/Pages/2009-08-24-01.aspx
10 Ministry of Finance Report, Government of India
11 http://www.indiastrategic.in/topstories490.htm
12 http://www.acexc.com/cmscategory.php?catid=56&sublist=sub37&divshow=H
13 www.ibef.org/industry/aviation.asp
14 http://www.indiaonestop.com/export-aircraft&parts.htm
15 http://www.livemint.com/2010/03/16230049/GE-Aviation-to-spend-300-mn-i.html
16 http://www.acexc.com/cmscategory.php?catid=56&sublist=sub37&divshow=H
17 http://www.aviation-database.com/aviation_database_pages1/Aviation-industry-in-India.html
18 http://indianaviationnews.net/india-aviation2008/2008/10/big-market-for-small-aircraft-in-india.html
19 http://www.anna.aero/2008/07/04/indian-domestic-traffic-growth-falls-below-10-kingfisher-and-others-still-waiting-
for-international-approval
21 Airports Authority of India, Foundation for Aviation and Sustainable Tourism
22 http://www.livemint.com/2010/01/11214424/Airlines-fly-to-smaller-cities.html
23 http://www.centreforaviation.com/news/share-market/2009/11/13/jazeeras-profits-down-53-in-3q2009-chinese-and-
indian-domestic-traffic-growth-continues/page1, Centre for Asia Pacific Aviation & Indian Ministry of Civil Aviation
24 http://www.economynews.us/economy/aviation-giants-flocking-indian-markets-as-the-sector-seemed-poised-for-
growth
25 Boeing Current Market Outlook 2008-2027 Report for India
26 Boeing Current Market Outlook 2008-2027 Report for India
27 http://www.livemint.com/2010/03/04215016/Airbus-raises-forecast-for-Ind.html
28 http://www.airbus.com/en/presscentre/pressreleases/press-release/detail/airbus-to-increase-a320-family-production-
rate/news-browse/1/news-period/1267398000/2674799/archived/news-category/press_release
29 http://www.prnewswire.com/news-releases/indian-commercial-aviation-suppliers-market-to-grow-exponentially-
spurred-by-low-labor-and-manufacturing-costs-says-frost--sullivan-61741552.html
30 http://science.howstuffworks.com/transport/flight/modern/a380.htm
31 http://en.wikipedia.org/wiki/Airbus_A320_family
32 en.wikipedia.org/wiki/NAL_Saras
33 http://www.8ak.in/8ak_india_defence_news/2010/07/interview-nals-5000cr-rta70-regional-transport-jet-
programme.html
34 www.topnews.in/first-chinaassembled-airbus-a320-makes-maiden-flight-2168112
35 www.chinadaily.com.cn/bizchina/2010-06/.../content_10008730.htm
36 http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=55118, Article by: Mr.Bejoy George, Chief

Marketing Officer, QuEST Global
38 Aircraft Manufacturing in Australia - Industry Risk Rating Report, MarketResearch.com
39 http://www.ehow.com/about_5347649_airline-industry-swot-analysis.html
40 www.scribd.com/doc/32759573/Indian-Airline-Sector-Analysis
41 www.flightglobal.com/.../indian-aerospace-industry-opens-up.html
42 www.ciidefence.com, Confederation of Indian Industry, Aerospace
43 www.arcweb.com/ManufacturingIT-India, ARC-TCS
44 http://www.ehow.com/about_5347649_airline-industry-swot-analysis.html
45 www.thetransportpolitic.com/2010/.../indian-railways-plans-9-billion-in-investments-for-2010-advances-high-speed-
rail
46 www.icao.int/icao/en/atb/ecp/CaseStudies/Europe_LowCost_En.pdf
47 Applying Low Cost Airline Pricing Strategies on the European Rail Roads, Thomas Sauter-Servaes, Institute for
Land and Sea Transport Systems, Track and Railway Operations, Berlin University of Technology.
48 Airports Authority of India Ltd for Passenger Traffic Trends & Projections Study
49 Ministry of Civil Aviation for Air Cargo Traffic projections

50 CAPA, Centre for Asia-Pacific Aviation
51 HAMCO India, MRO
52 AeSI (easy), Aeronautical Society of India
53 “Overhaul & Maintenance”, Aviation Week
54 India to get Mobile Airports (can be shifted in trucks & arranged in 20mins, handles 26-40tons load Aircrafts) soon,
April 2008, Economic Times. (Wheeled-Carrier Landing also similar concept)
55 http://www.indiahousing.com/infrastructure-in-india/aviation-industry-in-india.html
56 http://business.mapsofindia.com/aviation/
57 http://www.indiainbusiness.nic.in/industry-infrastructure/infrastructure/civil-aviation.htm
58 www.oag.com/oag/website/com/en/Press+Room/Press+Releases+2007/Indias+aviation+growth+phenomenon+0506
0701
59 http://www.foolonahill.com/mbaaviation.htm
60 http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.ht
61 http://indiabudget.nic.in/es2009-10/chapt2010/chapter01.pdf
62 Aviation Industry in India, Study Report by Netscribes India (Pvt) Ltd
63 The strategies and effects of low-cost airlines in Europe, by Simon Smith
64 Industry Sources, (Hopper Flight Strategy, to ground for 2 cities between Source & Destination place to increase
Passenger load Factor & Yield per Seat)
65 Federation for Indian Airliners, (For ATF taxation rates & prices)
66 The Impact of Low Cost Carriers in the Europe, (Presented by European Union)
67 AeSI (easy), Aeronautical Society of India
68 “Overhaul & Maintenance”, Aviation Week
69 Boeing & Airbus Company Forecast Reports
70 CSM Software Pvt Ltd, for Design, Mfg
71 NASSCOM, Aerospace Industry
72 “Airlines to raise $4 bn to add muscle”, Mint (For Capital raising)

Commercial Aircraft Manufacturing India Business Case

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Commercial Aircraft Manufacturing India Business Case

Enviado por

Direitos autorais:

Formatos disponíveis

Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context.

Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 1 of 64

Commercial Aircraft Manufacturing;

Masters Degree in Business Administration in Finance Management

Under the Guidance of

Place: Bangalore (Venkateswara Rao.G)

today from the Surroundings with which he is in interaction”

suggestions and kind support during my work.

for their constant support and encouragement throughout my life.

Objectives of the Study:-

Research Methodology used for carrying the Study:-

Summary & Conclusions: -

c) Limitations, If Any and The Scope of Future Research:-

Table-1: A320-200 Present Specifications ……………………………................................................ 10

Indian Air-Traffic Annual Passengers 2001/02 – 2007/08 ……………………………….………….. 29

II. Certificates ……………..…….………………………………………….......… 2

III. Declaration …...………………………………………………..…………….…. 3

VI. List of Tables …………………………………………………………………..... 7

VII. List of Charts …………………………………………………………….…..… 7

VIII. Table of Contents …………………………………………………….….….…. 8

1. Chapters ………………………………………………… …………….……….... 9

1.1 Existing Models Study 9

1.1) Existing Models Study

1.2) Scope of Changes Proposed for New-Aircraft

1.2.1) Existing Technology

Table-1: A320-200 Present Specifications

Wing Area 122.6 m2 (1,320 sq ft)

1.2.3) Required modifications for New-Commercial Aircraft;

a) ElectroMagnetic Propulsion for Take-Off and Braking for Landing

b) Detachable and Attachable Wheeled-Carrier for Take-Off & Landing

c) Landing on Constructed Hydraulic Reservoirs OR in Sea for Sea-Shore Cities

1.3) Demand & Supply for proposed New-Aircraft

1.3.1) Indian Economy and Aviation Industry Growth Study;

Table-3: Indian Economic Survey 2009-10 Key Indicators

1. GDP & Related Indicators

Growth Rate % na 14.4 15.6 15.5 12.7 10.6

Growth Rate % na 9.5 9.7 9.2 6.7 7.2

Scheduled Com. Bank Credit % 27 30.8 28.1 22.3 17.5 13.9 g

6. Fiscal Indicators (Centre)

7. Population Million 1089 1106 1122 1138 1154 1170

1.3.2) India’s Economic Outlook by IMF and Global Insight

1.3.3) International Air Transport Association (IATA) Review

1.3.4) Economic Growth during 2008-09

1.3.5) Centre for Asia Pacific Aviation (CAPA) Review

1.3.6) ACEXC (Aviation Center of Excellence India) Review

1.3.7) Indian Aviation Industry

1.3.8) Aircrafts & Parts Market

1.3.9) Partnerships & Mergers

Private Carriers: Jet Airways and Air Sahara

1.3.11) Government's Role

1.3.12) Forecasts for Aviation Market

1.4) Air-Traffic Projections, Demand and Supply

1.4.1) Air-Traffic Study

Table-4 : Air-Traffic Projections

2012-13 41.44 6 27.2 4.9

India Domestic Passengers and Growth: Oct-2008 to Oct-2009

Indian Carriers Domestic Market Share: Oct-2009

Indian Carriers’ Oct-2009 Load Factor

1.4.2) Aircraft Demand & Supply Study

Year 2007-2026 2008-2027 2008

Large 870 1,070 Large 740 220

Twin Aisle 3,510 8,080 Twin Aisle 6,700 1,510

Single Aisle 11,360 24,230 Single Aisle 19,460 1,420

Regional Jets 3,060 2,220 Regional Jets 2,100 70

Payback Period (N) = SC / (Px - VCx)

Break-Even Sales (S) = PxN = 633011 = US$ 20.79 Billion.

Expected (NPV) = p1NPV1 + p2NPV2 + p3*NPV3