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MANAGEMENT
1912 First flight from Karachi to Delhi started by Indian State Air Services and
Imperial Airways UK collaboration.
1932 Tata Airline introduced by JRD Tata.
1946 Tata Airlines was transformed into Air India.
1953 Air India was nationalized.
1990 Liberalization in the aviation industry, with private players being allowed to
operate as air taxi operators, but not permitted to operate scheduled service.
1994 Private carriers permitted to operate scheduled services.
1995 Jet, Sahara, Modiluft, Damania, NEPC, East West granted scheduled carrier
status.
1997 4 out of 6 operators shut down. Jet & Sahara continue.
2003 Air Deccan starts operations as India’s 1st Low Cost Carrier.
2005 Kingfisher, SpiceJet, Go Air, Paramount start operations.
2006 Indigo starts operations.
2007 Jet-Sahara Merger.
2008 Kingfisher-Air Deccan Merger.
Revolutionized by liberalization, the aviation sector in India has been marked by fast-
paced change in the past few years. From being a service that few could afford, the sector has
now graduated to being a fiercely competitive industry with the presence of a number of
private and public airlines and several consumer-oriented offerings. 1.2% of the GDP is
generated by this sector. So, it’s in a developing stage.
The promise and the potential of the Indian aviation market are awesome. Over 135
aircrafts have been added in the last two years alone. By 2010, India's fleet strength will stand
at 500–550. In the same period, the domestic market size will cross 60 million and
international traffic 20 million. Airbus pegs India’s demand for airliners at 1100 aircraft,
worth US $105 billion, over the next 20 years. According to Civil Aviation Minister Praful
Patel, the country will need 1,500 to 2,000 passenger planes in 10 years, up from 260 now.
With the sector expanding at a fast pace, the number of aircrafts being used is on the
rise and so is the need for pilots. Not surprisingly, aviation school is the latest buzzword
among students as India would require 7,500–8,000 pilots and an equal number or more air
cabin crew by 2010. Heavy pay packets are awaiting pilots with a commercial pilot license
(CPL).
1. Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident Indian)
investment up to 100 per cent is permissible in domestic airlines without any govt. approval.
However, the govt. policy bars foreign airlines from taking a stake in a domestic airline
company.
2. Low entry barriers: Nowadays, venture capital of $10 million or less is enough to launch
an airline. Private airlines are known to hire foreign pilots, get expatriates or retired personnel
from the Air Force or PSU airlines in senior management positions. Further, they outsource
such functions as ground handling, check-in, reservation, aircraft maintenance, catering,
training, revenue accounting, IT infrastructure, loyalty and programme management.
3. Attraction of foreign shores: Jet and Sahara have gone international by starting
operations, first to SAARC countries, and then to South-East Asia, the UK, and the US. After
five years of domestic operations, many domestic airlines too will be entitled to fly overseas
by using unutilized bilateral entitlements to Indian carriers.
4. Rising income levels and demographic profile: Though India's GDP (per capita) at
$3,100 is still very low as compared to the developed country standards, India is shining, at
least in metro cities and urban centres, where IT and BPO industries have made the young
generation prosperous. Demographically, India has the highest percentage of people in age
group of 20-50 among its 50 million strong middle class, with high earning potential. All this
contributes for the boost in domestic air travel, particularly from a low base of 18 million
passengers.
5. Untapped potential of India's tourism: Currently India attracts 3.2 million tourists every
year, while China gets 10 times the number. Tourist arrivals in India are expected to grow
exponentially, especially due to the open sky policy between India and the SAARC countries
and the increase in bilateral entitlements with European countries and US.
Boeing announced a US $1.5 billion order for 10 aircrafts from Jet Airways, India's
largest private airline, which has 60 aircraft and will increase that number to 90 in two years.
Manufacturers like Boeing and Airbus are filling their order books fast with such rapidly
growing airlines in India. According to a survey by the Airports Council International (ACI),
Asia will be the fastest-growing region with an annual 9 per cent growth. The two fastest-
growing markets are set to be India (10.4 per cent) and China (8.1 per cent) in the next 20
years.
Future scenario:
The aviation industry is expected to grow at a compounded annual growth rate of 25%
till 2010. Also, by 2010 Indian airports will be handling between 90 and 100 million
passengers per year, as against the current 34 million passengers. It is expected that nearly
80% of this growth will be driven by the low cost carrier segment (LCC). By 2008, the LCCs
would capture 65% of the direct on-line air ticket market from 61% in 2005.
SWOT ANALYSIS:
Strengths:
1. Growing tourism: Due to growth in tourism, there has been an increase in number of the
international and domestic passengers. The estimated growth of domestic passenger segment
is at 50% per annum and growth for international passenger segment is 25%.
2. 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.
Weaknesses:
1. 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 having 2.02 trips per annum.
2. Untapped Air Cargo Market: Air cargo market has not yet been fully tapped and is
expected that in the coming years large number of players will have dedicated fleets.
3. Infrastructural constraints: The infrastructure development has not kept pace with the
growth in aviation services sector leading to a bottleneck. Huge investment required for
physical infrastructure for airports.
Opportunities:
2. Expected Market Size: Average growth of aviation sector is about 25%-30% and the
expected market size is projected to grow upto100 million by 2010.
Threats:
1. Shortage of trained Pilots: There is a severe shortage of trained pilots, co-pilots and
ground staff which is severely limiting growth prospects.
3. High prices: Though enough number of low cost carriers are already existing in the
industry, majority of the population is still not able to fly to other destinations because of
high prices.
Key Players in the Domestic Market:
In July 2008, it was voted as the world's best long-haul airline after Singapore
Airlines. Jet Airways has also won an award for the quality of its catering. According to
March 2008 figures, Jet Airways share of India's domestic aviation market stood at 29.8%,
including its low-cost subsidiary JetLite's share of 7.1%, making it the largest airline in India.
However, the airline faces competition from other domestic carriers like Kingfisher Airlines,
SpiceJet and IndiGo Airlines.
Jet Airways and Air Sahara were the only private airlines to survive the Indian
business downturn of the late 1990s. On 12 April 2007, Jet Airways agreed to buy out Air
Sahara for 14.5 billion rupees ($340 million). Air Sahara was renamed JetLite, and was
marketed between a low-cost carrier and a full service airline.
USP: largest domestic airline with a very large network providing connectivity
across various destinations, best-in-class service quality.
Kingfisher & Kingfisher Red (Previously Air Deccan)
Kingfisher is one of six airlines in the world to have a five-star rating from Skytrax,
and according to some estimates, is the second largest airline in India in terms of
passengers flown. In July 2008, Kingfisher's share of Indian aviation market stood at 14.3%
while its sister carrier Air Deccan's share stood at 13.5%.
The airline started operations on 9 May 2005, following the lease of four Airbus
A320-200 aircraft. It has announced plans to start flights to the USA with Airbus A340-500
and Airbus A380-800 aircraft. The airline is owned by the United Breweries Group. In
October 2007, the airline announced Deepika Padukone as its brand ambassador. In
September 2008, Kingfisher announced its plans to raise US $400 million through equity.
Air India Limited is the national airline of India with a worldwide network of
passenger and cargo services. Air India is state-owned, and administered as part of the
National Aviation Company of India Limited - which was created in 2007 to facilitate Air
India's merger with Indian Airlines. Together with Code Sharing Agreements with other
International airlines, the airline connects over 130 destinations worldwide and includes
twelve gateways in India.
Air India is wholly-owned by the government of India. However, it plans to sell 10-
15% of its stake in the airline by 2008 to fund Air India's global expansion plans. After
dominating Indian skies for years, Air India is now the third largest airline in India in terms
of passengers carried after Jet Airways and Kingfisher Airlines. Air India is expected to
formally join the Star Alliance in March 2009.
USP: oldest airline of India, worldwide network of passenger and cargo services.
IndiGo
SpiceJet is a low-cost airline based in New Delhi, India. It began service in May
2005. It marked its entry in service with Rs. 99 fares for the first 99 days, with 9000 seats
available at this rate. This deal was followed it up with a Rs. 999 promotional scheme on
select routes. Their marketing theme “offering low 'everyday spicy fares' and great guest
services to price conscious travelers”. Their aim is to compete with the Indian Railways
passengers travelling in AC coaches.
USP: no-frills, low-cost carrier, voted as the best low-cost airline in South Asia and
Central Asia region by Skytrax in 2007
IndiGo
20%
30% SpiceJet
Others
Kingfisher Airlines:
Kingfisher Airlines' in-flight product has been granted a 5-star rating from Skytrax.
It is also known for the glamourized look of its cabin crew.
Kingfisher Airlines has introduced landscape camera system onboard its Airbus
aircrafts. This will enable passengers onboard to have a scenic
view of the ground on their personalised screens. The
landscape camera will be displayed on channel two of the
aircraft's in-flight entertainment systems. Kingfisher's
Executive Vice-President Hitesh Patel said, ''India is a country
with a beautiful landscape and I'm confident that our guests
will find this service of great interest''.
Meal on Kingfisher
Jet Airways:
With the arrival of its new Boeing 777-300ER and Airbus A330-200 aircraft, Jet
Airways has introduced a new cabin with upgraded seats in all classes. It has three classes of
service: First, Première (Business), and Economy. Jet Airways has a three-star rated
Business and First Class, and is in the top twenty-five business classes reviewed by Skytrax.
Economy class has been reviewed as a three-star product by Skytrax.
First Class
All seats convert to a fully-flat bed, have a 15-inch widescreen LCD monitor with
audio-video on-demand (AVOD), in seat power supply, and USB ports etc. Jet Airways is the
world's second airline to introduce private first class suites. It is the ninth-best first class in
the world as conducted by Skytrax.
Première Class
Air India:
Air India offers three classes of service – First Class, Executive Class and Economy
Class. Flat bed seats are offered for First and Executive Class passengers.
Air India's newly ordered fleet features Air India's brand new interiors. First class is a
completely lie flat bed, with an 22 inch PTV with AVOD. The seat features in seat massage,
USB ports and laptop power supply. Business class is the "shell" type and also converts into a
flat seat. It also features an 18 inch PTV with laptop power supply and USB ports. Air India's
new economy class features 33 inch seat pitch and a 10.6 inch PTV with AVOD.
Kingfisher Airlines Ltd. led with 44% share of Domestic Airlines ad pie in Print
followed by Jet Airways (I) Pvt Ltd and SpiceJet Ltd with 24% and 16% share respectively
during Jan - May '08.
News channels had the maximum share of 49 per cent of Airline sector
advertising, followed by Sports and Infotainment channels with 15 per cent and 12 per
cent share respectively during 2007.
During Jan - May '08, maximum ads of Domestic Airlines were based on 'Contest
Promotion' i.e. with 46% followed by 'Discount Promotion' and 'Multiple Promotion' with
26% and 14% share respectively.
• TV advertising of Domestic Airlines saw a drop of 21 per cent during 2007
compared to same period in 2006.
• During 2007, TV advertising of Domestic Airlines was more during the second half
compared to the first half of same year.
• In the year 2006, the first and last quarter had an equal advertising share of
Domestic Airlines on TV.
FUTURE CHALLENGES:
India has the world's fastest growing airline industry. However, the growth in the
aviation sector and capacity expansion by carriers have posed challenges to aviation industry
on several fronts. These include shortage of workers and professionals, safety concerns,
declining returns and the lack of accompanying capacity and infrastructure. Moreover, stiff
competition and rising fuel costs are also negatively impacting the industry.
1. Employee shortage:
There is clearly a shortage of trained and skilled manpower in the aviation sector as a
consequence of which there is cut-throat competition for employees which, in turn, is driving
wages to unsustainable levels. Moreover, the industry is unable to retain talented employees.
2. Regional connectivity:
One of the biggest challenges facing the aviation sector is to be able to provide
regional connectivity. What is hampering the growth of regional connectivity is the lack of
airports.
4. Declining yields:
LCCs and other entrants together now command a market share of around 46%.
Legacy carriers are being forced to match LCC fares, during a time of escalating costs.
Increasing growth prospects have attracted & are likely to attract more players, which will
lead to more competition. All this has resulted in lower returns for all operators.
5. Gaps in infrastructure:
Airport and air traffic control infrastructure is inadequate to support growth. While a
start has been made to upgrade the infrastructure, results will be visible only after 2 - 3 years.
6. Trunk routes:
It is also a matter of concern that the trunk routes, at present, are not fully exploited.
One of the reasons for inability to realize the full potential of the trunk routes is the lack of
genuine competition. The entry of new players would ensure that air fares are brought to
realistic levels, as it will lead to better cost and revenue management, increased productivity
and better services. This in turn would stimulate demand and lead to growth.
CONCLUSION:
Flying is going to become expensive in the coming few months (Because of the
growing crude oil prices, the oil companies have raised the price of jet fuel by 10%)
Domestic airlines too have announced an increase in fuel surcharge by Rs. 150 to Rs.
350 (Following the rise in the price of jet fuel)
Increase in tourism (World travel & tourism council ranks India, the 3rd fastest
growing travel & tourism economy in the world)
Budget passengers will be badly hit (Those who considered flying by low fare carriers
will consider other modes of travel including Railways.)
BIBLIOGRAPHY
http://en.wikipedia.org
http://www.thehindubusinessline.com
http://www.bestindiansites.com
http://www.zenithoptimediaindia.com
http://www.indiantelevision.co.in
http://www.naukrihub.com
http://www.exchange4media.com
http://www.indiantelevision.co.in