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Business Communication
Report on
Sector: Aviation
BY Group No. 1
Section: C
Kshitij Garg 201821019
Gunadeep Gandavaram 201821012
Megh Arvikar 201821021
Radhika Modi 201821030

Sector: Aviation 1|Page

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Introduction & Market Scenario

The civil aviation industry in India has emerged as one of the fastest growing industries in the country during
the last three years. India is currently considered the third largest domestic civil aviation market in the world.
India is expected to become the world’s largest domestic civil aviation market in the next 10 to 15 years, as
per Mr. Jayant Sinha, Union Minister of State for Civil Aviation, Government of India.

According to International Air Transport Association IATA, India will displace the UK for the third place in
2025.The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as low-cost
carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information
technology (IT) interventions and growing emphasis on regional connectivity.

India’s passenger traffic grew at 16.52 per cent year on year to reach 308.75
million. It grew at a CAGR of 12.72 per cent during FY06-FY18.Domestic passenger traffic grew YoY by 18.28
per cent to reach 243 million in FY18 and is expected to become 293 million in FY20E. International passenger
grew YoY by 10.43 per cent to reach 65 million in FY18 and traffic is expected to become 76 million in FY20E.

In FY18, domestic freight traffic stood at 1,213.06 million tons, while international freight traffic was at
2,143.97 million tons. India’s domestic and international aircraft movements grew 14.40 per cent YoY and
9.40 per cent YoY to 1,886.63 thousand and 437.93 thousand during 2017-18, respectively. As of March 2018,
there are nearly 550 commercial aircraft in operation in India.

Sector: Aviation 2|Page

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SWOT Analysis

 The Strength of the Product– For every successful business, this is one of the most common objects
that play a huge role in increasing the strength of the business. To the aviation industry in India, the
product is air travel which is growing every day. The increased propensity to fly has provided immense
growth to the industry while the huge population of the country plays the rest of the part.
 Low-Cost Service– There are lots of airline services which are bringing the opportunity of flying at
comparatively low cost than other plush airline services. Due to that, people try to fulfill their dream
to fly.
 Changing Lifestyle of People– Lifestyle of people is regularly changing, and the disposable income
has also increased. This gives the opportunity of the enjoying the lavish way of traveling, flying.
 The Labor Cost Is Low– in India, the labor cost is quite low, that is $30-35 per man for an hour. This
is $55-60 in the Middle East and South-East Asia and even more in the USA and Europe.
 When Safety Is Concerned– This is one of the safest modes to travel in comparison to others and also
the quickest. People will prefer it more.
 Highly Trained Staff– No matter the ground staff or the flight attendants, the Indian Aviation Industry
is getting hyped because of the crew members of the industry.

 Personal importance Gets More Importance– Each Airline Company deals with their own problems
and concentrates only on their own issues instead of thinking about the entire industry of India.
 Lack of Infrastructure– It is true that the Government is trying their best to get better-planned
airports and top class infrastructure, still there are certain loopholes.
 Fixed Revenue– This is a weakness of aviation industry in comparison to other transport industries.
Actually, once the flight goes, the empty seat will remain empty.

Sector: Aviation 3|Page

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 Still Quite Expensive– No matter how the airline companies are providing cheap offers, still flight
tickets are expensive and also require pricy disbursements.

 Improvement in Investment– For the green field airport the Government has approved 100% FDI of
which 49% is for domestic airlines. Foreign investments up to 74% are permissible for direct
investment.
 Technological Advancement– The more technology will keep on blessing, the facilities like automated
ground processes, fuel-efficient aircrafts, etc. are booming around.
 Increased Revenue– The in-flight customer-friendly services have been increased, and the other value-
added products will also raise the revenue as customers have to pay for those separately.

 Economic Downturn– A global economic slump can affect the growth of the aviation industry as it
will disturb the leisure traveling along with business traveling.
 The threat of Terrorist Attack– Seeing the situation of the world; this is always a great risk for the
flights and overall aviation industry.
 Increasing Cost of Fuel- Though fuel-efficient airlines are emerging, still maximum airlines are
dependent on fuel. The cost is increasing which will inevitably make the flights more expensive.
 Shortage of Skilled Manpower– This is a real trouble as skilled manpower like professional ground
staffs, cabin crew, flight attendants, and pilots are not highly available.

Sector: Aviation 4|Page

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CURRENT UPDATES

 India plans to construct 100 airports at an estimated cost of $60 billion (about Rs. 4.2 lakh crore) in
the next 10 to 15 years, Civil Aviation Minister Suresh Prabhu said on 4th September 2018.
 Minister of State for Civil Aviation, Jayant Sinha, on Monday claimed the cost of travelling by air is
cheaper than taking a ride in auto-rickshaw. Sinha compared the per kilometer cost of air tickets
with the average fares of auto-rickshaws in cities. "Today, airfare is less than that of an auto-
rickshaw. You'll ask how is that possible? When two people take an auto-rickshaw they pay fare of
Rs. 10 which means they're charged Rs. 5/km but when you go by air you are charged Rs. 4/km."
 Budget carrier SpiceJet today successfully operated India's first test flight powered by biojet fuel.
According to the airline, a Bombardier 78-seater Q400 aircraft, partially using biojet fuel, took off
from Dehradun and landed at the airport in the national capital. The flight was powered with a blend
of 75 per cent air turbine fuel (ATF) and 25 per cent biojet fuel, it said. The global aviation body IATA
(International Air Transport Association) recently set out a target for one billion passengers to fly on
aircraft using a mix of clean energy and fossil fuels by 2025. To put it into context, some 4.1 billion
people flew last year globally.
 After putting disinvestment of debt-ridden Air India on the back burner, the government is set to
infuse Rs 2,100 crore into the loss-making national carrier. The Maharajah will get these funds as part
of government guaranteed borrowing, Secretary in the Ministry of Civil Aviation RN Chaubey said.
The turnaround plan for Air India was so futile that even after pumping in Rs 28,000 crore into the
airline, it could barely generate operating profits of Rs 403.03 crore in two financial years (2015-16
and 2016-17). The government's plan to sell off debt-laden Air India resulted in a damp squib as the
proposed strategic stake sale failed to take off in May. Not even a single buyer turned up to bid for
the money-guzzling airline. A Turnaround Plan (TAP) as well as a Financial Restructuring Plan (FRP)
were approved for Air India by the previous UPA regime in 2012.Under these plans, the airline is to
get budgetary support amounting to Rs. 30,231 crores over a ten-year period and also equity support
for the payment of principal/ interest of the non-convertible debentures.

Sector: Aviation 5|Page

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Future

India’s domestic aviation market has become the third largest in the world and the overall civil aviation
market in India is all set to become the world's third largest by 2020. By 2020, passenger traffic at Indian
airports is expected to increase to 421 million.
As of May 2018, 588 airplanes were in-service in the fleet of Indian airlines.
Domestic passenger traffic expanded at a Compound Annual Growth Rate (CAGR) of 13.91 per cent over
FY06–18. International passenger traffic posted a CAGR of 9.36 per cent over FY06-18. Freight Traffic grew
at a CAGR of 7.53 per cent over FY06-18. Freight Traffic is expected to grow at a CAGR of 7.27 per cent to
reach 4.14 million tons in FY23.
The Government of India has launched regional connectivity scheme named UDAN (Ude Desh ka Aam Nagrik)
to make flying affordable for common man.
AAI is going to invest Rs 15,000 crore (US$ 2.32 billion) in 2018-19 for expanding existing terminals and
constructing 15 new ones. It has opened airport sector to private participation, six airports across major
cities are being developed under the PPP model. The Airports Authority of India (AAI) aims to bring around
250 airports under operation across the country by 2020.
According to various estimates, India will require investments worth Rs 3 - 4 lakh crore (US$ 46.55 - 62.06
million) to achieve a capacity for having a billion trips per year.

Sector: Aviation 6|Page