airlines industry in india-group 8
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8/14/2019 Airlines Industry in India-GROUP 8
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AIRLINE
INDUSTRY ININDIA
Presentation By Group VIII
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AGENDA
Objective
Current Scenario
Factors Driving Growth
Factors Obstructing Growth
The Scope Ahead
Key Learnings
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OBJECTIVE
Analysis of The Airline Industry:
Growth Factors
Impediments
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CURRENT SCENARIO
Growing vigorously at a rate of 25-30% and is expected to continue
International Players making a beeline to enter this emerging market
Carriers operating in India has grown from two state-owned players
in 1991 to more than ten today
Numbers of Flights operating: 2500 per day
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Growth in Domestic PassengerTraffic
Year ended 31 March Domestic Sector
Passenger
(millions)
Year-on-Year
Growth
1996 10.4
1997 11.2 7.7%
1998 11.5 2.7%1999 12.0 4.3%
2000 12.7 5.8%
2001 13.7 7.9%
2002 12.8 -6.6%
2003 13.9 8.6%
2004 15.7 12.9%2005 19.9 26.8%
2006 25.5 27.9%
Source: Airport Authority ofIndia
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Some Major Players
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Factors Driving Growth
Wider Availability of Low Fares
Higher Disposable Income and Growth in Consumer Spending
Lifestyle Changes
Growth from Tier II Cities
Tourism
Government Policies
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Wider Availability Of Low
Fares Large entry of Low Cost Carriers Costs have become comparable to A.C. Train
fares
Indian Rupees (INR)
Sector
2 AC - Sleeper Journey time 3 months 2 months1 month 3 daysJourney time
Delhi-Mumbai 4100 17 hours 4256 5452 64481hr. 45 min.
Delhi-Bangalore 5700 35 hours Re 1 6656 8248 96482hr. 30 min.
Mumbai - Bangalore 3000 23 hours 3656 4952 54481hr. 35 min.
Rail Fare (Return) Air Deccan fare (Return)
Source: Air Deccan Advertisement
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High Disposable Income
Growth in Income Level:
Increase in Leisure Travelers for the past few years; 5 years back85% were business travelers
22.1
27.0
43.6
194
169163
0
10
20
30
40
50
1998-99 2001-02 2009-10
mn
140
150
160
170
180
190
200
At 01-02 prices
Rs'000
Urban middle class households (LHS) Avg middle class household income (RHS)
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Lifestyle Changes
Younger Population (70% below 35 years)
Growth in Software/Manufacturing Industry
Air Travel no longer a luxury
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Growth From Tier II Cities
Government plans to modernize 35 non-metroairports
IT/Manufacturing companies plan to set up base
According to CRISIL - Traffic at non-metro airportto exceed metro airports by 2010:
Non Metro Airports = 74 million passengers
Metro Airports = 19 million passengers
This calls for investment of around Rs. 6000crores
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Tourism As a Growth Sector
High rate of growth in Tourism Industry
2004-05 had a 25% growth rate and is growing
De-seasoning of various destinations (e.g. Goa,
Kerala) 320 million domestic tourists
International tourism increasing but domestic isgoing to be the biggest impact
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Government Policies
Liberalization of the Aviation Industry (Open SkyPolicy):
Ended monopolies of state carriers
Increased number of players in the market:
Pre 1991 Two
Currently More than Ten
Increased FDI limit in Air Transport Services 74% in Airports
49% in Airline Carriers
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Government Policies
(contd) Restructuring and development of Airports Privatization of Airports
Airport Status Operator Investment (USD
million)
Hyderabad Under Construction - to be
commissoned in 2008
GMR-Malaysia Airports 300
Bangalore Under Construction - to be
commissoned in 2008
Siemens, L&T, Unique
Zurich
300
Delhi Concession awarded - modernisation
and upgradation
GMR-Fraport 1,750
Mumbai Concession awarded - modernisation
and upgradation
GVK-Bidwest 1,750
Kolkata To be privatised
Chennai To be privatised
Total 4,100
Source: Airport Authority of India
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Impediments To Growth
Lack of Infrastructure
High Input Costs
Lack of Human Resources
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Lack Of Infrastructure
Not enough operational Airports only 89 out of 450are operational
Not enough night parking
Shortage of runways Poor facilities for passengers restrooms,
restaurants, parking, etc Baggage system needs urgent upgrade
Need for more Maintenance Repair and Overhaul(MRO) Centers
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High Input Costs
Fuel Costs: 70% higher than International standards. Fuel bill - 40% of Operating Cost Annual industry bill - USD 1.7 billion.
Aviation Turbine Fuel (ATF) prices in India isaround Rs. 37,800 per kilo litre against Rs.21,800 in the Average International Markets
20% of the Operational Budget is spent ontraining pilots
Landing and Parking Charges: 78% higher thanthe International Average
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Inadequate HumanResources
Shortage of Skilled Manpower: Pilots
Cabin Crews
Ground Staff
Shortage of Air Traffic Controllers: Currently 1000 ATCs handling 89 Airports
Requirement of 2500 ATCs
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SCOPE AHEAD
25.5 million Domestic Travelers by next 12months
Airline Industry to be worth Rs. 35000crores by 2010
Growth to exceed that of China, Franceand Australia
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KEY LEARNINGS
Macro-Environmental Factors affecting theindustry: Growth Factors
Obstructing Factors
If all hindrances can be addressed then,SKY IS NOT THE LIMIT
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THANK YOU
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