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Dynamics of Aviation Industry: 2012

BY MANISH MANGHNANI

Flow of presentation

• Indian Aviation Market.• Air Corporation act that changes the Scenario• Viability of the Air line Industry.• Role of Air Transport.• Forces that brought changes in aviation Sector.• Kingfisher financial crises.• Dynamism in Airline market.• News

Indian Aviation Market

• Performance of Air Traffic evaluated for the longer time frame of 20 years(1990-91 to 2010-11).

• Total passenger Traffic growth annually:-9.9%.

i. Domestic:- 10.4%

ii. International:- 9.4%

Performance Of Scheduled Passenger traffic In India

Air Corporation Act Changes The Indian Scenario

• 1st March 1994 gate opened for the private sector

• 2003-2004 called the Watershed year in the history of civil aviation

• India witnessed 1st low cost carrier

• Air Deccan was the beginner.

• LCC or NO Frills changed the landscape of the competition

Viability of Air line industry

• Decade 2000-2010 witnessed a profitless growth

• FY 2010-2011 revival of strong market growth

• In 2003 only 4 carrier was present Air India, Indian airlines, Jet-Airways, Air Sahara

• In 2011 six carrier were operating in 11 different models Air India + Alliance air + Air India Express

i. Jet Airways + Jet Konnect + Jet Lite

ii. Kingfisher Airlines + Kingfisher Red

iii. Indigo

iv. Spice Jet

v. Go Air

• Catered 54 million domestic passengers during FY 2011

Role of Air Transport

• Key infrastructure

• Growth in international trade

• Connectivity enhancing the business

• Tourism development

• Job opportunity

• Contribution in GDP

• Substantial contribution to Public Finances

Forces that brought changes in Aviation sector

• Rising domestic gross domestic product

• Expanding middle income group.

• Demographic dividend

• Rising urban population

• Significant market development

• Growing tourism

• Thrust on remote area connectivity.

• Dynamism In Air Line market:

Entry And Exit Of Different Air Lines In India

t

The blue colour shows the year in which the particular Air line was in operation

• The figure shows that the number of Carriers was the highest in the years 2006 and 2007 during the entire period under study i.e. 1995-96 to 2011-12.

• However, the form of competition that existed was not commercially sustainable resulting in consolidation in the industry.

• In the interim period until 2011-12, Paramount

Airways stopped their operations, there was a merger

between 3 sets of carriers mentioned before and entry

of another LCC Indigo airlines in 2006-07.

• Graph 33 reflects the change in market share of airlines

between 2005-06 and 2011-12 (September 2011) in terms of

the passenger carried by the respective carriers on domestic

routes.

• Paramount Airways at 0.1% in the decreasing order of market

share. As against this in Part B of Graph 1, we observe that

there has been exit of airlines, entry of airlines and

consolidation in the industry.

Airports in India

Indian Airport : Passenger• Passenger throughput at Indian airports during 2010-2011 is placed at 144

million. (74% were domestic passenger & rest International)

• The percentage of Domestic passengers to the total passenger throughput

at Indian Airports has gone up from 68% in 2004-05 to 74% in 2010-11

implying faster growth of domestic as compared to international passenger

throughput.

• In terms of CAGR, Domestic segment registered maximum growth 18%

(approx) followed by the growth in International segment at 12% approx.

Annual terminal capacity and Passenger throughput in 2010-11 at all Major Airports

Sr. No.

Major Airports Annual Capacity (Million)

Passenger Traffic Handled (Million)

Capacity Utilization (%)

1 Mumbai 29.07 29 100%

2 Delhi 60 29.94 50%

3 Chennai 23 12.05 52%

4 Bangalore 11.5 11.59 101%

5 Kolkata 24.1 9.63 40%

6 Hyderabad 12 7.60 63%

7 Ahmadabad 4.02 4.04 101%

Source : DGCA

Indian Airport : Cargo

• Cargo throughput at Indian Airports during 2010-11 is placed at

2.34 Million Metric Tones.

• India’s impressive growth in international and domestic trade over

past few years has augured well for the air-cargo industry in India.

• Economic activity as measured by its GDP has been the prime driver

for the air cargo traffic growth in India.

• Indian government adopted “Open Sky” policy in early 1990s, under

which Indian or foreign carriers were allowed to operate scheduled

and non-scheduled cargo services to/from any airport in India.

Cargo Handled: Indian AirportsYear Cargo Handled (‘000 tones)

Domestic International Total

1995 -96 222 458 680

2004-05 490 831 1321

2010- 11 888 1504 2391

CAGR %

Domestic International Total

1995 -96 to 2004-05 9.2% 6.8% 7.7%

2004-05 to 2010-11 10.4% 10.4% 10.4%

1995-96 to 2010- 11 9.7% 8.2% 8.7%

Source : DGCA

Public Private Partnership Mode of Airport Development

PPP Mode of Airport Development

• Rapid growth in air traffic since 2004, resulted in congestion, delay & poor customer experience at major airport.

• Available infrastructure was highly inadequate to serve the increasing demand.

• To bridge the gap between capacity available & demand, MoCA brought PPP mode in to existence.

Aviation industry F.Y. 2012

• Dramatic shift observed from FSC to LCC.

• Share of FSC declined with increase in LCC.

• Jet Airways holds the largest market share of 26.1% in 2011-

12(consolidated with Jet - Lite).

• Jet Airways standalone stood at 18.2%.

• Indi-go is now 2nd largest with 19.7% market share.

• As of now no airline group in India has a market share greater than

26% in domestic market.

NEWS

• Paramount Airways working on revival plan

• New Dream Liner for five routes added by Air India

• Spice Jet has three more planes ; now fleet strength 51

• Ethiad is the first foreign investor in the aviation sector

• Ethiad plans to buy 70% stake in Jet and Kingfisher

• German Bank sues DGCA and Kingfisher

• Year 2012 is profitable for Indi-Go and Air India by beating Jet Airways in market share

Sources

• Indian Aviation News• AAI• civil Aviation Sector• Ministry of Aviation• www.Tcil.com• www.AirIndia.com• www.spiceJet.com• www.Indigo.com• www.go Air.com

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Thank you!!!