INDIAN AVIATION INDUSTRY

Subhajit naskarSwasti ranjan sahu

Tahsin akhtarTania dutta

Tripti dasUrmimala paul

Tathagata biswas

Air India was set up by J.R.D. Tata, who ran it successfully until it was nationalized in 1953.

Total 450 air ports, 13 international 7 custom airports, 80 domestic airports and 28 civil enclaves

Size About 75 million passengers $ 5.6 billion

Growth Around 15% growth in last 10 years. Growth in 2009 : 0.7% Vision 2020 statement predicts handling 280 million

customers by 2020

Major players & their market share

POLITICAL FACTORS

An unstable political environment causes uncertainty in the minds of the air travelers, regarding travelling to a particular country.

Instability due to international events & continued tension with Pakistan.

The most significant political event however has been September 11

Due to high corruption levels, bribes have to be paid for every permit & license required.

Trade relations

ECONOMIC FACTORS

Business cycles have a wide reaching impact on the airline industry.

During prosperity phase people indulge themselves in travel & prices increase.

During recession spending on air travel is cut which leads to reduce prices.

After the September 11 incidents, the world economy plunged into global recession due to the depressed sentiment of consumers.

Many companies were forced to cut prices to increase profits like citybank.

This prompted the industry to lay off employees,which further fuelled the recession (Air India).

SOCIAL FACTORS

People from varied income

groups. (Air India)

People from various

religions and castes.

.

Consumer friendly

environmentCustomization.

TECHNOLOGICAL FACTORS

The increasing use of the Internet has provided many opportunities to airlines. (Air Sahara ).

Internet based services to customers such as online ticket booking, updated flight information &

handling of customer complaints (Air India).

Modern communication, navigation, surveillance, and air traffic management.

Restructuring the existing airports at Delhi, Mumbai,Chennai and Kolkata.

Convertion of obsolete and unused hangars into profit centers.(AAI)

Trends in the Sector

Consolidation : Mergers

and Acquisitions

Price competition

among airlines

Increasing fleet sizes

Outsourcing

OPPORTUNITY

THREATSMiddle East

Aviation:low frequencies

from multiple destinations to their hubs, from where passengers can

access extensive global networks ex- Ahmedabad to Hamburg, or

Mumbai to London, connecting at an attractive hub,

Terrorism:

BUDGET-2010

Industry Expectations The industry recommended reduction in customs duty on Aviation

Turbine fuel (ATF) to 5% - Not fulfilled The industry recommended bestowing declared goods status to ATF so

as to have a uniform sales tax rate of 4% across the country - Not fulfilled

The industry recommended a withdrawal of service tax on First Class and Business Class air tickets - Not fulfilled

Budget impact The decreased allocation to the Civil Aviation sector is mainly due to

decrease in investment in NACIL. The increased allocation to AAI would lead to higher outlay on infrastructure facilities.

The airline companies are sitting on unabsorbed losses so MAT would not be applicable.

The levy of service tax on domestic journeys would lead to higher burden on the airline companies. However, the companies would recover the same from the passengers.

the budget has increased outlay for AAI to Rs 3094 crore (Rs 30.94 billion) up from revised estimate for FY2009-10 of Rs 2823 crore (Rs 28.23 billion).