me aviation presenatation

5/20/2018 ME Aviation Presenatation

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N.KAVYA

BILASH DASH

VAIBHAV GOYAL

MANKHANBIRTH MOMIN

PRANEETA KAUL

NAKUL RAMNANI

THE VI TION

INDUSTRY


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History of Aviation

FIRST FLIGHT

On December 17, 1903, Orville and Wilbur Wright capped

four years of research and design efforts with a 120-foot,

12-second flight at Kitty Hawk, North Carolina - the first

powered flight in a heavier-than-air machine. Prior to that,people had flown only in balloons and gliders.

FIRST PASSENGER

The first person to fly as a passenger was Leon Delagrange,

who rode with French pilot Henri Farman from a meadow

outside of Paris in 1908.


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INDIAN AVIATION INDUSTRY

There was hectic activity to bring planes to India and show them off in

December 1910.

His Highness the Maharaja of Patiala sent British Engineer CW Bowles to

Europe to look at the new art or science of flying and bring a couple of planes

back with him.

Bowles returned to India in December 1910 with a Farman biplane made in

England and a Gnome-Bleriot monoplane fitted with two seats.

Fortune did not favour Patiala and neither of these aircraft became the first

to get into the air.


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The first actual flight was successfully attained by Mr.

Davies in a Bleriot.

On the 10th of December Mr. Davies had the machine

ready and early in the morning circled the polo ground at

a height of twenty five or thirty feet.

Thus Allahabad has had the distinction of giving the lead

not only in India, but also to

the whole of Asian Continent

in connection with the latestof scientific wonders.


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INDIAN AVIATION INDUSTRY TODAY

India has the potential to become the third largest aviation market by

2020. There is large untapped potential for growth due to the fact that

access to aviation is still a dream for nearly 99.5 per cent of its population.

According to the report, the Indian civil aviation industry is on a high

growth trajectory, albeit with minor hiccups.

The industry has ushered in a new wave of expansion driven by Low Cost

Carriers (LCC), modern airports, Foreign Direct Investments (FDI) in

domestic airlines, cutting edge Information Technology (IT) interventions

and a growing emphasis on No-Frills Airports (NFA) and regional

connectivity.

The Indian civil aviation industry is amongst the top 10 in the world with a

size of around USD 16 billion. This is a fraction of what it can actually

achieve.


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Various reports have highlighted the significant growth in

the Indian aviation sector over the last decade.

As per data from the Airports Authority of India (AAI),

passenger throughput grew to 159 million (FY 13) and

cargo throughput to 2.19 million MT (FY 13).


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MARKET SHARE OF SCHEDULED DOMESTIC AIRLINES


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The Role of Aviation Industry in Indias GDP

The Aviation Industry in India is the most rapidly growing aviation

sector of the world.

The growth of airlines traffic in Aviation Industry in India is almost

four times above international average.

Aviation Industry in India have placed the biggest orders for aircraftsglobally.

Aviation Industry in India holds around 69% of the total share of the

airlines traffic in the region of South Asia.

A mind is like a parachute it

doesnt work if it is not open.


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Upto 1990, Indian Airlines was a single service provider having many

users of service. It had low elasticity with no close substitute.

In April 1990, the Government adopted open-sky policy. With Open Sky

Policy many private operators began operation in the domestic sector.

The carriage increased from a modest 15,000 passengers in 1990 to more

than 0.4 million in 1992.


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Opening up of the Aviation industry to 41% FDI in the form of equity stake

has also increased the competition in the economy.

By 1995, Private airlines occupied 10% of the domestic air traffic.

Hence the various players broke into the monopoly of IA and AI creating a

situation of Oligopoly market.

There are 8 major airways in the current Indian aviation industry. Each and

every player has a control on the prices and influences the market prices.


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The business strategies of pricing of tickets, advertisements, promotion

schemes etc are in line with that of the competitors. A slight change in any type

policy by a company will lead to the others to follow suit.

Eg: Like when Air Deccan came up

with a promotional scheme of Re 1

ticket, its immediate competitor

Spice Jet launched a scheme of

99p/ticket.

The product offered by each and

every airline i.e. air services is

more or less homogeneous with

minor differences.

The prices in this industry are fixed

by the players according to the

segment of market they want to

cater to.


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Market Share of Domestic Airlines

Source: Live Mint


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Region/Area Focus

IndiGoMain HubIndira Gandhi International Airport, New Delhi.

Secondary HubChhatrapati Shivaji International Airport,

Mumbai and Kempegowda International Airport, Bangalore.

Focus CitiesNetaji Subash Chandra Bose International

Airport, Kolkata; Chennai International Airport, Chennai; Cochin

International Airport, Kochi; Rajiv Gandhi International Airport,

Hyderabad; Sardar Vallabhbhai Patel International Airport,

Ahmedabad; Lucknow International Airport, Lucknow.


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SWOT AnalysisStrengths

The only profitable airlines running

in India in low cost carriers segment.Incorporates the best technology,

human resource and service at an

affordable cost to the customer.

Growth is ahead of aviations overall

industry growth in India.

Covers 32 destinations(all the majorcities in India).

Weakness

Concentrates only on middle class

society.Customers are not happy with inflight

catering services.

It has to focus on proper baggage

handling and improve the seating

comfort level.

Opportunities

IndiGo has attracted many loyal

customers of other airlines and

converted into IndiGo flyers over ashort span of time.

Shown tremendous growth both in

terms of market share and profit in

the recent years.

Witnessed a rapid expansion by

buying a new A320S airbus.

Threats

Rising fuel cost.

Facing competition from other

low fare airlines like Spice Jet andJet Konnect.

Rising labour cost.


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Air India

Main Hubs - Indira Gandhi International Airport, New Delhi &Chhatrapati Shivaji International Airport, Mumbai.

Secondary Hubs - Chennai International Airport, Chennai & Netaji

Subash Chandra Bose International Airport, Kolkata.

Focus CitiesHongkong International Airport, Hongkong; Singapore

Changi Airport, Singapore; Kempegowda International Airport, Bengaluru;

Trivandrum International Airport, Trivandrum; Cochin International

Airport, Cochin; Rajiv Gandhi International Airport, Hyderabad; Sardar

Vallabhbhai Patel International Airport, Ahmedabad.


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SWOT Analysis

Strengths

Largest air carrier in India in terms of traffic

volume and company assets.Owns the most updated fleet and competent

repairs and maintenance expertise.

Has financial backing of the government.

Weakness

Air India is operating Lack of clarity on

the across broad international and

domestic markets competing with world

leading airlines as well as local small

operators. This lack of clarity on the

strategic direction largely dilutes its

capabilities and confuses its brand

within markets.

Low profitability and utilization ofcapacity.

Opportunities

Worldwide regulation make the skies more

accessible; the route agreement is easier to

achieve. The number of foreign visitors areincreasing rapidly.

Customers are getting wealthier, tend to be less

price conscious and prefer to choose service over

cost.

Best time for introducing Low Cost Carriers

(LCCs).

Threats

Air India faces imminent aggressive

competition from world leading

airlines and price wars triggered by

domestic players.

The Indian Railway Ministry has

dramatically improved speed and

services in their medium/long distant

routes, attracting passengers away

from air service, with prices almost atpar with the low cost carreirs.


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Jet Airways

Main Hubs - Chhatrapati Shivaji International Airport, Mumbai.Secondary Hubs - Chennai International Airport, Chennai; Netaji Subash

Chandra Bose International Airport, Kolkata; Kempegowda International

Airport, Bengaluru; Indira Gandhi International Airport, New Delhi.

Focus Cities - Cochin International Airport, Cochin; Rajiv Gandhi International

Airport, Hyderabad; Sardar Vallabhbhai Patel International Airport,Ahmedabad & Lucknow International Airport, Lucknow.


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SWOT Analysis

Strengths

Has created a good image among the Indian

fliers.

Trusted airline by the corporate.One of the biggest Indian airline companies

with over 13000 employees.

Operations in over 75 Indian cities and over

400 daily flights.

International destinations in nearly 20

countries.Top brand due to excellent operations and

marketing.

Weakness

Competition from Lower Cost

Carriers(LCCs) and other competitor meansmarket share growth is tough.

Presence of other airlines on international

routes making it difficult to have significant

market share.

High Cost.

Opportunities

Strongly positioned in the international

routes.Has presence in every segment.

Increasing number of people opting to travel

by airlines..

Threats

Lower Carrier Costs (LCCs).

Rising fuel cost and Labour costs.


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Jet Lite

Main Hub - Indira Gandhi International Airport, New Delhi.Secondary Hubs - Chhatrapati Shivaji International Airport,

Mumbai & Netaji Subash Chandra Bose International

Airport, Kolkata.

Focus Cities - Kempegowda International Airport,

Bengaluru; Chennai International Airport, Chennai; Cochin

International Airport, Cochin; Chaudhary Charan Singh

International Airport, Lucknow; Rajiv Gandhi International

Airport, Hyderabad.


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SWOT Analysis

Strengths

Low cost.

Subsidiary of Jet Airways.Covers 42 destinations.

Weakness

No international destinations.

Very low market share.Not too many destinations as compared to its

competitors

Opportunities

Growing aviation market.

Expand their destinations.Increasing number of flight

passengers.

Threats

Rising labour cost.

Rising fuel cost.Competition


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Spice Jet

Main Hubs - Indira Gandhi International Airport, New Delhi; ; Chennai

International Airport, Chennai & Rajiv Gandhi International Airport,Hyderabad.

Secondary Hubs - Chhatrapati Shivaji International Airport, Mumbai &

Kempegowda International Airport, Bengaluru.

Focus Cities - Cochin International Airport, Cochin; Netaji Subash

Chandra Bose International Airport, Kolkata; Sardar Vallabhbhai PatelInternational Airport, Ahmedabad & Pune International Airport, Pune.


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SWOT Analysis

Strengths

Entered with Rs 99 fare for the first 99days.

Strong backing by the Promoters.

Having more than 35 destinations in

India.

Good presence in the market due to its

branding and advertising.

Weakness

No international destinations.Dependency on leased assets.

Opportunities

Growing aviation market.

International tie up would boost brand

image.

Threats

Rising fuel cost.

Strong Competition.


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Go Air

Main Hub - Chhatrapati Shivaji International Airport, MumbaiSecondary Hub - Indira Gandhi International Airport, New Delhi.

Focus Cities - Kempegowda International Airport, Bengaluru & Srinagar

Airport


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SWOT Analysis

Strengths

Strong backing by the promoters.Covers almost all major cities.

Good branding and marketing in India.

Weakness

Very low market share.

It entered Indian market very late.

Not too many destinations compared with its

competitor

Opportunities

More destinations yet to be covered.

Global operations can also be a value

addition.

Threats

Plenty of Low Cost Carriers (LCCs) to compete

with who already have taken the lead.

Rising labour cost.

Rising fuel cost.


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Type of Market for Aviation Industry

The market structure for airlines is anoligopoly.

There are only a handful of companies that

compete in this industry. Oligopolies are more competitive than

monopolies, industries for which there is only

one seller of the product, but are lesscompetitive than industries that experiencenear perfect competition.


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Reason for Aviation industry Market-

Oligopoly Market

Each company has some pricing power, but

they can't set prices to whatever they want.

There are regulatory bodies such as DGCA to

control pricing.

Each company affects the market (unlike

perfect competition) but is also affected by

other companies in the market (unlikemonopolies).


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Oligopolies are industries where set-up costs are

extremely high, so people can't just enter themarket even if there's money to be made in theindustry.

People will sometimes refer to them as "Big 3" or

"Big 4" or "Big" however many major players thereare in the market.

That's not to say that there aren't small players in

the airline industries that fill a special niche in themarket, but the small companies don't affect themajor players.


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One characteristic of oligopolies is that they engage inprice wars.

When one airline company decides to cut fares the otherindustries will usually cut theirs as well vice-versa is nottrue.

Price wars happen because some company is trying tograb a larger percentage of the market, and the other

companies lower their prices to not lose market share.

People feel some loyalty for various reasons (such asfrequent flyer program or availability of certain flights), sopeople might stick with their preferred company when a

competitor offers a lower price, so just because onecompany is selling at a higher price doesn't mean theywon't sell at all.


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Issues faced by the Aviation Industry

Labor -According to the ATA, labor is the an airline's No.1 cost; airlinesmust pay pilots, flight attendants, baggage handlers, dispatchers,customer service and others.

Fuel Cost -According to the Air Transportation Association (ATA), fuel isan airline's second largest expense. Fuel makes up a significant portionof an airline's total costs, although efficiency among different carrierscan vary widely. Short haul airlines typically get lower fuel efficiencybecause take-offs and landings consume high amounts of jet fuel.

Weather - Weather is variable and unpredictable. Extreme heat, cold,fog and snow can shut down airports and cancel flights, which costs anairline money.

Airport capacity, route structures, technology and costs to lease or buythe physical aircraft are significant in the airline industry.


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Porters Five Force Model

Competetive

Rivalry


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Air Transport Services

DGCA, under the provisions of Rule 134 of the

Aircraft Rules, 1937 grants permission to

persons to operate an air transport service to,

within and from India.


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Different Air Transport services in India

Scheduled Air Transport Services (Passenger)

Non- Scheduled Air Transport Services

(Passenger)

Air Transport Services (Cargo)

Non-Scheduled Air Transport Services

(Charter Operation)


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Social Costs

Flying possesses the ability to negatively impact the health of

passengers.

Long Travel Duration

Noise pollution

People living near Airport

Air pollution


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Capacity Utilization

Capacity utilization can be defined as the ratio of actualoutput to some measure of potential output.

Effect of market demand on Capacity utilization.

If capacity utilized optimally

Reducing the cost per unit of the services provided

Widening the market by making Indian Airlines more

competitive


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Three measures of capacity utilization :

(1) passenger load factor (%),

(2) flown hours per day (as a % of the

maximum) and(3) aircraft in use (as a % of the total fleet)

Passenger Load Factor : It is generally used to

assess how efficiently a transport provider"fills seats" and generates fare revenue.


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Resource Allocation

Resource Allocationis a plan for using available resources.

Example - human resources

Airline Pilot

Co-Pilot

Flight Engineer

Assistant Controller

Flight Dispatcher

Flight Attendant


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Resource Allocation

Aircraft mechanic or service technician

Ground Staff

Assistant manager in Customer Service

Department

Staff


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Resource Allocation

Problems

Indias aviation regulator the Directorate General of Civil

Aviation (DGCA) facing issue due to a serious shortage of

resources, with several key departments remaining well

below sanctioned staffing levels.

Insufficient investment in training the existing staff


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Consumer Protection

The primary responsibility of the DGCA is Safety Oversight, and tomeet this obligation, DGCA implements an Annual SurveillanceProgramme ( ASP ) covering all aviation activities.

Safety aspects like fastening of seat belts, no smoking, evacuation

procedures Airline security

Adequate safety measures are taken during landing/take-off

Quality of fuel should be ensured. Adequate fuel should be uplifted

for the flight.


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Consumer Protection

Before departure from base, the operator

should ensure that the aircraft is free from any

defect and proper rectification/maintenance

procedures have been followed

No excess passenger/load

Passengers with disabilities


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M k t Sh


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Market Share


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Passenger Growth


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Passenger Load Factor


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Cancellations


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Reasons for Cancellations


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Passengers Complaints during June 2014


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Various reasons of passenger complaints


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On-Time Performance Scheduled Domestic

Airlines)


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Reasons for delay


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Total Domestic Passengers Carried By Scheduled

Domestic Airlines Year 2014)


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Emerging trends- CAGR


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Emerging trends- Investments

0

1

2

3

4

5

6

7

8

9

10

11th 5 year plan 12th 5 year plan

5.5

9.5

Private Sector Investment

Amount (in Billion $)


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Government is investing in Northeastern India for connectivity with rest of the country

Greenfields are under consideration under Public Private partnerships.

Emerging trends

Emerging trends- Growing demands


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Emerging trends Growing demands


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Emerging trends

New JV from Tata-SIA and Tata-AirAsia.

Four airline Etihad,AirAsia,SIA,Tiger Airways

expanding in India.

FDI brings growth.

A-380 will help in reducing cost

Government is looking to make all 450 airportfully functional for connectivity.


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CONCLUSION

Industry is pushing their limits.

Government is investing in order to increase

Growth rate as Indian travelling trends are

changing.

New Projects lined up are new promises.


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