Introduction Of Indian Aviation Industry

Published Date: 02 Nov 2017

India is the 9 largest aviation market in the world, as per the RNCOS study report, titled "Indian Aerospace Industry Analysis". It is estimated that the civil aviation market will register more than 16 % compound annual growth rate (CAGR) during 2010-2013 on back of strong market fundamentals.

The quickly growing aviation sector in India handles about 2.5 bn (billion) passenger across the world in a year, moves 45mn( million) tonnes (MT) of cargo through 920 airlines, using 4,200 airports and deploying 27,000 aircraft. Currently, 87 foreign airlines fly to and from India and 5 Indian carriers fly to and fro from 40 countries. India is likely to be amongst the top 5 nations in the world in the next 10 yrs. An competent civil aviation sector is significant for India as it is inter-linked with other sectors in the economy and generate employment and income through global commerce and tourism, as per a National Council of Applied Economic Research (NCAER) study titled "Emirates in India - Assessment of Regional Benefits and Economic Impact."

It is primarily recognized because of the boost in the share of profits from Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL). passenger carried by Indian domestic airlines from January-February 2010 stood at 8,056,000 as against 6,761,000 in the corresponding period of 2009-a increase of 19.2 %, according to a study shown by the Ministry of Civil Aviation.

Now Hyderabad International Airport has been ranked amongst the world's top 5 in the annual Airport Service Quality (ASQ) passenger examination along with airports at Singapore, Seoul, Beijing and Hong Kong. This airport in Hyderabad is manage by a public and private joint venture consisting of the GMR Group, Malaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and the Airports Authority of India (AAI).

Market Size

The domestic airlines carried 438.4 mn(million) passenger during January -September 2012 (first 3 quarters of calendar year) as per data study by the Directorate General Civil Aviation (DGCA).

The air transport (counting air freight) in India has concerned foreign direct investment (FDI) worth 446 mn US$ from April 2000 to September 2012 as per data study by Department of Industrial Policy and Promotion (DIPP).

Market Players

Spice Jet Ltd has announce the launch of 2 new international flights from Kerala, Kochi; to Male and Dubai. The airline has deploy the Bombardier Q400 aircraft, with a capacity of 78 passenger in the Kochi-Male route

IBS Software has enter into a contract with Lufthansa Cargo AG for the implementation of its air cargo solution - iCargo. The deal worth Rs 700 corer {127.50 mn US$} has 3 segment and IBS Software has key share of the contract.

Aerospace on a High

New Zealand and India have signed the ‘Arrangement for Cooperation on Civil Aviation’. Under the arrangement the 2 countries will support and promote the growth of technical and training cooperation in the field of civil aviation

GVK Power and Infrastructure Ltd has sign management and operations contract to the Airports Authority of Indonesia {Angkasa Pura Airports}. The range of the contract include administrate non-aeronautical commercial operations at both the existing terminals and the new international terminal of Indonesia's second busiest Bali (Denpasar) international airport

Maldivian Airlines has extended its flight network by concerning Dhaka, Chennai and Mumbai with Male, the capital city of Maldives. ‘India is our focus market as it has a enormous potential,’ said Mr Bandhu Ibrahim Saleem the Chairman of Maldivian Airlines

India will be the 4 biggest market in terms of value for all new aircraft delivery after the US, the UAE and China during the next twenty yrs as per aircraft maker Airbus.

Recent Developments

India released its 1st ever complete Aviation Carbon Footprint study for 2011; on October 9; 2012, which states that carbon dioxide {CO2} emission from Indian scheduled airline operations plus from foreign airlines to international destinations signify less than 1 % of the country's total CO2 emission, which is significantly lower than the global avg contribution of airlines.

A 10-member delegation led by Mr S R Rao; Commerce Secretary at Ministry of Commerce and Industry, the Government of India, will visit Pakistan for 2 days. The visit aims at boosting trade relations growing air connectivity and starting trade in petroleum product. Two-way trade between Pakistan and India is estimated to boost to 6 bn US$ by 2013-14.

Government Initiatives

In a key step aimed to boost up the Indian civil aviation sector; the Cabinet Committee of Economic Affairs (CCEA) has relaxed the FDI norms in aviation; which will allow foreign aviation companies to spend in Indian aviation companies. The foreign carriers can now pick up to 49 % stake in domestic Indian aviation firms.

The 12th Five Year Plan {2012-17} estimate the domestic and international cargo to raise at the rate of 12 % and 10%; correspondingly; with the total traffic projected to touch 5.9 mn(million) tonne (MT) by 2020. The Government has planned to invest 30 bn US$in next 10 ys, as per Mr S N A Zaidi; a Secretary of Civil Aviation.

The Government's open sky policy has concerned many foreign players to enter the market and the industry is rising in terms of number of players and the aircrafts. Given the strong market fundamentals; the civil aviation market in India is probable to register a CAGR of more than 16 % during 2010-2013; according to a RNCOS study.

The Government has taken different steps towards structural policy reform and has come out with new policies which are liberal and will push public and private partnerships (PPP).

The Government of India allows 100 % foreign direct investment (FDI) for green field airports; via the automatic route. Moreover; foreign investment up to 74 % is permissible through direct approvals while special permissions are required for 100 % investment.

Private investors are allowed to set up general airports and captive airstrips while maintain a distance of 150 kms {kilometers} from the existing ones. Complete tax exemption is also granted for 10 ys.

About 49 % FDI is allowed for investment in domestic scheduled passenger airlines and investment up to 100 % by non-resident Indians (NRI) via the automatic route. FDI up to 74 % is allowed for non-scheduled and cargo airlines.

The Indian aviation sector can be mostly separated into the following key categories:

Scheduled air transport service includes international and domestic airlines.

Non-scheduled air transport service consists of air taxi operators and charter operators.

Air cargo service; which include air transportation of mail and cargo.

Scheduled air transport services

It is an air transport service undertaken between 2 or more places and operated according to a published timetable. It includes:

Domestic airlines; which provide scheduled flights within India and to select international destinations. Spice Jet, Air Deccan, IndiGo and Kingfisher Airline are some of the domestic players in the industry.

International airlines function from scheduled international air services to and from India.

Non-scheduled air transport service

It is an air transport service other than the scheduled one and may be on charter basis and/or non-scheduled basis. The operator is not permitted to publish time schedule and issue tickets to passengers.

Air cargo services

It is an air transportation of mail and cargo. It may be on non-scheduled or scheduled basis. These operations are to destination within India. For operation outside India; the operator has to take definite permission of Directorate General of Civil Aviation demonstrating his capacity for conduct such an operation.

Leading Companies

Players in Indian aviation industry can be classified into three groups:

Public players

Start up players

Private players

There are 3 public players: Indian Airlines, Alliance Air and Air India. The private players include Paramount airways, Jet Airways, Air Sahara, Kingfisher Airlines, Go Air Airlines, Air Deccan, Spice Jet and many more. The start up players is those which are planning to enter into the markets. Some of them are Magic Air, Omega Air ,MDLR Airlines and Premier Star Air.

Market share of key players in the Indian aviation sector

Name of the players

Market Share

Kingfisher Airlines and Kingfisher Red (previously Air Deccan)

28%

Jet Airways and Jet Lite (previously Air Sahara)

25%

Air India and Indian (previously Indian Airlines)

16%

IndiGo

14%

SpiceJet

12%

GoAir

3%

Paramount Airways

2%

MDLR Airlines

0.004%

Factor Inputs

 

 

           

 

 

 

 

 

Source - Business World, July 2004

 

Airfares in India are among the highest in the world. For instance, a typical Delhi-Bangalore round trip costs Rs 18,000 - the same as it would from Delhi to Singapore.

 Fuel Prices

ATF is the major cost for domestic carriers accounting for 30% of the total operating costs in India, which is much higher than around 10-15% for airlines worldwide. The exorbitant sales tax on the ATF, which increases the price of ATF, is the major reason for this higher share in operating cost. The Jet fuel price has increased by 13.1 % to USD 424.64/ KL in New Delhi during the period May-Aug ’04. The rise in the first seven months of 2004 stands at 21.5%. 

 

Operating Costs

 

The regulatory system affects where, how and when airlines can fly. Thus it affects airlines’ ability to operate efficient networks and their revenue. To the extent that airlines cannot use the least cost combinations of aircraft types to carry passengers and freight, the costs of operating existing networks are higher than they otherwise might be (technical inefficiency). Further, they may be prevented from flying the optimum sized and configured network (allocative inefficiency). Thus, costs may be reduced as airlines are able to operate the right aircraft at the right frequencies on an existing route.

Airlines, by changing the design of a network and increasing its size, may also be able to decrease costs through economies of scale and scope.

Top aviation companies in India

Air Charter Services Pvt Ltd: Air Charter Services Pvt. Ltd. perform its business operation with private business aircrafts, corporate and executive air charters, photo and video flights, helicopter tours, and VIP charter flights. Its client list incorporates VIPs, tour co-ordinators, corporate firms air medical evacuation professionals and , travel agents. It provides services such as VIP, relief, privacy services and air ambulance.

Air Charters India: Air Charter India is own by the STIC Travel Group and has approximately 100 airplanes in India. It cover several international destinations with an unmatchable logistics support. The aviation company has 40 offices with a highly expert manpower of more than 1000 people. It offers services like heli-sightseeing, corporate jets, executive jets, charter flights for pilgrimage in India, heli-skiing, etc. Air Charter India provides airplanes such as aircrafts for corporates, individuals and group travelers, helicopters, business aircrafts.

Air India: National Aviation Company of India Limited (NACIL) was the 1st Indian aviation company which lead the way for other companies in the aviation sector. It was initiate before the India gain its self-government. Later it collaborate with Indian Airlines and gained the status of being the biggest airline in South Asian airline. Air India Express, Air India Regional and Air India Cargo are its subordinate in aviation market. It offers 1st class; Economy class and Executive class services and has code sharing pacts with companies like Aeroflot, Austrian, Air France, Airlines, Kuwait Airways, Emirates Airline, Air Mauritius, etc.

Aviation India: Aviation India provide service like air charter services, cargo services, flight operation, freight control, advisory, passenger services and aircraft preservation, consultancy and renovation, air supervision helipad engineering and, international flight operation, etc. The airlines has expert workforce and offers total organize and efficient back-up to several international schedule and non-schedule operation.

Indian Airlines: Indian Airlines was inaugurate on top of 1st August, 1953 and in cooperation with its fully governed assistant in aviation market Alliance Air, it takes pride in being recognized as one of the largest regional airline systems in Asia. It has a fleet of 70 airplanes and cover 76 destination, 18 foreign destination and58 Indian destination. Globally it covers Kuwait, Qatar, Oman, UAE, Bangladesh, Pakistan, Maldives, Sri Lanka, Singapore, Yangon, etc.

Deccan Aviation Ltd.: The aviation company has its presence in 8 places namely, Surat, Hyderabad, Mumbai, Ranchi, Colombo (Sri Lanka), Delhi, Bangalore and Katra. It has 350 daily departure and cover 65 destination in India. It offers the advantage of no-cost travel to ticketing flexibility, infants, ticketing counters and lavish aircraft interiors.

Indigo: Indigo is a useful low-price domestic airline which offers reasonable flying alternatives for mn (millions). The airline was facilitate by the Air Passengers Association of India (APAI) as the ‘Best Low-Fare Carrier in India for the year 2007’. Indigo has 120 daily departure and a fleet of 19 Airbus A320. The airline covers 17 destination namely Bhubaneshwar, , Ahmedabad , Agartala, Bangalore, Guwahati, Goa, Delhi, Hyderabad, Chennai, Vadodara, Kolkata, Mumbai, Imphal, etc.

Paramount airways: Paramount Airways is a business class airline which has its base in India and headquarters at Chennai. certified by Madurai-based Paramount Group and Paramount Railways was inaugurated in 19th October 2005. it operates in 8 destinations and Its fleet comprises 5 aircrafts.

Go Air Airlines: Like Spice Jet; a Go Air airline is also a low price airline certified by the Wadia group. It was inaugurate in Mumbai in June 2004. It operate in 11 cities with 61 daily departure. It has started its function in Bangalore, Coimbatore, Ahmedabad, Chennai, Jaipur, Mumbai, Goa, Cochin, Srinagar, Pune, Delhi, etc.

Kingfisher Airlines: It is the one and only 5-star airline in India which offers admirable 1st class service on domestic itineraries also. It is part of UB group, Kingfisher Airlines has received 30 awards for its novelty and customer satisfaction. After its tie-up with Deccan, has 484 daily departures.and the airline covers 64 cities .

Spice Jet: Spice Jet is mainly a low cost airline which incorporate many Boeing 737-800 airplanes in its convoy. It cover 14 destination in India.

Air Sahara: Air Sahara was inaugurate on December 3; 1993 with a fleet of only 2 Boeing 737-200s. Now it comprise of 27 aircrafts; availability of 16500 seats on regular basis and 135 daily departures. It reache different Indian destinations like Delhi, Lucknow, Bangalore, Kolkata, Chennai, Mumbai, etc.

Jet Airways: Jet Airways was recognized on May 5; 1993. It earn yearly takings of Rs 2502.89 and total revenue of around ` 117868.8 Million. At present it id India's largest private domestic airline with 62 aircrafts and a market share of 25percent. It covers 50 destination with 340 regular departure. Jet Airways has pacts with foreign airlines, such as Gulf Air, Austrian Airlines, Lufthansa, Swiss, Thai and Qantas.

SWOT Analysis

PEST Analysis

Political Factors – Trade relations, Licensing

Economic factors – Recession, prosperity phase

Social Factors – Income factor, Religions and castes

Technological Factors – Usage of internet.