Spicejet

Case study on low cost carrier in India

Timeline:
1932: History of airlines started when Dorabji Tata launched Tata Airlines. 1953: Govt transformed the exiting airlines into two entities: IA and AI. 1986: This act restricted private player from operating across India, which allows private player to offer chartered and non scheduling services. 1994: Govt approved 6 more private carriers. 1998: Many of these airlines either closed or fling for closure. Only two airline: jet and Sahara survived. 2003: Air Deccan entered into the market following the western paradigm. 2003-07: Many companies and govt contributed to the growth of Indian airline industry 2011: The year turned out to be a year of mixed signal.

Problems and Solutions:

Rising aviation fuel charges No subsidy from govt Fuel contribution in % of operating cost High taxation and airport charges Un-uniformity in taxation (state sales tax as high as 30%) centralize excise duty (4% throughout) Increasing service tax from 10.3% to 12.4% Abatement of 60% in economical ticket for consumer

Continued
Shortage of qualified pilots and technical manpower Open institutions for pilots and technical manpower Congestion at airports Support infrastructure Fear of imminent recession

Continued
India should had been focused on the development and infrastructure in aviation industry as this was considered one of the most crucial stimulants for economic growth because it attracted enormous investment from 2004.