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Padmashree Dr. D. Y.

Patil University
DEPARTMENT OF BUSINESS MANAGEMENT

“ANALYSIS ON AVIATION SECTOR


IN INDIA”

SUBJECT:

TREASURY & FOREX MANAGEMENT

SUBMITTED TO:

PROF. SHWETA BHOSLE

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ACKNOWLEDGEMENT
We are privileged to introduce this assignment for “Treasury and Forex
Management”. Being a management student of MBA we need to acquire knowledge
of each and every aspect of management tactics. Keeping this objective in mind, this
project has been written in a paper and systematic manner. While all necessary
information has been covered and care has been taken to avoid information overload.

We had great pleasure in preparing this project. We are confident that the
information given in this project is true as per our knowledge. We shall be eagerly
waiting for any suggestions given by our respected professor.

We take this opportunity to thank our honorable “Mrs. Shweta Bhosle” for her
support and encouragement extended to us.

Submitted By, Submitted To,


Kinchit R. Pandya Prof. Shweta Bhosle.
MBA-CORE 09064.
(Finance)

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TABLE OF CONTENT
SR. NO. TOPIC PAGE
NO.
1 Scope of Aviation Sector in India 4

2 Classification of Indian Aviation Sector 5-6

3 Growth of Aviation Sector in India 7

4 Trends in Aviation Industry 8-9

5 Aviation Sector Boomed 10-11

6 Current Domestic Airline Companies Operating 12


In India.
7 Air India 13-14

8 Go Air Airlines 15-16

9 Indigo Airlines 17-18

10 Jet Airways 19-21

11 Kingfisher Airlines 22-25

12 Spicejet Airlines 26-28

13 Conclusion 29

Scope of Aviation Sector in India.


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With a growth rate of 18 percent per annum, the Indian Aviation Industry is
one of the fastest growing aviation industries in the world.. The government &
apposes open sky policy has led to many overseas players entering the market and
the industry has been growing both in terms of players and number of aircrafts.
Today, private airlines account for around 75 per cent share of the domestic
aviation market.

India is the 9th largest aviation market in the world. According to the
Ministry of Civil Aviation, around 29.8 million passengers traveled to/from India
during 2008, an increase of 30 per cent on previous year. It is predicted that
international passengers will grow up to 50 million by 2015. Further, due to
enhanced opportunities and international connectivity, 69 foreign airlines from 49
countries are flying into India. Growth Rate 24% annual growth.

AAI manages 128 airports, which include 15 International Airport, 08


Customs Airports, 81 Domestic Airports and 28 Civil Enclaves at Defense
airfields. There are over 450 airports and 1091 registered aircrafts in the country.
The genesis of civil aviation in India goes back to December 1912 when the first
domestic air route between Karachi and Delhi became operational. In the early
fifties, all airlines operating in the country were merged into either Indian Airlines
or Air India and, by virtue of the Air Corporations Act 1953, this monopoly
continued for the next forty years.

Classification of Indian Aviation Sector

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The Indian aviation sector can be broadly divided into the following main
categories:

1Scheduled Air Transport Services- It includes domestic and international airlines.

2. Non-scheduled air transport service - It includes charter operators and air taxi
operators.

3. Air cargo service - It includes air transportation of cargo and mail.

Scheduled air transport service:

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

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

2. International airlines, which operate 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:

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

At present, there are 2 scheduled private airlines (Jet Airways and Air Sahara),
which provide regular domestic air services along with Indian Airlines. In addition
there are 47 non-scheduled operators providing air-taxi/non-scheduled air transport
services.

Apart from this, the players in aviation industry can be categorized in three groups:

• Public players

• Private players

• Start up players

There are three public players: Air India, Indian Airlines and Alliance Air. The
private players include Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air
Deccan and many more. The startup players are those planning to enter the
markets. Some of them are Omega Air, Magic Air, Premier Star Air and MDLR
Airlines

Growth of Aviation Sector in India

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 Domestic airlines flew 3.67 million passengers in August 2009—an increase
of 25 per cent.

 The Centre for Asia Pacific Aviation (CAPA) forecasted that domestic
traffic will increase by 25 per cent to 30 per cent till 2010 and international
traffic growth by 15 per cent, taking the total market to more than 100
million passengers by 2010.

 The government plans to invest US$ 9 billion to modernise existing airports


by 2010. The government is also planning to develop around 300 unused
airstrips.

 India ranks fourth after US, China and Japan in terms of domestic
passengers volume. The number of domestic flights grew by 69 per cent
from 2005 to 2008. The domestic aviation sector is expected to grow at a
rate of 9-10 per cent to reach a level of 150-180 million passengers by 2020.

 The industry witnessed an annual growth of 12.8 per cent during the last 5
years in the international cargo handled at all Indian airports. The airports
handled a total of 1020.9 thousand metric tones of international cargo in
2006-07.

 Further, there has been an increase in tourist charter flights to India in 2008
with around 686 flights bringing 150,000 tourists. Also, there has been an
increase in non-scheduled operator permits – 99 in 2008 as against 66 in
2007.

Trends in Aviation Industry

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1. Consolidation in aviation sector: In aviation industries the rise in the number
of alliances will help in promote the growth of aviation sector in India. Example of
the Jet-Sahara merger is just the beginning. Indian aviation industry is looking
forward to more consolidations.

2. The number of passengers travelling by air is on the rise: By 2025


passenger boarding expected to double and by the same time aircraft operations are
expected to triple, the number of passengers travelling by air is on rise.

3. For the travelling public, price is paramount in choosing a carrier: Airfares


are fully transparent to the public and travellers are choosing the lowest price
option because of the Internet and round-the-clock search facility. Even business
travellers, who have been less price-sensitive, are resisting fare increases.
Travellers are not giving preference to brand but the only premiums they are
willing to pay for are time-of –day and direct flights.

4. Capacity is growing without much constraint: The new aircraft have been
ordered by Indian carriers for delivery in the coming period, without clear plans to
retire older planes. Significant numbers of regional jets are also adding by them.
Kingfisher Airlines has already ordered 5 Airbus A380 aircrafts that will operate
on international routes

5. Cost structures will continue to handicap legacy carriers as they compete


with newer airlines, as well as with overseas carriers: Great threats are being
posed by the low cost carriers to legacy carriers, as a result of which they are
reshuffle, their pricing policies. Apart from this, they are also facing competition
from overseas players.

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6. Outsourcing: Private airlines are famous to hire foreign pilots, get expatriates
or retired personnel from the Air Force or PSU airlines, in senior management
positions. Airlines are also famous to take on contract employees such as cabin
crew, ticketing and check-in agents.

Aviation Sector Boomed

Reason for Boom in Aviation Industry:

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1. Foreign equity allowed: Without any Government approval, foreign equity up
to 49 per cent and NRI (Non-Resident Indian) investment up to 100 per cent is
allowable in domestic airlines.

2. Low entry barriers: Nowadays, to launch an airline venture capital of $10


million or less is enough. Private airlines are hiring foreign pilots, get expatriates
or retired personnel from the Air Force or PSU airlines in senior management
positions.

3. Attraction of foreign shores: Many private players like Jet and Sahara have
gone international by starting operations, first to SAARC countries, and then to
South-East Asia, the UK, and the US and many more domestic airlines too will be
entitled to fly overseas by using unutilized bilateral entitlements to Indian carriers.

4. Rising income levels and demographic profile: As compared to the developed


country standards, India's GDP (per capita) at $3,100 is still very low but as India
is shining, at least in metro cities and urban centres, where IT and BPO industries
have made the young generation prosperous.

Demographically, In India people in age group of 20-50 among its 50 million


strong middle class, has the highest percentage with high earning potential. It
contributes the boost in domestic air travel, particularly from a low base of 18
million passengers.

5. Untapped potential of India's tourism: Presently India attracts 3.2 million


tourists every year, while China gets 10 times the number. Due to the open sky
policy Tourist arrivals in India are expected to grow exponentially.

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6. Glamour of the airlines: An airline is as glamorous as the film-making
industry. Today Airline tycoons, like J. R. D. Tata and Howard Hughes, Sir
Richard Branson, Dr. Vijaya Mallya, have been idolized. Airlines have an aura of
glamour around them, and high net worth individuals can always toy with the idea
of owning an airline.

Current Domestic Airline Companies Operating In India

Following are the airline companies which are currently operating in India:
1. National Aviation Company of India Limited (NACIL) Air India

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2. GoAir Airlines

3. Indigo Airlines

4. Jet Airways + JetLite (Air Sahara)

5. Kingfisher Airline +Kingfisher Red (Air Deccan)

6. Spicejet Airlines

Market Share of Scheduled Domestic Airlines

Source: Directorate General of Civil Aviation

Air India

Founder of Air India is J.R.D Tata & it was the first Indian airline, was
owned by T ata Sons Ltd. T ata Airlines converted into a Public Limited
Company on July 29, 1946 and renamed “AIR INDIA”.

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Air India is a state-owned flag carrier and currently the oldest and largest
airline of the Republic of India. It is a part of the Indian government-owned
National Aviation Company of India Limited (NACIL). The airline operates a fleet
of Airbus and Boeing aircraft serving Asia, Europe and North America. It is the
16th largest airline in Asia. Air India has two major domestic hubs at Indira Gandhi
International Airport and Chhatrapati Shivaji International Airport. Currently it has
31 fleets & it has ordered 30 more fleets. Aircraft In service Orders Passengers First
Business Economy
Current Scenario of Air India

 The director general of civil aviation (DGCA) has approved phasing out the
commercial mandatory agreement for airlines, which stipulates that foreign
carriers operating to India have to enter into seat block arrangement and
code sharing with state carriers, by January 1, 2010.
 The move would mean that foreign carriers can choose code-sharing
partners other than Air-India and will not have to pay royalty fees. In 2004-
05, Air-India earned Rs 550 crore through commercial mandatory
agreements, an increase of 18.36% over the previous fiscal. It would
definitely be a setback for Air-India since revenues from block space
agreement contribute to 4.5% of the total revenue earned.
 Nacil, which runs the national carrier Air India, is expected to incur a loss of
approximately Rs 5,400 crore during 2009-10, only marginally lower than
the preceding fiscal despite a host of cost-saving measures being initiated. In
2007-08, Nacil had incurred a loss of Rs 2,226.16 crore and then Rs 5,548
crore in 2008-09. The airline’s total outgo on lease rental payments for
2007-08 was Rs 717.2 crore, for 2008-09, Rs 811 crore and for 2009-10 (up
to February 2010) Rs 759.25 crore. Currently its total Working Capital loan
is Rs. 16000 crore & total debt is Rs, 79,000 crore.

Analysis on NACIL (Air India)

1) It should focus more on risk management practices.

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2) It requires an effective turnaround management to rebuild their brand image
in aviation sector.

3) NACIL should be given autonomy in decision making.

4) The government should provide capital in the form of convertible debt.


Convertible debt would provide the government the option to convert into
equity.

5) They should opt for IPO to generate more revenue which will help them to
reduce the losses.

6) There should be transparency in their working process.

7) Corporate governance is required to be taken into consideration. NACIL


requires visionary leader which would drive NACIL in a better way.

8) As per Civil Aviation Minister Praful Patel informed that turnaround plan of
National Aviation Company of India Limited (NACIL) has projected
benefits of Rs 1,911 crore during Financial Year (FY) 2010. However,
NACIL has achieved savings of Rs 753 crore in the FY 2010, which is a
good recovery & it will benefit them to compete with the private players in
aviation sector.

Go Air Airlines
Go Airlines (India) Pvt. Ltd. is the aviation foray of the Wadia Group, one of
India’s top business houses. The airline operates its services under the brand Go

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Air. Go Air launched its operations in 2005. Go Air is a low-fare carrier launched
with the objective of commoditizing airline travel by offerings airline seats at
marginal premium to first class train fares across India.

Go Air is positioned as ‘The Smart People's Airline’. Its captivating theme, ‘Fly
Smart’ is aimed at offering passengers a consistent, quality-assured and time-
efficient service. Its unique product portfolio comprises of some of the most
innovative offerings in the industry including GoSave, GoFlexi, GoHappy and a
bundle of Red Eye flights. The airline uses the state-of-the-art Airbus A320
aircraft fleet. Its product offering is driven by frequency based service between
various commercial hubs of the country. Go Air has been honored with the Best
Airline Award for Efficient & Quality service by PATWA for two consecutive
years in a row. The airline currently operates across 18 destinations 160 daily
flights and approximately 1120 weekly flights.

Current Scenario of Go Airlines

 Go Air India’s smartest airline, today announced that it has registered an 84


per cent load factor for the month of June 2010. During the last quarter
(April 2010 – June 2010), Go Air has consistently registered average
passenger loads in excess of 83 per cent. During the past year Go Air has
been on a continuous growth phase.

 For the period of April 2009 -March 2010, Go Air flew 2.41 million
passengers as against 0.95 million passengers during the same period in
2008-2009 thus achieving a 153 per cent growth rate in passenger traffic.
Similarly for the Quarter ended 30th June, 2010 Go Air flew 787000+
passengers which were almost 52% higher than in the similar period last
year.

 Go Air India’s smartest airline, announced the addition of two new stations
to its growing network namely Nagpur and Nanded. Services has commence
from 6th of April 2010. This move comes as part of Go Air’s growth
strategy and to strengthen its existing network. The introduction of these 2
new stations will take the total number of weekly flights to 700 and 50
routes.

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 Wadia group-promoted budget air- carrier Go Air is in the process of raising
around $100 million to fund its aircraft acquisition programmed, airline
sources said on Tuesday. The airline is currently in talks with financial
institutions and a deal is expected to be arrived at over the next 2-3 months,
they said. GoAir, which currently has 10 Airbus A-320s in its fleet, plans to
take delivery of another 10 aircraft over the next three years.

Analysis on Go Air Airlines

1. Go Air is having a very sound business in low cost carrier by comparing


with other private players in aviation sector as their performance speaks for
them.

2. Go Air is doing a good business within domestic market but they should opt
for towards expanding their business by starting international flights. This
will help them to increase their customers.

3. Go Air should go for joint venture with international airline company which
will aid them with new technology and new innovative tariff structure which
will attract more customers.

4. Wadia group can generate more funds for Go Air Company by listing in
stock market as the performance of the company is good in domestic sector
which might attract investors in it.

5. They should use some fleets on lease which will help them to reduce their
cost of capital & will help them to utilize their fund in an efficient manner.

Indigo Airlines

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Indigo commenced operations on 4 August 2006 with a service from Delhi
to Imphal via Guwahati. The airline is owned by the Gurgaon based InterGlobe
Enterprises. It took delivery of its first Airbus A320-200 aircraft on 28 July 2006
and received six aircraft during 2006. Nine more aircraft were delivered in 2007
taking the total to 15. Former US Airways Executive Vice-President, Marketing
and Planning Bruce Ashby joined IndiGo as their Chief Executive Officer.

The airline has also acquired 3 parking spots in Indira Gandhi International
Airport and Chhatrapati Shivaji International Airport. Recently IndiGo changed
the outfits for their crew members on occasion of its 4th anniversary. IndiGo is a
private domestic low-cost airline based in Gurgaon, Haryana, India. It operates
domestic services linking 24 destinations. Its main base is Delhi's Indira Gandhi
International Airport. It was awarded the title of ‘Best Domestic Low Cost Carrier’
in India for 2008.

Current Scenario of Indigo Airlines

 Indigo plans to launch international services on 15 routes starting from the


middle of next year, according to a proposal it has submitted to the aviation
ministry. The Gurgaon-based carrier, which has a 13.6 % share in the
domestic passenger market, will complete five years of local operations in
August, meeting a key requirement for local airlines to fly overseas. Indigo,
with at least 16 Airbus A320 aircraft to augment its fleet of 32 A320s
between now and 2011, plans to launch international services in a phased
manner from August.

 India’s leading low-fare carrier IndiGo, run by InterGlobe Aviation Pvt. Ltd,
is planning to raise $500 million (Rs2,215 crore) through its initial public
offering (IPO), the highest ever for an Indian airline, and this may lead to a
re-rating of airline stocks. The IPO is scheduled for the last quarter of the
current fiscal ending March 2011.

 The country’s biggest discount airline IndiGo, run by InterGlobe Aviation


Pvt. Ltd, has sought in-principle approval from the civil aviation ministry
for a possible future order of 150 aircraft. The carrier wants approval “for
import/acquisition of an additional 150 aircraft for scheduled air transport,”
it said in a letter to the ministry that has been reviewed by Mint. The airline
had ordered 100 Airbus A320 jets in 2005, deliveries for which will run till
2015.

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 In the fiscal, considered to be the worst for the industry, the unlisted carrier
earned a profit of Rs82.16 crore, the first since its launch three years ago,
according to its annual submission to the Directorate General of Civil
Aviation (DGCA). The profit, on revenue of Rs1,876.35 crore, compared
with a loss of Rs212.28 crore in 2007-08 and Rs174.13 crore in 2006-07.

Analysis on Indigo Airlines


1) Indigo Airlines is currently making a decent brand image in low cost carriers
with having a market share of 13.6%. It was awarded the title of ‘Best
Domestic Low Cost Carrier’ in India for 2008.

2) To raise the funds they have opt for the IPO which will benefit them to
improve their business growth which will keep them stable in the current
competitive environment.

3) Indigo Airlines should currently to be more focused to increase their number


of fleets as they are going for expansion of business which is very crucial for
them to capture more customers along with their loyal customers.

4) They can also give more focused on risk management practices.

5) In future they are now focusing to start an international route which is very
good as now only Jet; Kingfisher & NACIL are given permission for
international routes that will lead to competition among companies.

Jet Airways

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Jet Airways is a major Indian airline based in Mumbai, Maharashtra. It is
India's largest airline and the market leader in the domestic sector. It operates over
400 flights daily to 67 destinations worldwide. Its main hub is Chhatrapati
Shivaji International Airport, with secondary hubs at Delhi, Chennai,
Bengaluru, Pune and Kolkatta. It has an international hub at Brussels Airport,
Belgium. Jet Airways is owned by Naresh Goyal.

Jet Airways was incorporated as an air taxi operator on 1 April 1992. It


started Indian commercial airline operations on 5 May 1993 with a fleet of four
leased Boeing 737-300 aircraft. In January 1994 a change in the law enabled Jet
Airways to apply for scheduled airline status, which was granted on 4 January
1995. It began international operations to Sri Lanka in March 2004. The company
is listed on the Bombay Stock Exchange, but 80% of its stock is controlled by
Naresh Goyal (through his ownership of Jet’s parent company, Tailwinds). It has
10,017 employees (as at March 2007).

Naresh Goyal – who already owned Jetair (Private) Limited, which


provided sales and marketing for foreign airlines in India – set up Jet Airways as a
full-service scheduled airline to compete against state-owned Indian Airlines.
Indian Airlines had enjoyed a monopoly in the domestic market between 1953,
when all major Indian air transport providers were nationalised under the Air
Corporations Act (1953), and January 1994, when the Air Corporations Act was
repealed, following which Jet Airways received scheduled airline status.

Air Sahara Buyout


In January 2006 Jet Airways announced that it would buy Air Sahara for
US$500 million in an all-cash deal, making it the biggest takeover in Indian
aviation history. The resulting airline would have been the country's largest but the
deal fell through in June 2006.

On 12 April 2007 Jet Airways agreed to buy out Air Sahara for INR14.5
billion (US$340 million). Air Sahara was renamed JetLite, and was marketed
between a low-cost carrier and a full service airline. In August 2008 Jet Airways
announced its plans to completely integrate JetLite into Jet Airways.

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Jet Konnect

Jet Konnect is the low-cost brand of India-based Jet Airways. It was launched on 8
May 2009, and shares the same airline code and call sign as Jet Airways. It
operates a mixed fleet of ATR 72-500s and Boeing 737-800s.

Current Scenario of Jet Airways


 Jet Airways (India) Ltd, the country’s largest carrier by passengers, swung
to a profit in the second quarter from a loss in the year-ago period on
improved seat occupancy and greater efficiency, underscoring the revival of
the Indian aviation industry. The airline, which has a market share of 26.9%
along with its low-fare subsidiary, reported a stand-alone net profit of Rs.
12.40 crore for the quarter ended 30 September against a net loss of Rs.
406.69 crore in the same period last year.

 In a first for any Indian carrier, Jet Airways (India) Ltd plans to strike deals
with European railway operators to let passengers reach destinations its air
network doesn’t cover. Foreign airlines such as Lufthansa, Air France SA,
Emirates and Continental Airlines Inc. already have such arrangements with
railway firms, allowing passengers to carry on with their journey by train
after a flight, or vice versa, on a single ticket. The concept is particularly
popular in Europe. Jet Airways has sought the civil aviation ministry’s
approval to sign such agreements before it approaches European
governments for similar clearances, said a government official, requesting
anonymity.

 India’s largest airline by passengers, Jet Airways (India) Ltd, is set to


become the country’s first carrier to fly to South Africa.The airline is also
entering into an agreement with Kenya Airways to connect to the northern
regions of Africa, coinciding with India’s recent thrust to improve economic
diplomacy in the continent.

 India’s largest airline by passengers carried Jet Airways (India) Ltd plans to
join a global alliance soon, chairman Naresh Goyal said, changing its policy
of reaching separate pacts with individual carriers. Joining an alliance can
take as long as 18 months and typically increases revenue by about 5%,
depending on the network feed and the agreements signed between member
airlines and the alliance.

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 Passengers carried by domestic carriers rose 19.3% to 33.9 million
passengers in Jan-Aug with Jet Airways recording the highest market share
among domestic carriers, government data showed.

Analysis on Jet Airways


1) Jet airways are the market leaders in the aviation sector in India with highest
number of passengers carried i.e. 33.9 million so it can be said that they are
the market driver in this sector & also they are having the maximum number
of fleets with them i.e. around 100 fleets are with them which are currently
operating.

2) Due to hike in fuel price & recession period the company is currently
suffering from debt burden of around Rs. 1,236crore so in order to reduce
the debt burden company can go for further public offer or they can sell their
some stake to another company to recover their debt.

3) They should tap the cargo market which they have not venture till now. Jet
Airways (India) Ltd, which runs India’s largest airline, is in initial
discussions with FedEx Corp. for a dedicated cargo airline that it wishes to
set up either as a joint venture or in alliance with the multinational logistics
firm.

4) They should use turnaround strategy by improving their services regarding


customer enquiring, in flight entertainment, change in meals which will
them to distinct themselves from their competitor i.e. kingfisher airlines.

5) In current year they have generated revenue more than 37% higher and
profitability was superior to Kingfisher due to a higher share of full-service
carrier operations which is very good & they should sustain this growth in
future also.

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Kingfisher Airlines
Kingfisher Airline is a private airline based in Bangalore, India. The airline
is owned by Vijay Mallya of United Beverages Group. Kingfisher Airlines started
its operations on May 9, 2005 with a fleet of 4 Airbus A320 aircrafts. The
destinations covered by Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa,
Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata, Pune, Agartala,
Dibrugarh, Mangalore and Jaipur.

In a short span of time Kingfisher Airline has carved a niche for itself. The
airline offers several unique services to its customers. These include: personal
valet at the airport to assist in baggage handling and boarding, exclusive lounges
with private space, accompanied with refreshments and music at the airport, audio
and video on-demand, with extra-wide personalized screens in the aircraft,
sleeperette seats with extendable footrests, and three-course gourmet cuisine.

Kingfisher Airlines is one of six airlines in the world to have a 5-star rating
from Skytrax, along with Asiana Airlines, Cathay Pacific, Malaysia Airlines, Qatar
Airways and Singapore Airlines. Kingfisher operates more than 375 daily flights to
71 destinations, with regional and long-haul international services. In May 2009,
Kingfisher Airlines carried more than a million passengers, giving it the highest
market share among airlines in India.

Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, in


which Vijay Mallya also owns. Kingfisher Airlines serves 63 domestic destinations
and 8 international destinations in 8 countries across Asia and Europe. Kingfisher's
short haul routes are mostly domestic apart from some cities in South Asia,
Southeast Asia and Western Asia. All short haul routes are operated on the Airbus
A320 family aircraft. ATR 42s and ATR 72s are used mainly on domestic regional
routes. Kingfisher has its medium, long-haul destinations in East Asia, Southeast
Asia, and Europe.

Its first long haul destination was London, United Kingdom which was
launched in September 2008. It has plans to launch new long haul flights to cities
in Africa, Asia, Europe, North America and Oceania with deliveries of new
aircraft. All long haul routes are operated on the Airbus A330-200.

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Kingfisher Red
Formerly known as Air Deccan, the airline was previously operated by
Deccan Aviation. It was started by Captain G. R. Gopinath and its first flight
took off on 23 August 2003 from Hyderabad to Vijaywada.[3] It was known
popularly as the common man's airline, with is logo showing two palms joined
together to signify a bird flying. The tagline of the airline was "Simpli-fly,"
signifying that it was now possible for the common man to fly. The dream of
Captain Gopinath was to enable "every Indian to fly at least once in his lifetime."
Air Deccan was the first airline in India to fly to second tier cities like Hubballi,
Mangalore, Madurai and Visakhapatnam from metropolitan areas like Bangalore
and Chennai.

Current Scenario of Kingfisher Airlines


 Vijay Mallya-promoted Kingfisher Airlines Ltd joined other leading
operators in making a turnaround when it posted an operating profit in the
second quarter, a traditionally weak season during which approximately
30% of its medium-sized planes were grounded, resulting in an 18%
reduction in seats offered. While India’s second largest airline by passengers
carried reported an operating profit of Rs175 crore for the quarter ended 30
September against a year-ago operating loss of Rs65 crore, it reported a net
loss of Rs230 crore for the second quarter, narrowing from the year-ago
Rs419 crore loss.

 Kingfisher Airlines earned an average Rs4.56 lakh per flight during the
quarter, 38.85% higher than the year earlier.Airline passenger growth rose
12%, while airlines added 8% more capacity from the year ago.

 The loss before tax and other income was RS240 crore compared with a
Rs416 crore loss in the year earlier. The airline’s domestic division posted
an operating profit of Rs108 crore against an operating loss of Rs147 crore
in the year earlier.

 International operations continued to be in the red, posting an operating loss


of Rs53 crore versus an Rs134 crore loss in the year before. Kingfisher
Airlines said it’s going slow on international expansion and striving to put
six grounded planes back in the air.

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 Kingfisher Airlines India’s second largest carrier by market share said on
Thursday its board has approved a debt recast that seeks to convert some of
its debt into equity. The move will help the company reduce its interest
burden and stem losses.

 Kingfisher, controlled by United Breweries Holdings Ltd, will convert


lenders’ loans of up to Rs13.55 billion into shares. It also plans to convert
founders’ debt of up to Rs6.48 billion into share capital. It plans to issue up
to 575 million redeemable preference shares and up to 780 million
convertible preference shares to its consortium of lenders. Its board also
approved issuing up to 648 million convertible preference shares to founder
entities United Breweries (Holdings) Ltd. and to Kingfisher Finvest India
Ltd.

 Kingfisher Airlines Ltd, the country’s second largest airline by passengers


carried, will join Oneworld Alliance, a global grouping of airlines,
becoming only the second airline in the country to become part of a global
airline alliance after Air India which is already part of Star Alliance,
according to the airline’s request submitted to the civil aviation ministry.

 Kingfisher Airlines received approval to run flights on seven new


international routes this month. The carrier, which runs 14 daily flights on
seven international routes, said it will announce the launch dates of flights
for the new routes later. Four of the new routes connect New Delhi to
London, Hong Kong, Bangkok and Dubai, while the others link Mumbai
with Colombo, Bangkok and Dubai

Analysis of Kingfisher Airline


1) Kingfisher Airlines currently operates with a brand new fleet of 8 Airbus
A320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the
first airline in India to operate with all new aircrafts. Kingfisher Airlines is
also the first Indian airline to order the Airbus A380. It placed orders for 5
A380s, 5 A350-800 aircrafts and 5 Airbus A330-200 aircrafts in a deal
valued at over $3 billion on June 15, 2005.

2) Kingfisher Airlines has launched “Five Star Privileges, an exclusive


program that entitles guests to avail of great deals at partner establishment
around the country.
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3) Kingfisher Airlines captures market share with strong passengers in
February 2009 as per the latest ministry of Civil Aviation data.

4) Kingfisher Airline has not effectively penetrated in the domestic market.


They are more focused on international flight services they should focus
more on domestic arena as there is scope for them to generate more revenue.

5) On comparison with jet airways kingfisher should have more expansion of


fleets.

6) Should tie up with different state tourism (like Goa, Kerala, Tamil Nadu etc)
to promote domestic air traffic.

7) Recasting of debt into equity is a good idea to generate more funds through
FPO will help them to reduce the losses.

8) Kingfisher Airline is the only company in aviation sector which provides


training to their employees, that means it suggests that they are more
customer oriented. They want that their customer should face no problem
while travelling.

9) Kingfisher Airlines should stop sponsoring in F1 Race & IPL as they are
currently facing debt crunch.

10) They should join hands with certain banks like ICICI, SBI etc. to offer e-
ticketing.

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Spicejet Airlines
SpiceJet is a low-cost airline headquatered in Gurgaon, India. It began
service in May 2005 and by 2008, it was India's second-largest low-cost airline in
terms of market share after Indigo airline. SpiceJet was voted as the best low-cost
airline in South Asia and Central Asia region by Skytrax in 2007. SpiceJet, India's
leading low cost airline, is a reincarnation of ModiLuft. It is promoted by Ajay
Singh and the Kansagra family. SpiceJet marked its entry in the Indian skies with
99 fares for the first 99 days, with 9,000 seats available at this rate.

This deal was followed it up with a 999 promotional scheme on select


routes. Their marketing theme "offering low 'everyday spicy fares' and great guest
services to price conscious travelers. Their aim is to compete with the Indian
Railways passengers travelling in air conditioned coaches.

On 15 July 2008 Billionaire Wilbur Ross suggested he would invest 345


crore (US$76.25 million) in the low cost airline. The board of directors of SpiceJet
accepted an offer in-principle from the US-based PE firm that would make
available about 345 crore (US$76.25 million) to SpiceJet, a joint statement issued
by SpiceJet and WL Ross & Co.

Indian media baron Kalanidhi Maran acquired a major stake (37.7%) in this
airline on June 2010. On December 9, 2010, SpiceJet made a firm order for 15
Bombardier Dash 8 Q400 and options for another 15.

Currently, SpiceJet operates 21 Boeing 737-800/900ER aircraft across 19


destinations and has a 14% share of the Indian market. SpiceJet flies to 22
destinations across India, Nepal and Sri Lanka. It commenced international
operations with flights from Chennai to Colombo, Sri Lanka on 7th October 2010,
and flights from New Delhi to Kathmandu, Nepal on 9th October 2010.

Current Scenario of Spicejet Airlines


 Low-cost carrier Spice Jet plans to buy as many as 30 planes from Canada’s
Bombardier in a deal worth up to $900 million intended to help boost its
fleet. The airline’s board approved the order for 15 turboprop planes along
with an option to buy 15 more as part of a drive to boost services to smaller
cities in India as demand for air travel expands. The plane purchase
announcement came as the airline reported it swung to a profit of Rs. 10.10

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crore ($2.30 million) in the three months ended September from a loss of
one billion rupees a year earlier.

 Chennai-based Sun TV Network Ltd chief Kalanithi Maran took control of


Gurgaon-based carrier SpiceJet Ltd on Monday by inducting new board
members and a new chief operating officer, concluding the acquisition. He
will be the new chairman of the company with the single largest stake of
38.66% through KAL Airways Pvt. Ltd. It paid Rs. 746 crore after the June
announcement for a 37.7% stake in the airline, which was followed by an
open offer to buy another 20%.

 SpiceJet Ltd, buoyed by second-quarter profit, announced on Tuesday that it


will begin regional flights next year with newly ordered planes.The
company made a profit of Rs. 10 crore in the three months ended September
compared with a loss of Rs. 101.29 crore in the year-earlier period as
passenger traffic continued to grow and helped by Rs. 25.17 crore from the
sale and lease-back of planes.

 SpiceJet Ltd has been cleared to fly overseas in June, starting with Dhaka,
Kathmandu and the Maldives, after the airline completes five years of
domestic service later this month. The country’s carriers that fly overseas
are Air India, Jet Airways, Kingfisher Airlines and JetLite, making SpiceJet
the fifth to do so.

 SpiceJet Ltd announced net losses of Rs133.50 crore in the year to March,
around 85% more than the Rs72.1 crore it lost the previous year, in the wake
of steeply rising aviation fuel prices and slowing growth in passenger traffic.

Analysis of Spicejet Airlines


1) Comparing with all other players in aviation sector Spicejet is performing
well as its revenue increased by 37% on compare with kingfisher which
reduced by 6.58%.

2) Appointment of Kalanithi Maran as a CEO of the company had a positive


impact on the company & also the value of the shares of Spicejet has
increased as investors are having faith in the capabilities of Kalanithi Maran.

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3) Currently company is using few fleets on lease for their business which is
very good as it will help them to reduce their expenses to buy a new fleet but
in future when the company is performing extremely well than they should
buy new fleets which will help them to increase their market share in the
business.

4) Currently the fleets of the Spicejet are flying overseas in Dhaka, Maldives &
Nepal which is very good as it is the only Low Cost Carrier to get approval
for overseas business. In future they should focus to increase their overseas
businesses which will help them to generate more revenue.

5) They should go for merger with international alliance in order to increase


their market share in overseas business too.

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Conclusion
Continuing an upward trend, India's domestic air traffic witnessed a 22%
growth between January and April this year with airlines carrying over 1.62 crore
travelers. Between January and April, domestic airlines carried around 1.62 crore
passengers as against the 1.33 crore during the same period last year. This came
against the backdrop of continued downward trends witnessed in the global
aviation sector since it was hit by recession and experienced negative growth since
2008.

In contrast, the scheduled Indian airlines flew a total of 41.88 lakh domestic
passengers in April against 39.03 lakhs in March this year. Of these, Jet Airways
and JetLite combined carried 10.84 lakh, Kingfisher 8.98 lakh, while Air India
(domestic) remained at the third spot with 7.62 lakh passengers.

Among the low cost carriers, 6.58 lakh passenger preferred to fly with
IndiGo, SpiceJet carried 5.27 lakh and GoAir 2.46 lakh while all-business airline.
Barring Kingfisher, all other airlines witnessed a growth in their market share.

So it can be said that it was an average performance of the airline companies


in the current year due to hike in fuel price & recession it did not performed well
up to the potential it should be, but in future there is a scope for the companies to
perform well as government is trying to take measures to reduce inflation which
will benefit them. May be the year 2011 will be more joyful than the 2010 year for
the aviation sector in India.

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