Professional Documents
Culture Documents
Patil University
DEPARTMENT OF BUSINESS MANAGEMENT
SUBJECT:
SUBMITTED TO:
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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.
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TABLE OF CONTENT
SR. NO. TOPIC PAGE
NO.
1 Scope of Aviation Sector in India 4
13 Conclusion 29
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.
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The Indian aviation sector can be broadly divided into the following main
categories:
2. Non-scheduled air transport service - It includes charter operators and air taxi
operators.
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.
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.
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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
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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.
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.
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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.
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
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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.
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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.
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.
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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.
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
6. Spicejet Airlines
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.
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2) It requires an effective turnaround management to rebuild their brand image
in aviation sector.
5) They should opt for IPO to generate more revenue which will help them to
reduce the losses.
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.
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.
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.
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.
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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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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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.
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.
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.
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.
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crore ($2.30 million) in the three months ended September from a loss of
one billion rupees a year earlier.
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.
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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.
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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.
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