Professional Documents
Culture Documents
Airline industry
Kavita Chaudhary Vishal Anand Karman Desai Nikhil Bhosale Rajan Bhandari Ameya Vengurlekar
Airline industry
An airline provides air transport services for traveling
passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body. Airline services can be categorized as being intercontinental, intra-continental, domestic, regional, or international, and may be operated as scheduled services or charters
Airlines in India
Air India
Kingfisher Indigo
Jet lite
Jet airways Spice jet Go air
20.8% 17.1%
16.3% 11.3% 5.8%
WITNESSED A GROWTH OF ABOUT 18% WHICH IS VALUED AT US 5.6 $ BILLION IN YEAR 2008. AVIATION INDUSTRY OF INDIA HAS POTENTIAL TO ABSORB UPTO US 120 $ BILLION OF INVESTMENT BY 2020. THE ESTIMATION MADE BY THE CENTRE FOR ASIA PACIFIC AVIATION STATES THAT THE DOMESTIC AIRLINE TRAFFIC IN COUNTRY WILL GO UP BY 30% - 35% TILL 2012. WHILE THE INTERNATIONAL TRAFFIC IS EXPECTED TO INCREASE BY 15%.
Business environment
SLEPT analysis All industries are influenced by SLEPT factors. For example, some of the SLEPT factors affecting the airline industry in recent years include: 1 Social Increased popularity of foreign travel leading to a boom in demand for air travel. However, this has been adversely affected by international terrorism.
2 Legal There are increasingly tight rules about the materials that need to go into aircraft construction in order to make them safer and more resistant to fire hazards. This has had the impact of raising costs.
3 Economic Lower interest rates, have meant that people have more disposable income to spend on luxuries like long distance air travel. 4 Political The development of freedom of movement and trade in the European Union has led to greater levels of competition on European routes coupled with increased movement of people.
5 Technological Modern aircraft are safer and more economic to run than in the past making possible cheap air travel. The interest rate is the cost of borrowing money. The interest rate is established each month by the Monetary Policy Committee, although there will be different interest rates for different types of credit, depending on such factors as risk and length of the credit arrangement.
Government Policies
With Air India and Kingfisher going through their
worst crises, the government is working on a policy package civil aviation ministry has asked all scheduled airlines, including profit-making Indigo, to submit data on their prevailing financial position. To find out the extent of debt with financial institutions and their working capital requirements. A working group has been constituted under the chairmanship of civil aviation secretary Mr Nasim Zaidi, which would examine the data and the problems of the airlines
industry, as the government cannot provide any direct financial dole to bail out the private airlines Premier aviation consultancy firm Centre for Asia Pacific Aviation has forecast a record $2.5-3 billion loss for all Indian airlines for the year ending March 2012 banks approved a Rs 18,000-crore debt rejig plan for Air India and also agreed to provide fresh cash credit of Rs 2,200 crore The banks were also in talks with Kingfisher on the issue
The air transport (including air freight) in India has attracted foreign direct investment (FDI) worth US$ 423.31 million from April 2000 to
September 2011, according to the data provided by Department of Industrial Policy and Promotion (DIPP). Private carriers are anticipated to post a combined profit of US$ 350US$ 400 million for the financial year ending March 31, 2012 as per a report titled '2011-12 Aviation Industry Outlook' by Centre for Asia Pacific Aviation (CAPA) India
Civil Aviation: The different types of civil aviation are: Domestic airlines (Indian Airlines) International airlines (Air India, Lufthansa) Chartered airlines (Evergreen, Deccan Aviation) Private helicopter services (Pawan Hans) Corporate aircraft (Reliance) Transport (Fed EX)
Airports: The airports are controlled by the agencies like Airports Authority of India. AAI maintains the airports in India. Airlines get the routes and landing rights. These can be either used by them or swapped (e.g. Air India gave unused Delhi-London route to Virgin) Classes: Passengers can avail different types of classes in airlines: Economy class Business class First class The difference lies in various facilities like reclining seats etc. there is a significant difference in prices
Marketing: Airlines use conventional marketing methods for attracting customers. E.G. Advertising The Singapore Girl campaign of Singapore Airlines PR- Public Relations by Richard Branson of Virgin Brand Mascot- Maharaja of Air India SchemesFrequent flyer programs of various airlines
Overseas Opportunities
As airlines complete 5 years of domestic operation,
those with 20+ aircrafts will get international access. The opportunity for some will be a challenge for the existing international players. The risk cycle of increased competition, low yields, and growth transferred to the international arena.
encouraging Indias growth in FY2012/13 could possibly dip below 7% GDP growth for this current fiscal year is likely to be closer to 7% than the 8.5-9.0% forecast at the start of the year slowdown has largely been driven by internal factors such as corruption and governance scandals. directly frustrating investors. Capital has consequently been fleeing the country depreciating the Indian rupee by almost 20% since Sep2011. resulting in higher costs of fuel, aircraft leases and maintenance.
doing so. only winners in this scenario are the foreign airlines from whom Air India is being protected.
shareholding in Indian carriers (a proposal now before Cabinet) approving private carrier applications for international rights removing restrictions on ancillary revenues; and obliging more rational pricing by Air India
Thank You