SWOT ANALYSIS OF THE INDIAN AIRLINE INDUSTRY

Nikita Aggarwal C-04 Banipreet Kaur C-09 Gaurav Sharma C-28 Vinit Kumar Pandey C-31 Avishek Samal C-32 Sumit Kumar Pandey C-53 Neha Behl C-62 Chanchal Dubey D-25 TABLE OF CONTENTS SNo. 1. 2. Particulars History of Civil Aviation in India Current Scenario

started a regular airmail service between Karachi and Madras without any patronage from the government. a joint sector company. Air service of India. the number of air transport companies. This was with the opening of the first domestic air route between Karachi and Delhi by the Indian state Air services in collaboration with the imperial Airways. Ambica Airways. Three years later. In early 1948. carrying both air cargo and passengers. UK. the first Indian airline. was nine. Tata Sons Ltd. Indian National Airways. It was reduced to eight. These airlines were: Tata Airlines. Air India International Ltd. Deccan Airways. was established by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed . though it was a mere extension of London-Karachi flight of the latter airline. with Orient Airways shifting to Pakistan.. SWOT Analysis HISTORY OF CIVIL AVAITION IN INDIA The history of civil aviation in India began in December 1912. which were operating within and beyond the frontiers of the company.3. Bharat Airways and Mistry Airways.. At the time of independence.

9 lakh in 1995. The joint venture was headed by J. Between 1978 and 1990 it gradually increased and rose to 75.72 per cent in 1976 and further to 55. Though the Committee found no justification for nationalization of airlines.2 lakh in 1993. their share was 55. the private air taxi-operators carried 15. 29. . however. however.operators to operate flights from any airport. Such a merger. Its first flight took off on June 8. the share was nearly 72 per cent. The Government set up the Air Traffic Enquiry Committee in 1950 to look into the problems of the airline. It fell to 55.02 per cent in 1977.R. 36 lakh in 1994 and 48. cargo and passenger fares. it was operating four weekly services between Mumbai-London and two weekly services between Mumbai and Nairobi. In 1971.000 passengers. it favored their voluntary merger. The operators were. Their operations are governed by bilateral agreements signed from time to time between the Government of India and the governments of respective countries.58 per cent which went up to 65 per cent and declined to 58 per cent during 1972-75. however. The policy allowed air taxi. In 1990. At the time of its nationalization in 1953. Tata.D. In 1980-81. was not in keeping with the expectations of these airlines which had gone on an expansion spree during the post-World War II period. OPEN SKY POLICY The Open-sky policy came in April 1990. The share of foreign airlines in India's scheduled international traffic has increased. This number increased to 4.1 lakh in 1992. mounting salary bills and disproportionately large fleets took a heavy toll of the then airlines. particularly from 1949. Foreign airlines carrying international passenger traffic to and from India existed long before Independence. In 1996.93 per cent. a visionary who had founded the first India airline in 1932 and had himself piloted its inaugural flight. the number of such airlines was 35. 1948 on the Mumbai (Bombay)-London air route. The financial health of companies declined despite liberal Government patronage. both on a charter and a non charter basis and to decide their own flight schedules. It rose to 49 in 1996-97. required to use aircraft with a minimum of 15 seats and conform to the prescribed rules. was not welcomed by the airlines.constellation aircraft. acquiring aircraft ad spares. The trend. The soaring prices of aviation fuel. and an upward trend in air cargo and passenger traffic.

Jagsons Airlines. of which 16 are designated as international airports. The number of plus 120 category aircraft in the private sector was 34 and the total fleet strength was 75 in June. Modiluft and East West Airlines have since acquired the status of scheduled airlines.The 1996. Air India with 16. which had dominated the Indian air travel industry. Sahara India Airlines.14 per cent share in the domestic air passenger traffic.71 million as against 21. Indian aviation industry is dominated by private airlines and these include low cost carriers such as Deccan Airlines. CURRENT SCENARIO The Indian aviation industry is one of the fastest growing aviation industries in the world with private airlines accounting for more than 75 per cent of the sector of the domestic aviation market (as of 2006). Besides this there were 22 nonscheduled private operators and 34 private operators holding no-objection certificate in 1996. In terms of market share.3 per cent and GoAir with 5.8 per cent during the month of June 2010 . By 1995.1 million in the corresponding period of 2009—a growth of 22 per cent—according to data released by the Directorate General of Civil Aviation (DGCA). 1996. These included Jet Airways Sahara. The country has 454 airports and airstrips. Seven operators viz NEPC Airlines. Today. But only Jet Airways and Sahara managed to survive the competition. East West Airlines. Skyline NEPC. private air taxi operators carried 49. Passengers carried by domestic airlines from January-June 2010 stood at 25. followed by Kingfisher Airlines with 21 per cent. began to lose market share to Jet Airways and Sahara.9 per cent. GoAir. Meanwhile. Two out of seven scheduled air taxi operators suspended their operations in 1996 because of the non-availability of aircraft. The industry is growing at a compound annual growth rate (CAGR) of 18 per cent.08 lakh passengers which amounted to a 41. SpiceJet with 13. Archana Airways.5 per cent share. Indian Airlines. Jet Air. Currently. India ranks ninth in the global civil aviation market. NEPC Airlines. private carrier Jet Airways was the market leader with 26. ModiLuft Airlines. several private airlines had ventured into the aviation business and accounted for more than 10 percent of the domestic air traffic. who have made air travel affordable. and Damania Airways.4 per cent. Indigo with 16. SpiceJet etc. Continental Aviation.

not only due to population growth. AAI also plans to spend around US$ 3. place. airport retailing has also gained pace in the recent times. towards modernisation of non-metro airports. but also due to an increased propensity to fly. AAI. promotion. STRENGTHS • A major strength of any airline is the product itself (air travel). there are overall industry similarities that all airlines face.07 billion in the next five years for developing. . according to Praveen Seth. upgrading and modernising metro and non-metro airports. process. The continuous volatile environment of the aviation industry has been analysed with respect the extended marketing mix ( product. threats and opportunities. With the growth in the industry. over time air travel continues to grow.02 billion in 2010. While individual airlines each analyze and make decisions based on their own situations. Despite downturns. Additionally. price. with each endeavoring to maximize strengths and opportunities while minimizing weaknesses and threats. AAI is planning the city-side development of 24 airports. 11 new greenfield airports have been identified to reduce passenger load on existing airports. including those at Ahmedabad and Amritsar. SWOT ANALYSIS OF THE INDIAN AVIATION INDUSTRY SWOT means the strengths. Development of new terminals and airports such as the recently inaugurated T3 in New Delhi has provided added impetus to this segment. people and physical evidence). member-operations. weakness.The AAI is set to spend over US$ 1. This is one of the essential requirements of any organization and the foundation for understanding the industry of that particular organization.

and they have a major share of the Indian aviation industry. For example Air Deccan focuses exclusively on south Indian market while Go Air focuses on southern and western India. 5 years back 85% were business travelers. However. Private investors are allowed to establish general airports and captive airstrips while keeping a distance of 150 km from the existing ones. • Airlines have a high "spoilage" rate compared to most other industries. foreign investment up to 74% is permissible through direct approvals while special permissions are required for 100% investment. namely Go Airways. Though the government has tied up with private companies such as GMR and has upgraded airports such Delhi and Banglore but still there is a long way to go. and Kingfisher Air. Once a flight leaves the gate. at $30-35 per man-hour. OPPORTUNITIES • Government allows 100% FDI via the automatic route for the green field airports. About 49% FDI is allowed for investment in domestic airlines via the automatic route. • • Indian labour costs are an advantage. this option is not available for foreign airline corporations. This helped attract consumers for whom air travel was only a dream. This compares with $55-60 in South-East Asia and Middle East and even higher in the USA and Europe.• The entry of low-cost carriers pioneered by Air Deccan helped greatly reduce the costs involved in flying. Now a number of lowcost airlines are operating in India. Complete equity ownership is granted to NRIs (Non . WEAKNESS • All the major players in the aviation industry focus on particular regions rather than focusing on India as a country. Spice Jet. an empty seat is lost and non-revenue producing. The change in lifestyle of people and growth in the disposable income has resulted in an increase in leisure travelers for the past few years. • The unplanned location of airport and the lack of proper infrastructure facilities at the airport. Also.

21.800 per kilo litre against Rs.800 in the Average International Markets. cabin crew and ground staff. Aviation Turbine Fuel (ATF) prices in India is around Rs. 37. from more fuel efficient aircraft to more automated processes on the ground. . Technology can also result in increased revenue due to customer-friendly service enhancements like in-flight Internet access and other value-added products for which a customer will pay extra. landing and parking charges are 78% higher than the international average. all these policies promote foreign investment in this industry. according to the Investment Commission of India. The fuel bill is 40% of operating cost. • Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$ 80 billion towards new aircraft and US$ 30 billion towards the development of airport infrastructure. Also there is high attrition rate among the skilled manpower within the aviation industry. • Technology advances can result in cost savings. Furthermore. Thus. Also 20% of the Operational Budget is spent on training pilots. THREATS • One of the basic weaknesses in the aviation industry is the fuel costs which are 70% higher than International standards.Resident Indians). • There is a shortage of skilled manpower which includes pilots. Foreign direct investment up to 74% is allowed for non-scheduled and cargo airlines.

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