Professional Documents
Culture Documents
A Brief Overview
India is poised to be among the top five aviation nations in the world
in the next 10 years. Currently, India is the 9th largest civil aviation
market.
Recent estimates suggest that domestic air traffic will touch 160-180
million passengers a year, in the next 10 years and the international
traffic will exceed 80 million passengers a year.
The Indian Aviation Industry is exploring opportunities to improve
connectivity and is also looking at enhancing the number of Indian
carriers to various countries.
One of the key achievements of India in the last decade has been to
set-up an independent regulator for economic regulation of airports.
Regional
connectivity
Aircrafts landing
charges in India
Shortage of
trained
employees
Declining yields
Gaps in
infrastructure
Huge debt
burden
Indigo Airlines
Air India
Founded by J.R.D. Tata in 1932 as Tata Airlines.
In 1948 , 49% of the Airline was taken by Government of India.
Airline was granted the status of flag carrier under the name Air
India International.
On 25 August, 1953 the government of India purchased a majority
stake in the carrier and Air India International Limited was born.
First Airline in the world to have all jet planes.
Overstaffing:
41000 people work for Air India Largest number of people
employed by any airline .
The number is double the number of people needed to run the
business.
Paying salaries to near 41000 people is a big burden on Air
India.
It is increasing the debt of the airline which is already facing a
huge financial loss.
Merging Indian Airlines with Air India was a big mistake.
The strike by the pilots was an outcome of the hasty merger and
unkept promises of the management.
Post merger, the combined loss of both the Airlines rose from
2000 crores to 5000 crores.
Kingfisher
Owned by India's biggest liquor baron, Mr. Vijay Mallya Kingfisher Airlines
(KFA) is one of the finest luxury airlines of India. It is a subsidiary of UB
Group.
Kingfisher operates more than 375 daily flights to 71 destinations, with regional
and long-haul international services.
The airline started commercial operations on 9 May 2005 with a fleet of four
new Airbus A320-200s operating a flight from Mumbai to Delhi. It started its
international operations on 3 September 2008 by
connecting Bengaluru with London.
In the domestic services there are two full service airlines(Kingfisher First and
Kingfisher Class) and one low cost airline (Kingfisher Red).
Due to rising losses and cut-throat competition Kingfisher Airlines have
decided to dump the low-fare business model and focus instead on catering to
the premium, business-class passengers across the country.
YEARWISE PERFORMANCE
Months
Total
Income
Jun-06
15
1,352
1,692
-341
-68
Jul-06
Jun-07
12
2,142
2,562
-420
-42
03
Jul-07
Mar-08
09
1,546
1,734
-188
-11
04
Apr-08
Mar-09
12
5,577
7,186
-1,609
-55
05
Apr-09
Mar-10
12
5,271
6,918
-1,647
-54
06
Apr-10
Mar-11
12
6,496
7,523
-1,027
-16
07
Apr-11
Jun-11
03
1,991
2,255
-264
n/a
75
24,375
29,870
-5,496
From
To
01
Apr-05
02
Total
Cost
Net
Profit
EPS
Competition:
Cut-throat competition from the other low cost operators
like indigo and jet airways have prompted kingfisher
airlines to phase out their low cost airline segment.
Financial crisis:
Delayed salary
Fuel (ATF) Dues
Aircraft lease rental default
Airports Authority of India (AAI) default
Government Initiatives
Government Initiatives on
Promotion of Aviation Industry
(i) The Foreign Direct Investment limit in Air Transport
Services (Domestic Airlines) has been increased from 40% to 49%
and is soon expected to be increased further. However, the NRIs and
Persons of Indian Origin (PIO) have been allowed 100% FDI;
(ii) Private scheduled carriers with five years experience in
domestic sector and having fleet size of twenty aircraft permitted to
operate on international routes;
AIRPORTS IN
INDIA
At Present -
Fuel policy
India's cash-starved airlines will be allowed to import jet fuel
directly under a plan approved by a government panel.
Due of the federal and state taxes, jet fuel prices in India are
among the highest in the world.
The move to allow direct imports could reduce costs by 15 to 20
percent
FDI
A proposal of liberalizing the FDI policy to allow foreign
airlines to invest up to 49 per cent in cash-starved domestic aircarriers
More FDI has now become a requirement the capital intensive
aviation industry to pool in more equity.
The aviation sector is riddled with a host of problems and not
everything will be resolved by just injecting more cash, local or
foreign.
SWOT ANALYSIS
STRENGTHS:
Growing tourism
Rising income levels
Weakness:
Under penetrated Market
Untapped Air Cargo Market
Infrastructural constraints
OPPORTUNITIES
Expecting investments
Expected Market Size
THREATS:
Shortage of trained Pilots
Shortage of Airports
High prices
SUGGESTIONS
It is high time to come up with a solution of the crisis of the aviation
industry, the largest employer of the world in the unorganized sector,
as the airlines like Kingfisher and Air India are drowning in losses.
There is no need of government bailout private airlines as some of the
airlines are partially or fully responsible for their losses. Yet, as the
airlines are the backbone of the tourism industry and the thread
which links the country, the government has to intervene in the crisis.
But government bailout is not the solution as it is the taxpayers
money that will be flowing to the private players. Hence it is an
unfair step towards the general public.
CONCLUSION
Aviation industry is the backbone of tourism, investment and
employment in our country. Therefore, the government should take
every step possible in order to make it transparent and clear so that
the aviation industry can take advantage of the growing
opportunity in this sector. As aviation industry grows, it will lead to
more employment opportunities which will indirectly help our
country to grow economically.