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SUBMITTED TO: MR. RAJAN ARORA SUBMITTED BY: MAHESH KUMAR YADAV
TABLE OF CONTENT 1) 2) 3) 4) 5) 6) 7) INTRODUCTION PRESENT STATUS OVERVIEW AVIATION MARKET FORECAST MAJOR CHALLENGES AHEAD ROAD AHEAD COMPARISON WITH RAILWAYS .
The last quarter of 2009 has also raised some hopes of revival in the country.INTRODUCTION KNOWING AVIATION INDUSTRY 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.02 million as compared to 3. The number of passengers carried by domestic airlines during the month of October 2009 was 4. . of which 16 are designated as international airports. With an increase in traffic movement during December 2009 and increase in revenues by almost US$ 21. This is being primarily attributed to increase in the share of revenue from Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) along with increase in airport charges. as per the latest estimates released by the Ministry of Civil Aviation. according to the previous monthly report released by the Ministry of Civil Aviation. With a CAGR at 18 per cent and 454 airports and airstrips in place in India. the Airports Authority of India seems set to accrue better margins this fiscal.56 million in September 2009. Union Civil Aviation Minister Praful Patel has stated that aviation sector will witness revival by 2011.4 million.
opening up of new international routes by the Indian government. fleet expansion by airlines. low airfares offered by low cost carriers. establishment of new airports and renovation and restructuring of the existing airports have added to the growth of the industry. Some of the factors that have resulted in higher demand for air transport in India include the growing middle class and its purchasing power. The sector has also seen a significant increase in number of domestic air travel passengers.AVIATION INDUSTRY IN INDIA India is one of the fastest growing aviation markets in the world. repair and overhaul (MRO) industry in India. the growth of the tourism industry in India. As of May 2006. and the overall economic growth of India. In addition to these factors. With the liberalization of the Indian aviation sector. increasing outbound travel from India. private carriers accounted for around 75% share of the domestic aviation market. the industry had witnessed a transformation with the entry of the privately owned full service airlines and low cost carriers. development of the maintenance. the emphasis on modernization of non-metro airports. . service expansion by state owned carriers.
has forced the industry to rethink how they do business on both a Financial and operational level. due to unprecedented demand for air travel. in many cases completely reinventing themselves. Although high Fuel prices are affecting profitability. And face major cost cutting exercises in order to reach necessary levels of Efficiency.OVERVIEW CURRENT AVIATION INDUSTRY Challenges that faced airlines and the aviation industry as a whole over the last Few years. The industry is now in an excellent position to face the challenges ahead . The notion of restructuring and cost cutting has been embraced wholeheartedly By European and Asian airlines as the only viable way to secure their long-term Security. And as a result have been remarkably successful at turning around ailing Companies. airlines are now in a much stronger position Then 2000. North American airlines have been slower to face up these challenges. There is no doubt that the aviation industry has come through one of the toughest periods in over 30 years. Most airlines have faced up to these challenges.
Traffic growth coupled with fleet renewal. has resulted in The return of business confidence and corporate investment in the aviation Industry. Traffic growth and Fleet demand will result in the demand 3.100 freighter deliveries of which 23% will Be purpose built freighters. this has resulted in high level growth in the demand for worldwide leisure travel. Companies such as boeing and airbus will reap the benefits Of this growth. The political environment has also begun to slowly stabilize. will require the delivery Of approximately 16.9% per year. This resulted in much stronger levels of air traffic in 2004 than had been forecast.600 new passenger aircraft. throughout the 2004 ± 2023 period. . Over the 2004 ± 2023 period world passenger levels is forecast to increase by 5.3% year on year. Freight traffic is also expected to grow at 5.AVIATION MARKET FORECAST Economic recovery coupled with the steadying of world markets.
These include shortage of workers and professionals. High input costs: Apart from the above-mentioned factors. the results will be visible only after 2 . Trunk routes: It is also a matter of concern that the trunk routes. 4. Moreover. Increasing growth prospects have attracted & are likely to attract more players. 3. Declining yields: LCCs and other entrants together now command a market share of around 46%. While a start has been made to upgrade the infrastructure. are not fully exploited. declining returns and the lack of accompanying capacity and infrastructure. Rising fuel prices: As fuel prices have climbed. is driving wages to unsustainable levels.MAJOR CHALLENGES FOR AVIATION INDUSTRY The growth in the aviation sector and capacity expansion by carriers has posed challenges to aviation industry on several fronts. 7. Moreover. Legacy carriers are being forced to match LCC fares. Increasing manpower costs due to shortage of technical personnel. What is hampering the growth of regional connectivity is the lack of airports. in turn. 6. One of the reasons for inability to realize the full potential of the trunk routes is the lack of genuine competition. the rising fuel prices have led to increase in the air fares.3 years. at present. during a time of escalating costs. All this has resulted in lower returns for all operators. Regional connectivity: One of the biggest challenges facing the aviation sector in India is to be able to provide regional connectivity. 1. the industry is unable to retain talented employees. . 2. Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to support growth. Employee shortage: There is clearly a shortage of trained and skilled manpower in the aviation sector as a consequence of which there is cut-throat competition for employees which. Some of the reasons for high input costs are:Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. safety concerns. the input costs are also high. Moreover. which will lead to more competition. the inverse relationship between fuel prices and airline stock prices has been demonstrated. 5. stiff competition and rising fuel costs are also negatively impacting the industry.
according to the Investment Commission of India. The SEZ is spread over 300 acres of land and will come up with an investment of US$ 32. Ranga Reddy district. An Aerospace and Precision Engineering Special Economic Zone with a proposed investment of US$ 641.77 billion covering an area of 3000 acres by Messrs Bengal Aerotropolis which has partnered Change International Airport of Singapore. Air India is also in the process of launching Cargo Hub in Nagpur while Deccan Aviation has already started one from the city. Aircraft manufacturing major. 37 km from Belgaum. Andhra Pradesh. 45 km from Chandigarh. North India's first private sector Greenfield international airport. Repair and Overhaul (MRO) hub at Ropar. .06 million in November 2009. for the civil aviation sector at a cost of US$ 6. Aerotropolis will be built with an allocation of almost US$ 3. in Karnataka was also inaugurated. Hindustan Aeronautics Limited (HAL) was ranked 40th in Flight International's list of the top 100 aerospace companies last year. will soon come up near the industrial hub of Ludhiana in Punjab. Boeing is in the process of setting up the US$ 100 million proposed Maintenance Repair Overhaul (MRO) facilities in Delhi.THE ROAD AHEAD Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure. Punjab will also become the first state in the country to set up a Maintenance. y y y y y y Indian aerospace companies are growing too. Aerotropolis.2 million has also come up at Adibatla.4 million The country's first SEZ dedicated to the Aerospace Hattaragi.
an affordable reality for the hordes of Indians travelling across the country. Slashed rates and Advanced Purchase schemes (Apex) swiftly began to take shape. but the wallet-friendly LLCs are here to stay. When Air Deccan introduced airfares almost equalling the AC II-tier train fares. . resulting up to 30 to 40 per cent slashed fares for apex fares compared with the original prices. the response from the leading domestic airlines like Indian Airlines.LOW COST AIRLINES VS RAILWAYS The continuing fare tussle between the Railways and the Low-cost airlines has changed the contemporary scenario for the Indian traveller. Jet Airways and Sahara Airlines was immediate. . once confined to the rich and elite. It has taken some time for the low-cost airline industry to carve a niche for themselves. A ticket on India's low-cost carrier (LLC) has made flying.
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