AIRLINES

India is currently considered the third largest domestic civil aviation market in the world. India has become the third largest domestic aviation market
in the world and is expected to overtake UK to become the third largest air passenger market by 2024

KEY INDUSTRY TRENDS

• New Airport Development: As per IATA estimates, air traffic in India is expected to reach ~478 million passengers by
2036. To support such high traffic volumes, country needs to develop adequate supporting infrastructure. Additionally,
to support this growth we will need to develop adequate capacity and capability in the country KEY CONSIDERATIONS
• Capacity expansion of current airports: The airports at four metro cities in the country – New Delhi, Mumbai,
Hyderabad and Bengaluru – cater to nearly 55% of the country's total air traffic and are operating at near-full capacity. 1. Fuel Prices
Rising private consumption and healthy economic growth would continue to provide tailwind to traffic growth. 2. Carrying Capacity
• Regional Connectivity Scheme: The Government recognizes the need to generate demand at regional airports and a 3. Capacity Utilisation
lack of proper airport infrastructure. The Regional Connectivity Scheme launched in 2016, has the objective to promote 4. Range/Distance
tourism, provide employment and promote balanced regional growth by making flying affordable for the masses. The 5. Destination Routes
policy intends to improve regional connectivity via measures such as incentives for airlines, airfare caps, and revival of 6. Maintenance Costs
existing airstrips and airports 7. Depreciation of fleet
JARGON
• Load Factor: Measures the capacity utilization of transportation services and is equal to the average actual utilization
divided by maximum capacity
• PRASM: Passenger Revenue per Average Seat Mile – is the revenue generated per available seat miles in which ASM =
number of seats available x number of miles flown
• Hangar Costs: Costs associated with parking aircrafts; Companies need to conduct a cost benefit analysis in order to
assess whether to rent, lease or buy hangars
Further Reading (click to read):
1. Auctus Advisors: Civil Aviation and Cargo - A Knowledge Paper
2. How Airlines can gain a competitive edge through pricing
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MANUFACTURING
Industry 4.0 is revolutionizing manufacturing by providing manufacturers with the opportunity to use IT and advanced technology throughout the
product life cycle. This has resulted in substantial cost savings, increased efficiencies, and operational excellence.
KEY INDUSTRY TRENDS
• IoT: Manufacturers are increasingly leveraging the Internet of Things (IoT), which entails the interconnection of unique
devices within an existing Internet infrastructure, to achieve a variety of goals including cost reduction, increased
efficiency, improved safety, meeting compliance requirements, and product innovation. IoT’s existence is primarily due
to three factors: widely available Internet access, smaller sensors, and cloud computing
KEY CONSIDERATIONS
• From B2B to B2C: Many manufacturers who traditionally had a B2B business model are shifting to a B2B2C 1. Raw Material Costs
omnichannel. The benefits include increased profit, faster Time-to-market, brand control, price control, collecting 2. Labor and wages
consumer data. Companies are leveraging various e-commerce platforms for this purpose 3. Supply capacity
• ERP Systems: Manufacturers can streamline their process by automating all business operations to get accurate real constraints/bottlenecks
time information thereby reducing costs 4. Overhead costs
• Increased Re-shoring: Growing economies in off-shoring countries requires manufacturer to increase wages. This 5. In-bound and out-bound logistics
coupled with lack of infrastructure in various countries and increased transportation costs has led to many firms costs
‘re-shoring’ operations to their country, especially US 6. Depreciation of equipment
JARGON
Ask: In what part of the value chain does
• Just-in-time (JIT): ‘Pull-Demand’ system in which raw materials are delivered as needed to minimize inventory
the client operate?
• Bottleneck: The resource in a manufacturing process that is working at max capacity and thus limits the output of the
entire production process
• Pareto: 80% consequences come from 20% causes. In general, 20% of the causes lead to 80% of the downtime
Further Reading (click to read):
1. McKinsey: IoT and Predictive Maintenance
2. Bain Insights: Lean Six Sigma and Performance Improvement
3. Manufacturing the future: The next era of global growth and innovation
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