Aviation Industry

Group 6:

Prateek
Deepika
Romi
Deepak
Mehul
 About the Industry
1. Carries out wide range of services related
to air transportation.

2. Expanding Indian economy & increased

demand for trade has pushed the need for
aviation services to a new height.

3. Increasing number of private entrants in

the sector
 History of Civil Aviation

• First domestic air route between Karachi

and Delhi

• Year : February 18, 1911

Indian State Air Services +

Imperial Airways, UK
Air India- The Formation
• Founded by J. R. D. Tata in July 1932 as Tata
Airlines

• Tata Airlines became a public limited company

on 29 July 1946 under the name Air India. In
1948,

• 25 August 1953, the Government of India

exercised its option to purchase a majority stake
in the carrier and Air India International Limited
was born 
Air India: Rise of the Monopoly
In 1953 Nationalization of all assets

Air India has had 30 Years of undisputed control

over the Indian skies.

Air India had the third largest share in India's

domestic air travel market

In 2007 Government of India announced that

Air India would be merged with Indian Airlines
 The Turning Point
Open Sky Policy: The Government in 1990 allowed
air taxi- operators to operate flights from any
airport, (both on a charter and a non charter basis)

The Air Corporations (Transfer of Undertaking and

Repeal) Act, 1994 ended monopoly of Air India.

Private Players get entry:

- FDI stake up by 49% stake
- NRI investment hiked up to 100%
 Controlling Authorities
National Aviation
Company of India
Limited (NACIL)
Ministry of
Civil Aviation Airports
Authority of India
(AAI)
Pawan Hans
Helicopters
Limited (PHHL)
Bureau Of
Directorate Civil
General Of Aviation
Civil Aviation Securities
 Nationalization
• Nationalization of Indian Airlines (IA) in 1953
brought the domestic civil aviation sector under
the purview of Indian Government

• Government's intervention in this sector was

meant for removing the operational limitations
arising out of excess competition.

• This sector has mad substantial contribution

towards the development of trade & tourism in
the country
 Liberalization
Government of India progressively relaxed
restrictions allowing domestic airlines to operate
schedule services in India.

International air links with India also witnessed

major growth over the years.

In 2003, the government allowed private domestic

airlines to operate services to SAARC nations
through an open skies agreement
***South Asian Association for Regional Cooperation
 PESTAL
Political: Government is not stable

Economic: the disposable income of the people in the

economic is increasing

Social:

Technical: There has been considerate advancement in

technology with time

Legal: Flexibility in entry

Environment: Stiff competition in the industry .

Especially in hiring & training has become a tedious process.
Current Passenger Situation
Airline-wise Market Share - Year 2011

Spice Jet Air India

14% 16%
Go Air
6%

Jet Airways
18%
IndiGo
20%

Kingfisher Jet Light

18% 8%
Turbulent Sky: The Challenge
Indian aviation industry is plagued with several
problems:

• Include high aviation turbine fuel (ATF) prices

• Rising labor costs and shortage of skilled labor
• Intense price competition among the players
• Rising competition- entry of foreign companies
• Falling demand- pertaining to unstable economy
• Infrastructural constraint
Shaping Aviation’s Future: IATA’s Vision
• By 2050, IATA estimates that some 16 billion
passengers and 400 million tonnes of freight will
need to be flown yearly.

• To prepare the industry for the future, IATA is

working on an ambitious plan, Vision 2050, based
on four pillars.
- Structuring for profitability
- Sufficient and efficient infrastructure
- Sustainable technology to power the industry
- Capability to meet customer needs in future
IATA: Annual General Meeting 2011
•  67th IATA Annual General Meeting (AGM) and
World Air Transport Summit was held in Singapore
from 5 to 7 June 2011

• IATA suggested that “The industry’s major focus in

the coming years would be more on passengers.

• To evolve from the financial disaster of a partial de-

regulation that has created fierce competition
among airlines
 Crisis at Kingfisher
Kingfisher has been in facing crisis:

Kingfisher Airlines has delayed salaries of its

employees in Aug 2011. The management stated
that it does not have the money as the bank
accounts of the company had been frozen.

• ATF dues for HPCL & BPCL

• Since 2008, it has been reported that Kingfisher

Airlines has been unable to pay the aircraft lease
rentals on time
 Quarterly Results of Kingfisher
Kingfisher Airlines
Quarterly Results ---In Rs Crores---
  Sep '11 Jun '11 Mar '11 Dec '10 Sep '10
           
Sales Turnover 1,528.17 1,881.64 1,677.64 1,658.70 1,382.72
Other Income 102.09 29.37 -58.48 17.29 132.94
Total Income 1,630.26 1,911.01 1,619.16 1,675.99 1,515.66
Total Expenses 1,900.14 1,906.38 1,700.23 1,635.79 1,461.19
Operating Profit -371.97 -24.74 -22.59 22.91 -78.47
Total Extraordinary
-10.97 -4.79 -81.95 -19.19 -1.51
Income/Expenses
Gross Profit -269.88 4.63 -81.07 40.2 54.47
Interest 334.38 305.8 289.85 339.6 362.26
PBDT -615.23 -303.56 -452.87 -318.6 -309.3
Depreciation 78.53 86.55 61.88 61.28 52.99
PBT -693.76 -390.11 -514.75 -379.88 -362.29
Tax -285.07 -126.57 -159.21 -126.19 -131.47
Net Profit -408.69 -263.54 -355.54 -253.69 -230.82
Graphical Representation the Quarter

• Loss for September Net Profit

2010 is shown to be 0
Sep '11 Jun '11 Mar '11 Dec '10 Sep '10

-230.82 -50

-100

• The loss has been -150

gradually increasing -200

over the quarters. Axis Title

-250

• The loss has been -300

greatly reflected over a -350

year’s period and has -400

increased to -408.69 -450

Thank You