project of aviation

8/14/2019 Project of Aviation

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Presented by:Anirudha Bera (3031)Divyan k (3018)Rakesh kumar (3043)Rajib k sahoo (3037)

Neeraj Mudgal (3004)Sourabh Srivastava (3016)
http://brianamarshall.fotopic.net/p46149921.htmlhttp://brianamarshall.fotopic.net/p46105616.html


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Contents:-

Introduction

History of Indian aviation sector

Present scenario

About major players in Indian aviation sector

Reasons About booming aviation sector in India

Government policy

Analysis of market share

Challenges

Market growth

Future status

Sources of data


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Aviation Industry in India is one of the fastest growing aviation industries in the world.With the liberalization of the Indian aviation sector, aviation industry in India hasundergone a rapid transformation. From being primarily a government-owned industry,the Indian aviation industry is now dominated by privately owned full service airlines andlow cost carriers. Private airlines account for around 75% share of the domestic aviation

market. Earlier air travel was a privilege only a few could afford, but today air travel hasbecome much cheaper and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when the first airflight between Karachi and Delhi was started by the Indian State Air Services incollaboration with the UK based Imperial Airways. It was an extension of London-Karachi flight of the Imperial Airways. In 1932, JRD Tata founded Tata Airline, the firstIndian airline. At the time of independence, nine air transport companies were carryingboth air cargo and passengers. These were Tata Airlines, Indian National Airways, Airservice of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways andMistry Airways. After partition Orient Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air IndiaInternational Ltd in collaboration with Air India (earlier Tata Airline) with a capital of Rs2 crore and a fleet of three Lockheed constellation aircraft. The inaugural flight of AirIndia International Ltd took off on June 8, 1948 on the Mumbai-London air route. TheGovernment nationalized nine airline companies vide the Air Corporations Act, 1953.Accordingly it establishedBy 1995, several private airlines had ventured into the aviation business and accountedfor more than 10 percent of the domestic air traffic. These included Jet Airways Sahara,NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, ContinentalAviation, and Damania Airways. But only Jet Airways and Sahara managed to survive thecompetition. Meanwhile, Indian Airlines, which had dominated the Indian air travelindustry, began to lose market share to Jet Airways and Sahara. Today, Indian aviationindustry is dominated by private airlines and these include low cost carriers such asDeccan Airlines, GoAir, SpiceJet etc, who have made air travel affordable.But one of the major challenges facing Indian aviation industry is infrastructureconstraint. Airport infrastructure needs to be upgraded rapidly if Indian aviation industryhas to continue its success story.007 was arguably the best growth period for India's civil aviation sector. Passengerscarried


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Indian Industry

Indian economy is one of the fastest growing in the world. Its GDP growth rate is 9.2%

with a GDP of rupees 177000 crore, which is the fourth largest in the world. India, the

12th largest economy in the world possesses a foreign exchange reserve of USD.177.00

billion. The country is fast adapting to industrialization, the speed of which is measured

as the second fastest in the world. The major industries of India are automobiles,

cement, chemicals, consumer electronics, food processing, machinery, mining,

petroleum, pharmaceuticals, steel, transportation equipment, and textiles.

In the post liberalization era the country has capitalised on its vast pool of educated,

English speaking manpower to become a major power in

outsourcing, Information Technology, financial and biomedical technology research,

banking & insurance, and real estate development.

HISTORY OF INDIAN AVIATION SECTOR

The history of civil aviation in India started with its first commercial flight onFebruary 18, 1911. It was a journey from Allahabad to Naini made by a Frenchpilot Monseigneur Piguet covering a distance of about 10 km. Since then effortswere on to improve the health of India's Civil Aviation Industry. The firstdomestic air route between Karachi and Delhi was opened in December 1912

by the Indian State Air Services in collaboration with the Imperial Airways, UK asan extension of London-Karachi flight of the Imperial Airways.

The aviation industry in India gathered momentum after three years with theopening of a regular airmail service between Karachi and Madras by the firstIndian airline, Tata Sons Ltd. However this service failed to receive any backing


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from the Indian Government.

At the time of independence nine Air Transport Companies were operational inthe Indian Territory. Later the number reduced to eight when the Orient Airways

shifted its base to Pakistan. The then operational airlines were Tata Airlines,Indian National Airways, and Air service of India, Deccan Airways, AmbicaAirways, Bharat Airways and Mistry Airways.

With an attempt to further strengthen the base of the aviation sector in India, theGovernment of India together with Air India (earlier Tata Airline) set up a jointsector company, Air India International, in early 1948. With an initial investmentof Rs. 2 crore and a fleet of three Lockheed constellation aircrafts, Air India startedits journey in the Indian aviation sector on June 8, 1948 in Mumbai (Bombay)-London air route.

For many years since its inception the Indian Aviation Industry was plagued byinappropriate regulatory and operational procedures resulting in eitherexcessive or no competition. Nationalization of Indian Airlines (IA) in 1953brought the domestic civil aviation sector under the purview of IndianGovernment. Government's intervention in this sector was meant for removingthe operational limitations arising out of excess competition.

Air transportation in India now comes under the direct control of the Departmentof Civil Aviation, a part of the Ministry of Civil Aviation and Tourism ofGovernment of India.

Aviation by its very nature constitutes the elitist part of our country'sinfrastructure. This sector has substantial contribution towards the developmentof country's trade and tourism, providing easier access to the areas full ofnatural beauty. It therefore acts as a stimulus for country's growth and economicprosperity.

HISTORY

Revolutionized by privatization along with active participation of the foreigninvestors, the Indian aviation industry has experienced phenomenal

transformation over the last couple of years. From being a service catering tothe needs of the privileged group only it is now well within the reach of middleclass population. This has been the result of increased competition in the Indianaviation industry due to the presence of a wide variety of private and publicairlines with their low price tags. It was further helped by the entry of Air Deccan,the first budget airline in India, offering unbelievable tariffs to the customers.In the financial year 2005-06 there has been a significant 22.3 percent growth in


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passenger traffic in the domestic airports while the aircraft movement recordeda growth by 14.2 percent.In terms of the number of flights Jet Airways secures the top position with 8,168flights operating till June 2005. Indian Airlines is in second position with 7,562flights. Sahara (3,225 flights), Air Deccan (2,889 flights), Spice Jet (483 flights)

and Kingfisher Airlines (267 flights) come thereafter in the list of domestic andnational carrier operators.

Top Players

Players in Indian aviation industry can be categorized in three groups:

Public players

Private players Start up players

There are three public players:Air India, Indian Airlines and Alliance Air. The privateplayers include Jet Airways, Air Sahara,Paramount airways,Go Air Airlines, KingfisherAirlines, Spice Jet, Air Deccanand many more. The start up players are those which

are planning to enter into the markets. Some of them are Omega Air, Magic Air, PremierStar Air and MDLR Airlines

. Rankings in Aviation Sector

Company Score Ranks

Jet Airways 136.9 1Air India (NACIL) 132.7 2Kingfisher Airlines 131 3British airways 131 4Air Deccan 129.3 5Luftansa 127.7 6GoAir 126.2 7SpiceJet 123.8 8Indigo 121.2 9Paramount Airlines 119 10
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REASONS FOR BOOM IN AVIATION INDUSTRY1.Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident

Indian) investment up to 100 per cent is permissible in domestic airlines without any

government approval. However, the government policy bars foreign airlines from taking a

stake in a domestic airline company.

2.Low entry barriers: Nowadays, venture capital of $10 million or less is enough to

launch an airline. Private airlines are known to hire foreign pilots, get expatriates or retired

personnel from the Air Force or PSU airlines in senior management positions. Further, they

outsource such functions as ground handling, check-in, reservation, aircraft maintenance,

catering, training, revenue accounting, IT infrastructure, loyalty and

programme management. Airlines are known to take on contract employees such as cabin crew,

ticketing and check-in agents.

3.Attraction of foreign shores: Jet and Sahara have gone international by starting operations,

first to SAARC countries, and then to South-East Asia, the UK, and the US. After five years of domestic

operations, many domestic airlines too will be entitled to fly overseas by using unutilised bilateral

entitlements to Indian carriers.

4.Rising income levels and demographic profile: Though India's GDP (per capita) at $3,100

is still very low as compared to the developed country standards, India is shining, at least in metro

cities and urban centres, where IT and BPO industries have made the young generation prosperous.

Demographically, India has the highest percentage of people in age group of 20-50 among its 50

million strong middle class, with high earning potential. All this contributes for the boost in domestic

air travel, particularly from a low base of 18 million passengers.


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5.Untapped potential of India's tourism: Currently India attracts 3.2 million tourists every

year, while China gets 10 times the number. Tourist arrivals in India are expected to grow

exponentially, especially due to the open sky policy between India and the SAARC countries and the

increase in bilateral entitlements with European countries, and US.

6.Glamor of the airlines: No industry other than film-making industry is as glamorous as the

airlines. Airline tycoons from the last century, like J. R. D. Tata and Howard Hughes, and Sir Richard

Branson and Dr. Vijaya Mallya today, have been idolized. Airlines have an aura of glamour around

them, and high net worth individuals can always toy with the idea of owning an airline. All the above

factors seem to have resulted in a "me too" rush to launch domestic airlines in India.

Major players:-

INDIAN STARTUP AIRLINE PROFILES

Airline Total

Aircrafton Order

Fleet DetailsDelivery Dates Base Launch

Indigo 100 A320s From late 2006 NewDelhi

Dec. 05/ Feb. 06

Air Deccan 68 30 ATR 72s6 ATR 42s32 A320s

Hopes to operate75 aircraft by2010

BangaloreAug. 03

KingfisherAirlines

32 5 A380-800s 7 in Apr. 055 A350-800s5 A330-200s

9 aircraft peryear until 08

14 A320s (+20 options)3 A319s

Hopes to operate55 by 2010

BangaloreMay 05


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SpiceJet 25 10 737-800s(+ 10options)3 leased737-800s

From 2006 NewDelhi

May 05

Air One 25 2 ERJ 145sPlans toacquire 25more ERJ145s

n/a BangaloreMay 05

Go Air 20 20 A320s or 737s

9 initially leasedby Oct. 05

11 in second year

of operationsPlans to purchase20 Airbus fordelivery by 2007

Mumbai Oct. 05

Air-India

Express

21 21 737-800s 7 737-800s -already leased

NewDelhi

Mar. 05 - ticketonline sales; Apr.05 - commenceservices

Jet Airways

Capital Structure

Period

From To

Instrument Authorized

Capital

(cr)

Issued

Capital

(cr)

- P A I D U P -

Shares

(nos)Face Value Capital

2005 2006 Equity Share 130 86.33 86334011 10 86.33

2004 2005 Equity Share 130 86.33 86334011 10 86.33

2003 2004 Equity Share 100 72.09 72088900 10 72.09

BSE: 532617 NSE: JETAIRWAYS Reuters: N.A N.A

Source : Asian CERCv

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '03 Mar '04 Mar '05 Mar '06 Mar '07


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12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 141.92 141.92 86.33 86.33 86.33

Equity Share Capital 72.09 72.09 86.33 86.33 86.33

Share Application Money 0.00 0.00 0.00 0.00 0.00Preference Share Capital 69.83 69.83 0.00 0.00 0.00

Reserves -74.66 -112.08 1,664.56 2,057.53 2,018.48

Revaluation Reserves 540.87 387.57 259.27 162.02 132.44

Networth 608.13 417.41 2,010.16 2,305.88 2,237.25

Secured Loans 200.54 60.34 60.00 206.02 742.46

Unsecured Loans 3,581.89 3,149.65 2,904.84 4,689.58 5,313.84

Total Debt 3,782.43 3,209.99 2,964.84 4,895.60 6,056.30

Total Liabilities 4,390.56 3,627.40 4,975.00 7,201.48 8,293.55

Mar '03 Mar '04 Mar '05 Mar '06 Mar '0712 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 5,016.93 5,130.88 5,162.79 4,312.07 5,713.83

Less: Accum. Depreciation 1,532.56 2,050.21 2,593.46 2,249.58 2,416.34

Net Block 3,484.37 3,080.67 2,569.33 2,062.49 3,297.49

Capital Work in Progress 300.79 46.12 71.32 2,725.66 3,994.52

Investments 59.70 233.42 1,595.73 187.23 68.93

Inventories 341.00 347.44 332.52 405.25 438.99

Sundry Debtors 223.06 234.44 252.31 433.15 603.90

Cash and Bank Balance 471.95 12.53 49.07 1,524.84 33.99

Total Current Assets 1,036.01 594.41 633.90 2,363.24 1,076.88

Loans and Advances 171.15 446.90 347.20 1,148.66 1,262.79

Fixed Deposits 0.00 357.41 1,175.17 579.41 1,062.65

Total CA, Loans & Advances 1,207.16 1,398.72 2,156.27 4,091.31 3,402.32

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 661.47 853.00 1,079.89 1,400.06 2,221.55

Provisions 0.00 278.53 337.76 465.15 248.16

Total CL & Provisions 661.47 1,131.53 1,417.65 1,865.21 2,469.71

Net Current Assets 545.69 267.19 738.62 2,226.10 932.61

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 4,390.55 3,627.40 4,975.00 7,201.48 8,293.55

Contingent Liabilities 0.00 121.10 3,097.06 9,736.40 6,624.43

Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61


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Total CA, Loans & Advances 1,207.16 1,398.72 2,156.27 4,091.31 3,402.32

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 661.47 853.00 1,079.89 1,400.06 2,221.55

Provisions 0.00 278.53 337.76 465.15 248.16

Total CL & Provisions 661.47 1,131.53 1,417.65 1,865.21 2,469.71Net Current Assets 545.69 267.19 738.62 2,226.10 932.61


Total Assets 4,390.55 3,627.40 4,975.00 7,201.48 8,293.55

Contingent Liabilities 0.00 121.10 3,097.06 9,736.40 6,624.43

Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61

Jet Airways

BSE: 532617 NSE: JETAIRWAYS ISIN: INE802G01018

Industry : Transport

Profit & Loss account ------------------- in Rs. Cr. -------------------



Income

Sales Turnover 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78

Excise Duty 0.00 0.00 0.00 0.00 0.00

Net Sales 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78

Other Income 0.00 94.74 41.56 366.74 315.61

Stock Adjustments 0.00 0.00 0.00 0.00 0.00

Total Income 2,942.10 3,542.16 4,379.57 6,060.47 7,373.39

Expenditure

Raw Materials 0.00 50.07 71.96 63.12 0.00

Power & Fuel Cost 650.40 741.78 1,051.73 1,678.93 2,427.64

Employee Cost 263.45 282.24 374.74 567.81 938.55

Other ManufacturingExpenses

851.42 553.39 570.57 777.67 1,239.56

Selling and Admin Expenses 278.03 611.80 749.05 1,084.22 1,274.31


Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 2,458.33 2,300.99 2,876.62 4,262.09 6,020.66


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Operating Profit 483.77 1,146.43 1,461.39 1,431.64 1,037.12

PBDIT 483.77 1,241.17 1,502.95 1,798.38 1,352.73

Interest 256.13 525.47 461.31 691.24 909.70

PBDT 227.64 715.70 1,041.64 1,107.14 443.03

Depreciation 473.27 515.15 457.00 406.41 414.10

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax -245.63 200.55 584.64 700.73 28.93

Extra-ordinary items 125.07 0.54 18.82 41.01 24.49

PBT (Post Extra-ord Items) -120.56 201.09 603.46 741.74 53.42

Tax -1.19 15.03 190.14 270.22 23.42

Reported Net Profit -244.45 163.11 391.99 452.04 27.94

Total Value Addition 2,458.33 2,250.92 2,804.66 4,198.97 6,020.66Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 0.00 0.00 25.90 51.80 51.80

Corporate Dividend Tax 0.00 0.00 3.63 7.27 8.80

Per share data (annualised)

Shares in issue (lakhs) 720.89 720.89 863.34 863.34 893.34

Earning Per Share (Rs) -33.91 22.63 45.40 52.36 3.13

Equity Dividend (%) 0.00 0.00 30.00 60.00 60.00

Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61


Jet Airways

BSE: 532617 NSE: JETAIRWAYS ISIN: INE802G01018

Industry : Transport

Profit & Loss account ------------------- in Rs. Cr. -------------------



Income

Sales Turnover 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78

Excise Duty 0.00 0.00 0.00 0.00 0.00

Net Sales 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78

Other Income 0.00 94.74 41.56 366.74 315.61

Stock Adjustments 0.00 0.00 0.00 0.00 0.00

Total Income 2,942.10 3,542.16 4,379.57 6,060.47 7,373.39Expenditure

Raw Materials 0.00 50.07 71.96 63.12 0.00

Power & Fuel Cost 650.40 741.78 1,051.73 1,678.93 2,427.64

Employee Cost 263.45 282.24 374.74 567.81 938.55

Other ManufacturingExpenses

851.42 553.39 570.57 777.67 1,239.56

Selling and Admin Expenses 278.03 611.80 749.05 1,084.22 1,274.31


Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00Total Expenses 2,458.33 2,300.99 2,876.62 4,262.09 6,020.66



Operating Profit 483.77 1,146.43 1,461.39 1,431.64 1,037.12

PBDIT 483.77 1,241.17 1,502.95 1,798.38 1,352.73

Interest 256.13 525.47 461.31 691.24 909.70

PBDT 227.64 715.70 1,041.64 1,107.14 443.03

Depreciation 473.27 515.15 457.00 406.41 414.10

Other Written Off 0.00 0.00 0.00 0.00 0.00Profit Before Tax -245.63 200.55 584.64 700.73 28.93

Extra-ordinary items 125.07 0.54 18.82 41.01 24.49

PBT (Post Extra-ord Items) -120.56 201.09 603.46 741.74 53.42

Tax -1.19 15.03 190.14 270.22 23.42

Reported Net Profit -244.45 163.11 391.99 452.04 27.94

Total Value Addition 2,458.33 2,250.92 2,804.66 4,198.97 6,020.66

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 0.00 0.00 25.90 51.80 51.80

Corporate Dividend Tax 0.00 0.00 3.63 7.27 8.80Per share data (annualised)

Shares in issue (lakhs) 720.89 720.89 863.34 863.34 893.34

Earning Per Share (Rs) -33.91 22.63 45.40 52.36 3.13

Equity Dividend (%) 0.00 0.00 30.00 60.00 60.00

Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61

http://en.wikipedia.org/wiki/Image:Kingfisher_Airlines_logo.gif


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MARKETING STRATEGIES OF SOME BIG AVIATION COMPANIES

Kingfisher Airlines Limited is anairline based in Bangalore, India. It is a major Indianairline operating 218 flights a day and has an

[edit] Fleet

The KingfisherAirlines fleet consists of the following aircraft as of 02 October2007:

Kingfisher Airlines Fleet[1]

Aircraft TotalPassengers(Kingfisher

First/Kingfisher Class)

Routes Notes

ATR 72-50013(22orders)

66 (0/66)Domestic short

haul

Airbus A319-1003(1 order)

144 (0/144)Short-mediumhaul

IAEEngines

Airbus A319-100CJ

1 Corporate JetShort-medium

haul

Airbus A320-20013(49orders)

174 (0/174)134 (20/114)

Short-mediumhaul

Airbus A321-200 8199 (0/199)151 (32/119)

Short-medium

haul

Airbus A330-200(15orders)

Medium-long

haul

Entry intoservice: 2008

Airbus A340-500HGW

(10orders)

Ultra long haulEntry intoservice: 2008

Airbus A350-800

(20orders)(10options)

Airbus A380-800 (10orders)

Long haul Entry intoservice: 2010

The airline was the first in India to initially, and to continue, to operate with all

new aircraft.[citation needed] On 18 February2005 Kingfisher Airlines signed a contract with Airbus for three

Airbus A319 aircraft, adding to the 10 Airbus A320 aircraft (plus twenty options)
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ordered in January 2005. The first of the A319s will be delivered in December2005, complementing the A320s on routes to smaller cities in India.[2]

The Airbus A380 during its World Tour flight 2006-2007

On June 15, 2005 it became the first (and only) Indian airline to order the Airbus

A380. It placed orders for 5 A380s, 5 Airbus A350-800 aircraft and 5AirbusA330-200 aircraft in a deal valued at over $3 billion. Delivery of the A330s is due

to start in late 2007, followed by the A380s in 2010 and the A350s in 2012.[2]

OnNovember 20,2005at theDubai Air Show, Kingfisher Airlines announced

that it would be buying 20 ATR 72-500s (plus 15 options). The deal is estimatedto be worth $500 million dollars with the deliveries starting from March 2006.The last of the 20 planes would be handed over to Kingfisher Airlines by2008.The first aircraft from that order was delivered to the airlines on March 31,2006.[citation needed]

OnNovember 21,2005at the same air show, Kingfisher Airlines placed an order

to acquire 30 more A320s in a deal estimated to be worth $2 billion. Enginemaking joint venture International Aero Engineswill supply the engines for theplanes. Deliveries for the planes are likely to start from2008.[citation needed]

On January 13, 2006 an Airbus A319 of Kingfisher Airlines was the first aircraftin that class to land on the short older runway atMangalore airport.[3]

On theApril 24, 2006, Kingfisher signed a contract for five Airbus A340-500

HGWs. The airline plans to use this for its Bangalore-San Francisco and Mumbai-New Yorkroute. Delivery is expected for2008.[4]

Kingfisher has sold two Airbus A321s toPegasus Aviation Finance in a sale and

lease-back deal. Pegasus says in a statement that the two new-build A321-200sthat are being prepared for delivery to Kingfisher will be the first of the stretchedA320-family variant in India. Kingfisher already leases one A320 from Pegasus.[5]

Kingfisher was also the first Indian airline to bring the latest super jumbo Airbus

380 to India. A 380 arrived on 6 may 2007 in New Delhi and in Mumbai on 8th

May as part of Kingfisher's second anniversary celebrations On 20 Jun 2007 Kingfisher airlines announced to buy Airbus aircraft including an

extra 15 A350-800 XWB jets worth $3 billion. The order also includes five four-engine A340-500 planes, 10 A330-200 wide-body models and 20 single-aisleA320-family jets. The order is worth a total of $7.2 billion at list prices.Kingfisher had already ordered 5 of the original version A350 and has upgradedthese orders to the redesigned A350 XWB model
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A Kingfisher-sponsored Toyota F1 car: "Fly Kingfisher"

Kingfisher Airlines is an official sponsor of the Panasonic Toyota F1 Team.[6] KingfisherAirlines has entered a 2 year agreement to be a sponsor ofToyota F1 beginning in 2007.The "Fly Kingfisher" logo appeared on the sides of the Toyota F1 Car and on the driver's

overalls and helmet during the 2007 season.[6] However, due to the fact that KingfisherAirliners' owner Dr. Vijay Mallya focused on the new F1 team Force India which wasformed after Dr. Mallya's 2007 acquisition ofSpyker F1 team, Toyota and KingfisherAirlines' ended the contract on January 2, 2008.[7]

The airline started operations on 9 May2005[1] , following the lease of 4 Airbus A320aircraft. As of July 2007, Kingfisher operates only on domestic routes, however it hasannounced plans to start flights to the USA with Airbus A340 andAirbus A380 aircraft.The airline is owned by the United Breweries Group. (which also owns the popularIndianbeerof the same name). The airline promises to suit the needs of air travellers andto provide reasonable air fares. Kingfisher Airlines' main "luxury" component is its In-

Flight Entertainment System, a first among Indian airlines.[citation needed]. The airlines in-flight Mobile Phone and Internet Services will be provided byOnAirstarting 2008 forlonghaul flights. In October 2007, the airline announcedDeepika Padukone as its brandambassador.

GOVT REGULATIONS

The benefits of lax regulations in the Aviation sector are being enjoyed by consumers

around India. By removing more regulations the industry would become morecompetitive which would mean good news for consumers, but bad news for corporationswith bad managers. The stories in the media about the proposed changes and newregulations in the Aviation sector are strikingly similar to the screenplay ofThe Aviator(great movie).

No Flying Overseas : Air Deccan and Kingfisher are being denied the entry to flyoverseas despite their repeated pleas. A official from the ministry of Aviation said that,existing carriers like Sahara and Jet who are operating on overseas route are incurringlosses, hence he (the official) doesn't see the logic in allowing Deccan and Kingfisher to

fly overseas. This is way too much paternalism, since when did the government startcaring about a company's profitability? Why don't they cut taxes? Thats a better idea, butthe Sarkaaris a magnet for bad ideas. Besides the official should know that the coststructure determines the profitability of a company, a loss for Sahara could very possiblemean profit for Air Deccan because of the Deccan's low cost structure. But who needsvalid reasons when you have the might and sanction of the big bad government.
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Regulate Entry:The aviation ministry in order to protect the existing airline cartelmembers has directed Aircraft Acquisition Committee (didn't know that this departmenteven existed) to make entry norms more stringent. The committee will analyze detailslike model of aircraft and planned routes to ensure that airlines have a sound businessmodel. Of course this is necessary because airlines don't bother about providing a return

on investments, its like the saying goes "baap ka paisa". The real reason is because moresupply means less profits for existing players hence the need to choke entry with theexcuse of keeping the airline sector healthy.

The only rationale for government involvement in this sector is the common reason thatthe private sector wont operate routes to remote places. Despite government involvementwe still have a plethora of remote places with no air connectivity. Provision of serviceis/was determined based on the vote bank potential. However a voucher system canaddress these concerns. Instead of having national carriers like Air India and IndianAirlines, the govt. can issue vouchers to the so called "needy" groups who can use it withprivate operators. Same thing can be done for routes, if the government wants a particular

route that the private sector doesn't operate due to lack of profits. The government cansubsidize these routes and give it to the private players. So what should we do withIndian Airlines and Air India? Merger? De-merger?

POLICY

The South-East Asian regional grouping has invited the Indian government to join the Asean open-sky agreement that initially proposes allowing unlimitedflights between capital cities. During the second stage, members would also be

entitled to operate unlimited flights to the secondary cities in these areas. If India doesjoin the open sky agreement, it would offer Indian airlines the opportunity of launchingunlimited flights to Singapore, Bangkok, Kuala Lumpur, Yangon and Manila amongothers. A decision on this is likely to be made by the end of this month. The proposedregional open sky agreement is to be implemented in 2010. Currently, the open-skyagreement with Asean allows the designated airlines of India to operate daily services tothe capitals of 10 member states.

The draft bill for the formation of the Airports Economic Regulatory Authority(AERA) is ready and will soon be placed before the Union Cabinet. Subsequently, thebill will be placed before Parliament. According to Mr Ajay Prasad, Union civil aviationsecretary, the proposed authority will be a three-member body. Apart from the chairman,

there will be two other individuals with experience in this sector.

Airports


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The mode of development for the modernisation of the Chennai and Kolkataairports is expected to be decided in a months time. The views of both the stategovernments and other stakeholders would be considered before taking a final decisionon airport modernisation. While the Tamil Nadu government wanted Chennai airport tobe modernised through public-private participation (PPP), the West Bengal governmenthad insisted that the work be done solely by the Airports Authority of India (AAI). Also, asagainst his earlier stance, the civil aviation minister, Mr Praful Patel, has also welcomedthe West Bengal government's initiative in setting up a greenfield airport in Kolkata.However, the minister has added that the greenfield airport should not interfere with theoperations of the existing airport.

The Ministry of Civil Aviation has already received 25 project reports forupgradation of the 35 non-metro airports. The remaining 10 reports are due by theend of this month. Once the reports are completed, the ministry will be invitingexpressions of interest from private players interested in working with AAI in this regard.Work had already begun in places like Srinagar, Dibrugarh, Udaipur and Visakhapatnam.The estimated outlay for the upgradation of the 35 airports is expected to be around Rs

40 billion. Meanwhile, the International Civil Aviation Organisation has also givenclearance for the proposed greenfield airport in Navi Mumbai, subject to certainconditions being met.

AAI has prepared a report for the Sikkim greenfield airport. The cost of the airportwill be Rs 3.40 billion. The Sikkim state government has assured Rs 1 billion and alsothe land required for construction. During the Tenth Five-Year Plan period, AAI will bespending Rs 1.25 billion on the modernisation, upgradation and improvement of airportfacilities in the North-east.

GMR Hyderabad International Airport Limited (GHIAL), which is developing thenew international greenfield airport in Hyderabad, has entered into two in-flightcatering concessional agreements with LSG Sky Chefand Sky Gourmet. LSG SkyChef is a 100-per cent subsidiary of Lufthansa, and the world's largest provider of airlinecatering and in-flight solution, while Sky Gourmet Catering Private Limited operatesunder the trade name of "skygourmet" and is one of the leading airline cateringcompanies in the country with operations spread across Mumbai, Delhi, Bangalore andPune. The in-flight catering concessions involve financing, constructing, operating andmaintaining in-flight kitchen facilities for catering to the in-

AIRLINES

The deadline for the proposed mergerof the two state-run airlines, Air India andIndian, has been fixed as March 31, 2007. Consultants Accenture India Limited - arein the process of preparing both short-term and long-term reports for the same afterstudying the changing dynamics of the global and domestic aviation sector. Meanwhilethe initial public offer (IPO) of Indian has been temporarily shelved. An IPO will now be


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considered only after the merger of Indian and Air India as the chances of getting abetter valuation will increase after the merger.

Indian is to reintroduce a daily flight between Delhi and the Khajuraho sectorfrom September 15, 2006. The flight will be operated with an Airbus 320 aircraft. The

newly reintroduced flight will operate on the Delhi-Khajuraho-Varanasi sector and offermore than a 1,000 seats a week.

Air Deccan plans to introduce direct daily flights from Delhi to Kulu starting fromOctober 17, 2006. The airline will fly its 48-seater ATR aircraft on the route. Air Deccansfare on this sector starts at Rs 74 (plus taxes), and moving through various price points itgoes up till the last day, as against a fixed fare of Rs 4,150 (plus taxes).

Emirates Airlines is open to the option ofpicking up a stake in an airline in India

provided the government relaxes investment norms for foreign airlines. Emirateshas a code share agreement with Jet Airways and has a joint venture with Sri LankanAirlines. Over the last one year, the airline has also added 6,000 seats from India. Theairlines current fares are at least 20 per cent lesser than what they were a year ago.Meanwhile the airline also plans to launch eight flights a week from Bangalore fromOctober 29, 2006. This is being done to service the medical tourism boom in Bangalore.As part of the airlines inaugural offer, a return fare will cost Rs 14,000. Return fares toNew York begin at Rs 38,400 and for the European countries, Rs 20,000. All travel willbe through the airline's hub which is in Dubai.

Air India has awarded a contract worth $70 million to France-based Thales forinstallation of an advanced passenger entertainment system on the airlines 23Boeing aircraft to be inducted from February next year. As per the agreement, theentertainment system would comprise Thales Top Series digital audio and video on-demand entertainment systems at every seat. In addition, a 23-inch display systemwould be installed in the First Class followed by 15 inch and 10.6 inch in Business andEconomy classes. Air India had earlier signed up with Thales to install a similar systemon the six Boeing 747-400 aircraft at a cost of $35 million.

Meanwhile, Air-India is all set to pick up stake in the proposed $100-millionmaintenance, repair and overhaul (MRO) facility of the US-based aircraftmanufacturer Boeing Company in Nagpur. Air-India's stake in the facility will be in theform of contribution of its engineering assets and infrastructure located at its base inMumbai as well as its human resources. The airline will hire an independent firm to valueits engineering infrastructure and human resources to ascertain the proposed stake inthe MRO project.

Air India Express, Indias first international budget airline, will link Amritsar andMangalore to Dubai from the next month. By introducing this service, it will fulfill the


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long pending demand of travellers from these regions. The flight will take-off on October2, 2006. Two weekly flights will fly between Amritsar and Dubai. A large chunk oftravellers from Punjabgo to Dubai for employment purposes and theyhave been seeking a direct link between the border district and Gulf nation. These flightswould be progressively stepped up in the near future depending upon the strength ofpassengers.

PROMOTIONAL SCHEMES

Paramount Airways has announced the launch of an evening flight on theChennai-Madurai sector. The service will be available from September 15, 2006. Theairline currently operates two morning flights on the sector. The fare starts at Rs 1,999.The airline will also be connecting Madurai and Hyderabad via Chennai with an all-inclusive starting throughfare of Rs 5,949. A 50-per cent discount on full fare to seniorcitizens and special group rates for college and school students have also been

announced. Further, a discount of 50 per cent to all disabled passengers has beenintroduced and disabled children below 12 years will be eligible to fly free.

FINANCE

According to reports, AAI plans to raise around Rs 40 billion from the debtmarket for the several modernisation projects that it will be undertaking in the nearfuture. A senior official of the civil aviation ministry said that Rs 40 billion is the upperlimit for the fund-raising capability of AAI. At a later stage AAI might also float bonds.However, AAI has not yet finalised the amount that will be raised. The authority, which

has already got an AAA rating from Crisil, is presently preparing its cost involvement forthe proposed modernisation of 35 non-metro airports. Apart from the airport, otherfacilities such as hotels and roads will also be developed at these airports in partnershipwith private companies.

MISCELLANEOUS

Toulouse-based Avions de Transport Regionale (ATR) is eyeing a significantpresence in India. Aiming at proximity with its domestic clients like Air Deccan and

Kingfisher Airlines, ATR, a $540-million equal partnership firm promoted by EuropeanAeronautic Defence and Space (EADS) and Alenia Aeronautica, is launching a customersupport office in Bangalore and a spare parts distribution centre in New Delhi. Both thecentres are expected to become operational in 2006. In addition, ATR is also looking atsetting up a maintenance centre in Bangalore in collaboration with HindustanAeronautical Limited, Air Deccan or Kingfisher Airlines. The company is also in talks withsome domestic airlines to launch ATR cargo aircraft in India as well as to establishtraining centres with Air Deccan in Bangalore and with Kingfisher Airlines in Mumbai.


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From the beginning of 2005, ATR has sold 140 aircraft worldwide, including 65 to Indiancarriers.

DataTourist charter operations under Open Sky Policy

AirportNumber of flightsoperated

Number ofpassengers flown

Average numberof passengersflown per flight

Delhi 23 5,838 254Goa 518 121,999 236Trivandrum 23 2,096 178Others 43 5,417 126Total 607 135,350 226

CHALLENGES FOR AVIATION INDUSTRYThe growth in the aviation sector and capacity expansion by carriers have posed challenges to

aviation industry on several fronts. These include shortage of workers and professionals, safety

concerns, declining returns and the lack of accompanying capacity and infrastructure. Moreover,

stiff competition and rising fuel costs are also negatively impacting the industry.

1. 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, in

turn, is driving wages to unsustainable levels. Moreover, the industry is unable to retain talented

employees.

2. Regional connectivity: One of the biggest challenges facing the aviation sector in India is to

be able to provide regional connectivity. What is hampering the growth of regional connectivity is the

lack of airports.

3.Rising fuel prices: As fuel prices have climbed, the inverse relationship between fuel prices

and airline stock prices has been demonstrated. Moreover, the rising fuel prices have led to increase

in the air fares.

4.Declining yields: LCCs and other entrants together now command a market share of around46%. Legacy carriers are being forced to match LCC fares, during a time of escalating costs.

Increasing growth prospects have attracted & are likely to attract more players, which will lead to

more competition. All this has resulted in lower returns for all operators.

5. Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to

support growth. While a start has been made to upgrade the infrastructure, the results will be visible


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only after 2 - 3 years.

6. Trunk routes: It is also a matter of concern that the trunk routes, at present, are not fully

exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of

genuine competition. The entry of new players would ensure that air fares are brought to realistic

levels, as it will lead to better cost and revenue management, increased productivity and better

services. This in turn would stimulate demand and lead to growth.

7. High input costs: Apart from the above-mentioned factors, the input costs are also high. Some

of the reasons for high input costs are:-

Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increasing

manpower costs due to shortage of technical personnel.

GROWTH PROSPECTUS OF AVIATION SECTORThe Indian aviation industry has witnessed remarkable growth in recent years, with key drivers

being positive economic factors, including high GDP growth, good industrial performance, and

corporate profitability and expansion. Other factors include higher disposable incomes, growth in

consumer spending, and availability of low fares.

As of May 2006, private carriers accounted for around 75% share of the domestic aviation market.

During April-September 2006, the total aircraft movements witnessed an increase of 29.6% year

on year to 494.92 thousand aircraft movements, as compared to 318.89 thousand during April-

September 2005. The total air passenger traffic in September 2006 has shown an increase of

31.1%, as compared to 2005.

FUTURE GROWTH

The aviation sector too appears to have fallen victim to the slowdown fever. the growth in the domestic aviation sectorhas dipped sharply. from a record 32% plus growth last calendar year ,it has now fallen to 11.5% mainly because of farehikes and a high base impact. during the first 2 months of 2008 the seat factor of almost all domestic carriers hasdeclined. according to date released by the directorate general of civil aviation (dgca),domestic airlines carried 75.56 lakhpassengers during January February registering growth of 11.53% over 67.75 lakh passengers in the correspondingperiod last year. the market share of Indian, jet airways and jet lite increased to 14.4%,23.2% and 7.4% in February from13.9%,22.7% and 6.8% respectively in January. as the base of the aviation sector has expanded significantly the growthhas moderated. airfare in terms of increased fuel surcharge has increased and its impact is showing on the overall growthof the sector. fuel surcharge has increased by Rs 700 to Rs1650.


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RECENT DEVELOPMENT

Recent Developments in Aviation Sector

Modernization of airports

Policy on merchant airports

Growth in MRO segment:

Airport security policy

Augmentation of fleet by various airlines

Foreign equity participation in air transport services

Boom in Indian aviation sector is likely to generate more jobs

Airport Privatization in India:

Lessons from the Bidding Process in Delhi and Mumbai

ABSTRACT

Modernization of Delhi and Mumbai airports had been considered as early as1996 by theAirports Authority of India (AAI). In June 2003, the AAI board approved amodernization

proposal. These airports accounted for 47% of the passenger traffic, 58% ofcargo trafficand 38% of aircraft movement in 2003-04. They generated one third of allrevenues earnedby the AAI. Both Delhi and Mumbai airports handled twice as many aircraftmovements asthey were originally designed for, resulting in congestion for both aircraftsand passengers.

The bidding process began in May 2004 with an original completion date ofSeptember2004. However, due to a variety of reasons, the process got delayed and thebids werefinally received by September 2005. The evaluation process of the bids wasquestioned atvarious levels. There were many reviews of this with inputs from experts.The final decisionwas made in January 2006 by the Empowered Group of Ministers (EGoM)
http://www.naukrihub.com/india/aviation/recent-developments/1.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/2.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/3.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/4.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/5.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/6.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/7.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/1.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/2.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/3.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/4.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/5.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/6.htmlhttp://www.naukrihub.com/india/aviation/recent-developments/7.html


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aftercompromising on some of its own set parameters for one of the airports. Oneof the losingbidders called this an arbitrary decision making process and challenged thedecision incourt. After two stages of legal battle, the bidder finally lost the case inNovember 2006 andthe original awardees retained their position. Work is now progressing atthese airports.This paper focuses on the bidding process and brings out the lessons learnt.W.P. No. 2007-05-01 Page No. 2IIMA INDIA Research and Publications

Airport Privatization in India:

Lessons from the Bidding Process in Delhi and Mumbai11. IntroductionIn June 2003, the Airports Authority of India (AAI) board approved a

modernizationproposal through the privatization route for Delhi and Mumbai airports.The biddingprocess began in May 2004 with an original completion date ofSeptember 2004.However, due to a variety of reasons, the bids were finally sought andreceived bySeptember 2005. The evaluation process of the bids was questionedat various levels.There were many reviews of this with inputs from experts.The major policy decisions were made by the Empowered Group of

Ministers (EGoM).There were other supporting committees involved in the biddingprocess. Exhibit 1 givesthe scope and members of these committees. The final decision wasmade in January2006 by the EGoM after compromising on some of its own setparameters for Mumbaiairport. One of the losing bidders called this an arbitrary decisionmaking process andchallenged the decision in court. After two stages of legal battle, thebidder finally lost the

case in November 2006 and the original awardees retained theirposition. Work is nowprogressing at these airports.This paper focuses on the bidding process and brings out the lessonslearnt. The paperdraws significantly from a series of cases written on the subject by theauthors [Jain,Raghuram and Gangwar, 2007].


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Early Steps Towards Privatization

Modernization of Delhi and Mumbai airports had been considered asearly as 1996 by theAAI. In 1998, the Prime Minister had made a declaration that worldclass airports shouldbe set up in the country. A task force on infrastructure recommendedin 1999 that a longterm lease for outsourced management should be considered. Theywere not in favour ofcorporatization. In June 2003, the AAI board approved a modernizationproposal costingapproximately Rs 30 billion for Delhi and Mumbai airports. The AAIAmendment Bill

was passed by the parliament authorizing AAI to transfer theoperations and managementof its existing airports by way of long term lease to private players.These were expectedto run for a period of at least 30 years, with an option to extend for afurther 30 years.However, air traffic control would remain the responsibility of AAI andsecurity that ofthe government. The Act was notified as effective from July 01, 2003.In September 2003, a cabinet meeting of the then NationalDemocratic Alliance (NDA)

government approved a restructuring of the Delhi and Mumbaiairports on a long termlease by adopting joint venture route with 74 per cent equity of aprivate consortium and26 per cent of AAI. They also constituted the EGoM for implementingthe decision. TheMinistry of Civil Aviation (MoCA) constituted the IMG in October 2003to assist theW.P. No. 2007-05-01 Page No. 31 Prepared by Rekha Jain, G Raghuram, and Rachna Gangwar.We thank Meghna Mathur for the research assistance provided.

This paper is an outcome of the series of cases written on the subject by the

authors.IIMA INDIA Research and Publications

EGoM. The then EGoM met on November 09, 2003 under the chair ofthe FinanceMinister.The EGoM approved the appointment of ABN Amro as the financialconsultants (FC) onDecember 22, 2003. An Invitation to Register an Expressions of


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Interest (ITREOI) foracquisition of 74 per cent equity stake in the Joint Venture Company(JVC) was issued onFebruary 17, 2004. Last date of submission of expression of interest(EOI) as a response

to the ITREOI was June 04, 2004. Exhibit 2 gives excerpts from theITREOI, includinggovernment objectives and decisions, and bid structure. AAIs overallobjective was tocomplete the transaction for both the airports not later thanSeptember, 2004. Exhibit 3gives a macro economic perspective on the rationale for restructuringand modernizationof Delhi and Mumbai airports as given in the ITREOI.Exhibit 3 also describes the aviation oversight functions which weredistributed between

MoCA, AAI, Directorate General of Civil Aviation (DGCA) and theBureau of CivilAviation Security (BCAS). There were 449 airports/airstrips in thecountry. Commercialair services were possible only to 122 AAI approved airports. Eleven ofthese wereinternational, 83 were domestic civil airports and 28 were civilenclaves at defenceairfields. Of these, commercial airlines operated only through 60airports. The remainingwere unutilized, at best handling occasional charter aircraft

operations. Only 11 out of the122 airports generated profits.

DELHI AND MUMBAI AIRPORTS

The Delhi and Mumbai airports accounted for 47% of the passengertraffic in 2003-04.They were even more significant in terms of cargo traffic, accountingfor 58% of theshare. Catering to this, the aircraft movements share was 38%. Theseairports generated

one third of all revenues earned by the AAI. Both Delhi and Mumbaiairports handledtwice as many aircraft movements as they were originally designedfor, resulting incongestion for both aircrafts and passengers.

In 2003-04, Delhi airport handled 10.4 million passengers, of which58% were domestic.


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The total cargo traffic was 296 thousand tons, of which 31% wasdomestic. The mainsource of revenue at Delhi airport was aeronautical services (42%).Non-aeronauticalservices included cargo (26%), and commercial and others (32%).

In 2003-04, Mumbai airport handled 13.3 million passengers, of which60% weredomestic. The total cargo traffic was 326 thousand tons, of which 28%was domestic. The main source of revenue at Delhi airport wasaeronautical services (50%). Nonaeronautical services included cargo(17%), and commercial and other (33%).During the early period of the tenth plan (2002-07), passenger trafficat airports hadgrown at an average rate of 7% per annum. Government wasexpectingrowthrate of 16% per annum by 2010, given the Open Skies policies and

the response by theprivate sector in establishing new airlines, including low cost carriers.

Nearly 97% of the country's foreign tourists arrived by air, mostlythrough the Delhi andMumbai gateways. Tourism was the nation's second largest foreignexchange earner.While cargo carried by air weighed less than 1% of the total cargoexported/imported, itaccounted for nearly 20% of the total value.

A survey by the International Air Transport Association (IATA) revealedthat for the year1999, Delhi and Mumbai airports ranked amongst thethree least favored airports in theAsia Pacific region in each of the 19service elements considered. The overall ratings for Delhi and Mumbaiwere 2.6 and 2.3 respectively on a 5 point scale, while the average forairports in the Asia Pacific region was 3.5 and for world airports was3.8. Copenhagen, Singapore's Changi and Helsinki ranked among thetop for overall passenger satisfactionout of the 57 airports covered inthe survey, with a rating of about


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DOMESTIC AIRPORS MAP OF INDIA

Indian Airlines

Due to the immense increase in the demand for air travel, India's economy is flourishing. The credit

for this goes to its tourism and hotel industry. The evergreen tourist places in India are Kerala,Goa,

Mumbai, Delhi, Orissa, Kolkatta, Bangalore and Kashmir.

There are many domestic airports in the country. Almost all the important cities in India have

domestic airports.

There are more than 5 international airports in India and more than 65 domestic airports. Domestic

Airports can be categorized into four divisions: Domestic Airports, Model Domestic Airports, Civil

Enclaves and Others.

In India there are 37 Domestic Airports, 13 Model Domestic Airports and 13 Civil Enclaves. Cochin

and Keshoo are the two other airports.

[Buy this map in different sizes or resolutions, please scroll down for the Order Form.]
http://www.mapsofindia.com/indian-airlines.htmlhttp://www.mapsofindia.com/maps/kerala/http://www.mapsofindia.com/maps/kerala/http://www.mapsofindia.com/maps/goa/http://www.mapsofindia.com/indian-airlines.htmlhttp://www.mapsofindia.com/maps/kerala/http://www.mapsofindia.com/maps/goa/


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SOURCES OF COLLECTED DATA


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project of aviation

Documents