Airlines Industry in India-GROUP 8

8/14/2019 Airlines Industry in India-GROUP 8

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AIRLINE

INDUSTRY ININDIA

Presentation By Group VIII


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AGENDA

Objective

Current Scenario

Factors Driving Growth

Factors Obstructing Growth

The Scope Ahead

Key Learnings


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OBJECTIVE

Analysis of The Airline Industry:

Growth Factors

Impediments


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CURRENT SCENARIO

Growing vigorously at a rate of 25-30% and is expected to continue

International Players making a beeline to enter this emerging market

Carriers operating in India has grown from two state-owned players

in 1991 to more than ten today

Numbers of Flights operating: 2500 per day


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Growth in Domestic PassengerTraffic

Year ended 31 March Domestic Sector

Passenger

(millions)

Year-on-Year

Growth

1996 10.4

1997 11.2 7.7%

1998 11.5 2.7%1999 12.0 4.3%

2000 12.7 5.8%

2001 13.7 7.9%

2002 12.8 -6.6%

2003 13.9 8.6%

2004 15.7 12.9%2005 19.9 26.8%

2006 25.5 27.9%

Source: Airport Authority ofIndia


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Some Major Players


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Factors Driving Growth

Wider Availability of Low Fares

Higher Disposable Income and Growth in Consumer Spending

Lifestyle Changes

Growth from Tier II Cities

Tourism

Government Policies


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Wider Availability Of Low

Fares Large entry of Low Cost Carriers Costs have become comparable to A.C. Train

fares

Indian Rupees (INR)

Sector

2 AC - Sleeper Journey time 3 months 2 months1 month 3 daysJourney time

Delhi-Mumbai 4100 17 hours 4256 5452 64481hr. 45 min.

Delhi-Bangalore 5700 35 hours Re 1 6656 8248 96482hr. 30 min.

Mumbai - Bangalore 3000 23 hours 3656 4952 54481hr. 35 min.

Rail Fare (Return) Air Deccan fare (Return)

Source: Air Deccan Advertisement


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High Disposable Income

Growth in Income Level:

Increase in Leisure Travelers for the past few years; 5 years back85% were business travelers

22.1

27.0

43.6

194

169163

0

10

20

30

40

50

1998-99 2001-02 2009-10

mn

140

150

160

170

180

190

200

At 01-02 prices

Rs'000

Urban middle class households (LHS) Avg middle class household income (RHS)


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Lifestyle Changes

Younger Population (70% below 35 years)

Growth in Software/Manufacturing Industry

Air Travel no longer a luxury


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Growth From Tier II Cities

Government plans to modernize 35 non-metroairports

IT/Manufacturing companies plan to set up base

According to CRISIL - Traffic at non-metro airportto exceed metro airports by 2010:

Non Metro Airports = 74 million passengers

Metro Airports = 19 million passengers

This calls for investment of around Rs. 6000crores


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Tourism As a Growth Sector

High rate of growth in Tourism Industry

2004-05 had a 25% growth rate and is growing

De-seasoning of various destinations (e.g. Goa,

Kerala) 320 million domestic tourists

International tourism increasing but domestic isgoing to be the biggest impact


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Government Policies

Liberalization of the Aviation Industry (Open SkyPolicy):

Ended monopolies of state carriers

Increased number of players in the market:

Pre 1991 Two

Currently More than Ten

Increased FDI limit in Air Transport Services 74% in Airports

49% in Airline Carriers


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Government Policies

(contd) Restructuring and development of Airports Privatization of Airports

Airport Status Operator Investment (USD

million)

Hyderabad Under Construction - to be

commissoned in 2008

GMR-Malaysia Airports 300

Bangalore Under Construction - to be

commissoned in 2008

Siemens, L&T, Unique

Zurich

300

Delhi Concession awarded - modernisation

and upgradation

GMR-Fraport 1,750

Mumbai Concession awarded - modernisation

and upgradation

GVK-Bidwest 1,750

Kolkata To be privatised

Chennai To be privatised

Total 4,100

Source: Airport Authority of India


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Impediments To Growth

Lack of Infrastructure

High Input Costs

Lack of Human Resources


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Lack Of Infrastructure

Not enough operational Airports only 89 out of 450are operational

Not enough night parking

Shortage of runways Poor facilities for passengers restrooms,

restaurants, parking, etc Baggage system needs urgent upgrade

Need for more Maintenance Repair and Overhaul(MRO) Centers


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High Input Costs

Fuel Costs: 70% higher than International standards. Fuel bill - 40% of Operating Cost Annual industry bill - USD 1.7 billion.

Aviation Turbine Fuel (ATF) prices in India isaround Rs. 37,800 per kilo litre against Rs.21,800 in the Average International Markets

20% of the Operational Budget is spent ontraining pilots

Landing and Parking Charges: 78% higher thanthe International Average


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Inadequate HumanResources

Shortage of Skilled Manpower: Pilots

Cabin Crews

Ground Staff

Shortage of Air Traffic Controllers: Currently 1000 ATCs handling 89 Airports

Requirement of 2500 ATCs


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SCOPE AHEAD

25.5 million Domestic Travelers by next 12months

Airline Industry to be worth Rs. 35000crores by 2010

Growth to exceed that of China, Franceand Australia


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KEY LEARNINGS

Macro-Environmental Factors affecting theindustry: Growth Factors

Obstructing Factors

If all hindrances can be addressed then,SKY IS NOT THE LIMIT


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THANK YOU

Airlines Industry in India-GROUP 8

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