CREATED BY KUMARI PRIYANKA AVIATION INDUSTRY BUSINESS IN

INDIA

GREAT OPPORTUNITIES AND

GREAT CHALLENGES

INTRODUCTION Overview of Indian Aviation Business Aviation In India What's driving the Growth? What’s holding us back? Challenges facing operators Are we moving forward? Questions

OVERVIEW Explosive Growth in Indian Aviation in 2005-

06: Passenger traffic by 24%, aircraft movement by 17% and freight traffic by 10%

Growth driven by economic growth, rising incomes, growth of tourism, increasing competition, emergence of low cost airlines, liberal government policies etc.

Increasing competition and emergence of private players means greater choice, higher quality of service and lower prices.

OVERVIEW (CONTD) Airport Segment just beginning to see private sector

participation Delhi and Mumbai are being managed and

restructured by private companies in technical collaboration with international partners.

As of now, airport infrastructure is woefully inadequate.

Immediate need for existing airports to expand and upgrade

India has a total of 455 airports and airstrips; only 135 of them are operational. Need to revive/develop the rest.

As per current estimates, India needs USD 25 billion over the next 5 years to develop airports

OVERVIEW (CONTD) Low Cost Airlines are playing an important

role. A whole new socio-economic group has entered the market of airline travel.

Currently India attracts only 0.4% of global tourism and 1% of total spending in tourism. Tourism accounts for only 4.8% of GDP in India as against 10.2% of GDP world wide

Next few years will see some consolidation and shakedown in the Airline industry.

BUSINESS AVIATION IN INDIAThe most neglected sector of Indian aviation industryThere are no separate guidelines for GA aircraft in IndiaTill 2005, there were only 50 business aircraft to cater for a population of 1 billion people as against USA There is no concept of FBOs, heliports or GA terminals in the country.

REASONS FOR POOR GROWTH OF GA SO FAR

Lack of infrastructure Unfriendly government regulations.

Long and tedious procedures for purchase/import of aircraft

Strict banking regulations; tight control of RBI

Conservative mindset of the older generation of business leaders. This is changing with the present set of younger entrepreneurs.

Lack of understanding on the value of corporate aviation as business tool

Strict security norms

EXPLOSIVE GROWTH AHEAD GA is likely to grow by 30% to 40 % as

against the overall growth of 25% 2006 saw the fleet double. One business jet to be added every third day

for next 2 years. Fleet to triple in 2 years. Present applications for import of 300 GA

aircraft pending with the Govt. 100 cleared last year.

All major business houses and High Net worth Individuals (HNI’s) are joining the queue to become aircraft owners.

Key change is that many medium (and some small) companies are also buying A/C

WHAT’S DRIVING THE GROWTH

• Some De-regulation of Govt control. • Easier finance available for aircraft purchase

• Change of mindset of new generation business leaders – “tool vs. toy”

• Change in regulations for foreign investment in Indian companies

• Robust and booming economy (9%). Availability of extra purchasing power.

• Global ambition of Indian companies. Need creating demand

WHAT’S HOLDING US BACK

Lack of Infrastructure. Airports lack parking space, skies are overcrowded,

air traffic control needs major improvement in terms of training and technology.

Regional connectivity is poor and regional hubs need to be created. Most of the smaller airports lack basic facilities like VOR/ILS

approaches and are at best fit only for VFR flights.There are inadequate international airports and no FBOs or

heliports in the country

WHAT’S HOLDING US BACK (CONTINUED)

Shortage of manpower: There is tremendous shortage of pilots, engineers, operational personnel and ground staff in the aviation industry.

This is unlikely to go away for the next 5 years. India needs 5000 pilots, 25000 engineers and about 100,000 aviation specialists from all fields of aviation over the next 5-7 years

Present capacity is far below the demand – e.g. all the flight schools combined produce 150 CPL’s per year

GA suffers more than commercial aviation.

WHAT’S HOLDING US BACK (CONTINUED) Government Regulations; Though the

govt is making changes in the regulations, it needs to move at a much faster pace on this.

Aviation in India is over regulated and needs to free itself from govt shackles.

Acquisition committee, DGCA, BCAS, IB etc.

CHALLENGES FACING OPERATORS Complex and Difficult regulatory

environment Step-child Treatment – Commercial

aviation takes 1st priority Pressure from management/ clients Lack of Standards and procedures Severe shortage of manpower -

Difficult to retain key personnel Until now – no common voice – BAAI

hopes to change this

ARE WE MOVING FORWARD

Explosive Growth expectedNo. of Aircraft will increase rapidly

Will the environment change fast enough to sustain this?

Govt needs to play its part in policy making and infrastructure developmentPrivate participation in creating the right environment and taking a lead in training the manpower.Nascent stage; could very go wrong if growth is not planned or nurtured