Sectoral Report : AVIATION

Sushant Bahadur

What is the sector?

The sector deals with the transport of passenger and cargo from one place to another, using the aerial route.

Airports, aviation parts manufacturers, MRO and training are also included.

Sector Details (India)

Size About 75 million passengers $ 5.6 billion

Growth Around 15% growth in last 10 years. Growth in 2009 : 0.7% Vision 2020 statement predicts handling

280 million customers by 2020

SEGMENTS IN AVIATIONAVIATION

Civil Aviation General Aviation Military Aviation

AVIATION

Full cost Carriers Low cost carriers

Major Players (Market Share)

Top 3 Players

AIRLINES KINGFISHER AIR INDIA JET AIRWAYS

SECTOR PRIVATE PUBLIC PRIVATE

MARKET SHARE 26.03 17.66 16.72

FLIGHTS 425 500 400

DESTINATIONS 78 100 64

Major Cost Components

ATF costs

Personnel wages

Parking and Landing tariffs

Cost of developing airports

Aviation parts

Electronic Ticketing services

PEST Analysis : Aviation in India

SOCIALDevelopment in airport citiesEmployment opportunities

PEST

SWOT Analysis : Aviation in India

WEAKNESSESIn Airport infrastructuresHigh Cost structureSkilled resources deficient

OPPORTUNITIESPotential for market growthIndia’s geographical locationAerospace, MRO and Training areas

THREATSMiddle east aviationTerrorismRecession

SWOT

Challenges facing Aviation

Airport infrastructure development

Airways infrastructure setup

Training of personnel

ATF Costs (Sales Taxation)

Prominent Aviation Related News

AI-IA merge into INDIANLayoffs by airlines post recessionPrivate airlines permitted

international trips e.g. Jet Airways, Kingfisher

Air Deccan-Kingfisher tie-upGreenfield airports at Bangalore and

HyderabadPrivatized airports at Mumbai and

DelhiMassive investments by AAI in metro

airports

M&As in the Sector

Jet-Sahara

Air Deccan-Kingfisher

Trends in the Sector

Consolidation : Mergers

and Acquisitions

Price competition

among airlines

Increasing fleet sizes

Outsourcing

Employment Trends

Recently, there have been major layoffs in all airlines

Richard Branson has sought permission to start Virgin Atlantic airways : possible employment generation. Same with Eurocopter

India can become an outsourcing hub in aerospace manufacturing, MRO and training

Impact of Economic Budget (2009-10)

Minimal impact due to negligible increase in budget outlays

All travel/tourism sectors given low importance.

Reforms (both implemented and expected)

Major liberalization reforms in 1991

Independent aviation regulator appointed

Bilateral and multi-lateral agreements at government level

Modernization of airports

Setting up of privatized and Greenfield airports

Reforms (contd)

100% FDI in existing airports

49% in domestic airlines under domestic route

100% equity ownership by NRI permitted

100% tax exemption for Greenfield airports

INDUSTRY OUTLOOK

The industry is expected to grow @ 15% CAGR over the next 5 years

Foreign Cargo players are expanding capacities in India

Eurocopter, is keen to enter India into the EMS sector

Major players are investing in airports, like GMR Infrastructure, ADAG etc.

REFERENCES

http://ibef.org/

http://www.centreforaviation.com/

http://www.naukrihub.com/india/aviation/

http://www.livemint.com/articles/

http://www.businessaviation.com/

THANK YOU!