AVIATION SECTOR

A.MOHAMED USMAN SHARIEF

Transportation

Aviation

Roads

Ports

Railways

• One of the fastest growing industries in the world.

• Origin of Indian aviation industry can be traced back to the year 1912.

• India has the private airlines as its key players

• 75% of the market share is owned by the private sector.

• Problems that the Indian aviation industry is facing and thus immediate attention is needed.

AVIATION INDUSTRY

AIR NETWORK IN INDIA

Some Facts

• In the present scenario around 12 domestic airlines and above 60 international airlines are operating in India

• The growth of airlines traffic in Aviation Industry in India is almost four times above international average

• Aviation Industry in India have placed the biggest order for aircrafts globally

• Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia

Domestic Airlines

Air India GoAir Airlines IndiGo Airlines Jagson Airline Jet Airways Jet Airways Konnect Kingfisher Airline Paramount Airways SpiceJet Airlines JetLite (Air Sahara) Kingfisher Red (Air Deccan) MDLR Airlines

Players Taking Indians To Places

Began on 3 Dec 1993with two Boeing 737-200 aircrafts as Sahara Airlines

Initially services concentrated in northern India

Rebranded as Air Sahara on 2 October 2000.

“Regular” airline offering normal economy and business class seats.

300 flights, 43 Indian destinations Does not own its brand. Brand

owned by Jetair Enterprises Ltd. a separate company substantially owned by Naresh Goyal

State owned domestic airlines ((earlier Tata Airline) )

Formerly known as Indian Airlines GoI’s plan to merge Air India and Indian into one

giant airline consisting of 130-140 aircraft

Its hub is Chennai International Airport.Mainly targeting business travellersThe airline started operations in October 2005

Players Taking Indians Across India

Low-cost airline (LCC) Began in May 2005 Entered with Rs. 99 fares for first 99 days “Offering low everyday spicy fares” Aim: Compete with Indian Railways AC

sgment fleet of 6 Boeing 737-800 with 189 seats.

India's first low-cost carrier It was started by Captain G. R. Gopinath Started air operations in 2003 It was known popularly as the common

man's airline Connects 55 cities within India

GoAir – The People’s Airline established in June 2004 LCC promoted by The Wadia Group GoAir FreeFares Relatively small player as compared to

other LCCs Initial flights in southern & western India

with the first nine A320s

Services started in May 05 Initially operates only on domestic routes

but now in overseas also. Owned by United Beverages Group under

the leadership of Vijay Mallya

Growth Rate

24% annual growth

Market ShareJet Airways and Jet Lite (previously Air Sahara) 27.7%

Kingfisher Airlines and Kingfisher Red (previously Air Deccan) 20.7%

Air India (previously Indian Airlines) 18.6%

IndiGo 13.6%SpiceJet 12.4%GoAir 5.4%Paramount Airways 1.5%

Jet Airways Kingfisher Airlines Air India IndiGo SpiceJet GoAir Paramount Airways

At Present -

AAI manages 128 airports which includes:

- 15 International airports - 8 Custom airports - 25 Civil Enclaves - 80 Domestic airports

How aviation industry is effecting India's economy?

10 years back there were just 2 airlines. Both state owned . In the last 10years the economy has opened up. India has experienced growth rate of 8% per year.

• The main factors which affect the Indian Economy are:-

1. Increased no. of domestic airlines

2. Low cost airlines

3. India's improving economy • the other factors are:-

1. Increased in no. of business travellers to different countries

2.Incresed no. of incoming tourist and business enterprises

Factors Influencing Growth Rate

• Increased Inward and outward tourism• Increased competition has driven down prices

and margins• Additional purchasing power due to rapidly

rising real incomes amongst the middle class• Increased business trade due to the rapidly

growing economy and free trade agreements with neighbouring countries

• Favourable Government policies and tax reforms

Global v/s Indian Scenario• At the macro-economic level Asia Pacific growth is impressive. India and China are growing between 8 and 10% each year.• International passenger traffic grew 7.6% where as Asian airlines were

slower—at 6.3% • Asian freight traffic grew by 4.2% in comparison to global growth of 3.2% • Globally airlines lost US$6 billion in 2005 and in Asia it is a mixed picture.

Some carriers are among the most profitable. Others however are struggling but still the best performance in the world

• India has moved from 2 state-run airlines to a vibrant industry with more than 10 players. Indian carriers stole the show in Paris with US$12 billion of orders

• Huge potential still to be tapped in Indian markets. Only 40 million people travel by air—4% of the population

Objectives World Class Development and Expansion World Class Airport Management

• Salient Features of JVCs

•Equity participationDelhi 74 % Pvt. Consortium (GMR Group, Fraport AG, MAPL, IDF)

26 % AAI Mumbai 74% Pvt. Consortium ( GVK, ACSA,BSD) 26% AAI•Initial Capital

Mumbai Rs. 200 crores Delhi Rs. 200 crores.

•Estimated Capital Investment for first 7 yearsDelhi Rs. 3286 crs. (Funded as equity Rs. 551 crs, internal accrual Rs. 70 crs. Debt Rs. 2665 crs.)Mumbai Rs.5676 crs. (Funded as equity Rs. 626 crs. Internal

accural Rs. 804 crs. Debt Rs. 4246 crs.)

Mumbai and Delhi Airports

Greenfield airports

Hyderabad Airport

Bangalore Airport

Greenfield airport at Devanahalli is on a Build Own Operate and Transfer (BOOT) basis for 30 years at a revised cost of Rs. 1930 crores (earlier Rs. 1280 crores).

Equity: Karnataka State Industrial Investment Development Corporation (KSIIDC) 26% and Siemens Germany, Unique Zurich Switzerland and - L&T India Limited 74%.

Equity – Rs. 315 crores , State Support – Rs. 350 crores, Debt – Rs.1265 crores

Greenfield airport - Bangalore - AOD April 2008

Global v/s Indian Scenario

• At the macro-economic level Asia Pacific growth is impressive. India and China are growing between 8 and 10% each year.• International passenger traffic grew 7.6% where as Asian airlines were

slower—at 6.3% • Asian freight traffic grew by 4.2% in comparison to global growth of 3.2% • Globally airlines lost US$6 billion in 2005 and in Asia it is a mixed picture.

Some carriers are among the most profitable. Others however are struggling but still the best performance in the world

• India has moved from 2 state-run airlines to a vibrant industry with more than 10 players. Indian carriers stole the show in Paris with US$12 billion of orders

• Huge potential still to be tapped in Indian markets. Only 40 million people travel by air—4% of the population

Road Ahead

• The Indian aviation sector is likely to see clear skies ahead in the years to come.• Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5

years. • The Vision 2020 statement announced by the Ministry of Civil Aviation,

envisages creating infrastructure to handle 280 million passengers by 2020. • Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80

billion in new aircraft and US$ 30 billion in development of airport infrastructure. • Associated areas such as maintenance, repair and overhaul (MRO) and training

offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020.

• Aerospace major Boeing forecasts that the Indian market will require 1,000 commercial jets in the next 20 years, which will represent over 3 per cent of Boeing Commercial Airplanes’ forecasted market worldwide. This makes India a US$ 100 billion market in 20 years.