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Aviation Sector in India Present day scenario

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Political

The Indian Cabinet approved foreign airline investment in Indiancarriers in Sep-12

Permitted 49% foreign direct investment in the airline sector

The Airports Authority of India (AAI), the state-owned operator of morethan 120 airports - moving into a critical phase in all three key

functions: airport operations

airport development

air navigation services

5 Year/20 Aircraftthreshold for start-ups operating overseas likely tobe abolished in 2013/14.

restriction discriminated against Indian carriers since it does notapply to foreign airlines

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Economic Aviation Hub

Indias geographic location between Europe, the Middle East, Africaand Asia

combined with its huge domestic market

key building blocks to support the development of aviation hubs

Absence of a transparent policy

prevented the corporatisation of the sector

kept many serious investors away from the market

Frequent shifting of the goalposts

many potential investors are reluctant to commit capital despitetheir confidence in the underlying growth potential of the market

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Social

Focus on the Indian clientele which is mainly working class

Customization of services to achieve customer satisfaction

Consumer-friendly environment inside the aircraft

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Technology Indias satellite-based augmentation system, GAGAN, is expected to

launch in 2014

Satellite-based navigation and flexible use of airspace

reduce airline operating costs and carbon emissions through lower

fuel consumption.

Landmark year - upgrade projects at the two jewels in AAIs crown,Chennai and Kolkata airports, have finally been completed.

Construction utilised value engineering methods

helped to contain programme costs

welcomed by the industry as an important contribution to

moderating increases in charges

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IndiGo

Resources and Capabilities

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Indian Domestic Market Share by Airline, Mar-13

Source: CAPA, DGCA

On-Time performance,Mar-13

Source: CAPA Research, Company Reports

96.20%

92.90%

89.70%

87.40%

Indigo JetAirways

SpiceJet AirIndia

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Customer Service

Best on-time performance in six metro airports

Customers with only handbag can check-in-quickly without waiting

Customers allowed to carry eatables

Least passenger complaints and cancellation (only 0.3%)

Deliberate choice of under-served destinations

Other such routes: Hyderabad-Chennai-Thiruvananthapuram-Kochi-Delhi or Srinagar-Delhi-Indore-Nagpur-Bangalore

Large number of medical patients at Chennai Airport, so they gave abigger budget for wheelchairs

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The way it is in our industry, a pilot is functionally just apilot no matter how many years he has done. Then,after 30 years of service, you make him a vice president

of flight operations and expect him to manage 500pilots, this explains why the Indian airline industry hasnot produced enough leaders from the ranks

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One training program

functional skills training aimed at specific roles like that of pilots, in-

flight crew, ticketing attendants, baggage handling

coaching for customer service and soft skills

leadership training at all levels

Cost saving on Recruitment

Poached 200-300 pilots from Kingfisher

Saved on training cost

Lean Management

Air India has 250 employees per aircraft whereas Indigo has 96

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Industry AnalysisPorters 5 Force Model

Supplier Bargaining Power

HIGH

Rising fuel price

Duopoly of Boeing and Airbus

Maintenance staff from Airbus

Weak Rupee

Buyer Bargaining Power

LOW

Many other options SpiceJet, JetLite

Limited routes as compared to other airlines

Threat from New

Entrants

MEDIUMFDI & Government Regulations

Mergers like Jet-Etihad

LCC like SpiceJet expanding very fast

Air Asia

Substitutes HIGH

Improving Railway travelVideo conferencing

No switching cost

Competitive Rivalry- HIGH

Operational efficiency is limitable

Other airlines also concentratingon low costs

Low customer loyalty

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AirAsia: Advantage

A large successful airline

Cost per passenger kilometre excluding fuel is the lowest in theworld at just $2

Will help break the status quo in pricing, marketing and commercialstrategy of Indias airlines.

There is a lack of innovation in pricing and strategy, and 20% seatsare empty on most flights.

Vacuum due to Kingfisher's absence

Passenger traffic will increase owing to lower fares.

Will attract premium end bus and train travelers

(e.g. Travellers between Bangalore and Kerala)

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Thank You for flying with us....

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