Avistion Industry In India

Avistion Industry In India

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Aviation Industry In India

Overview
The history of civil aviation in India began in December 1912. At the time of independence, the number of air transport companies, which were operating within and beyond the frontiers of the company, carrying both air cargo and passengers, was nine.

In early 1948, a joint sector company, Air India International Ltd., was established by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft. Its first flight took off on June 8, 1948 on the Mumbai (Bombay)-London air route. At the time of its nationalization in 1953, it was operating four weekly services between Mumbai-London and two weekly services between Mumbai and Nairobi. The joint venture was headed by J.R.D. Tata, a visionary who had founded the first India airline in 1932 and had himself piloted its inaugural flight.

Current Trend in Civil Aviation Industry in India
It is a phase of rapid growth in the industry due to huge build-up of capacity in the LCC space, with capacity growing at approximately 45% annually. This has induced a phase of intense price competition with the incumbent full service carriers (Jet, Indian, Air Sahara) dis-counting to 60-70% for certain routes to match the new entrants ticket prices. This, coupled with costs pressures (a key cost element, ATF price, went up approximately 35% in recent months, while staff costs are also rising on the back of shortage of trained personnel), is exerting bottom-line pressure.

The growth in supply is overshadowed by the extremely strong demand growth, led primarily by the conversion of train/bus passengers to air travel, as well as by the fact that low fares have allowed passengers to fly more frequently. There has, therefore, been an increase in both the width and depth of consumption. However, the regulatory environment, infrastructure and tax policy have not kept pace with the industry's growth.

Enactment of the open sky policy between India and Saarc countries, increase in bilateral entitlements with the EU and the US, and aggressive promotion of India as an attractive tourism spot helped India attract 3.2 million tourists in 2004-05. This market is growing at 15% per annum and India is expected to attract 6 million tourists by 2010. Also, increasing per capita income has led to an increase in disposable incomes, leading to greater spend on leisure and holidays and business travel has risen sharply with increasing MNC presence.

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Smaller cities are also well connected now. Passenger traffic has increased and over 21 million seats have been sold, resulting in a growth of over 50%. The Indian travel market is expected to triple to $51 billion by 2011 from $16.3 billion in 2005-06. India's aviation sector is in for a further shake – up as its dozen-odd airlines move towards consolidation. The coming together of the kingfisher and air deccan is only the latest confirmation of the trend.
Role of Technology in Aviation Industry
Intense competition in Indian Aviation Industry has made the role of technology very important for domestic airline companies. Technology can help in making travel comfortable, allow easy access to tickets and reduce time to check-in. A considerable amount of money is also saved by automation. Following points highlight the increasing use of Technology by different Airlines:

• Vijay Mallya-promoted Kingfisher Airlines is planning to install a landscape camera at the bottom of the aircraft that will enable passengers get a view of the take-off and landing of their airplane when flying on domestic routes. They are also going to allow GSM phones to be used on board for the first time. They are already providing live TV as part of our high-end In-Flight Entertainment (IFE) initiatives.
• Public sector airline Air-India is exploring the possibility of launching an information technology (IT) subsidiary to handle its automation activities.
• Jet Airways has launched an Interactive Voice Response (IVR)-based payment and ticketing services. The service will allow passengers to complete their reservation with credit cards through a secure gateway and instantly receive their e-tickets via email.
• Low-cost carriers such as Air Deccan, SpiceJet, GoAir and IndiGo are currently allowing a web-check apart from online booking.

Major Players in the Industry
• Air-India is the national flag carrier airline of India with a network of passenger and cargo services worldwide. Air India has 44 world-wide destinations. It has been growing at a consistent rate of 10 to 15% each year.
• Indian is India's state owned primarily domestic airline, under the federal Union Ministry of Civil Aviation The Company was formerly known as Indian Airlines.
This year, Air India and Indian merged into one giant airline consisting of 130-140 aircraft.
• Air Sahara is a private airline operating scheduled services connecting all metropolitan centres in India. Sahara Airlines was rebranded as Air Sahara on 2 October 2000.
• Jet Airways is a "regular" airline which offers normal economy and business class seats. The airline operates over 300 flights to 43 destinations across the country.

Jet & Sahara has also merged recently to form a new entity which will consolidate their market share.
There are some other players in the industry involved with providing no-frill services. These include SpiceJet, Air Deccan, GoAir, Kingfisher, IndiGo Airlines etc.

Competiton to the Aviation Industry
Competiton to this industry includes Railways and Buses, Cabs (for shorter distances). Railway is giving stiff competition to the aviation industry. Recently, it has reduced its fare for AC I Class and AC II Class and has been introducing newer provisions to attract new customer segments such as it has brought online ticket booking recently which was till now only being provided by Airliners.

Tangibility Spectrum



Unique Challenges to the Industry
Though India Aviation Industry has been increasing at the fast pace, many airlines industry incurred losses in last year. There are many reasons responsible for it:

• High aviation turbine fuel (ATF) prices
• Rising labor costs and shortage of skilled labor
• Rapid fleet expansion and
• Intense price competition
• Inadequate airport infrastructure
• Lack of trained manpower pushing up personnel costs
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