Evolution of Airline Industry in India

Airline industry is affected by no. of factors such as fuel price fluctuations, high fixed costs, strong influence of external environment and excessive use of marginal costing by carriers. Recessions in the industry tend to last longer, while recovery periods are generally shorter. Over the past nine years, it is observed that industry has made losses for five years and during the profitable years margins were on a lower end. The airlines industry is acutely sensitive to external events such as wars, economic instability, government policies and environmental regulations.
Evolution of airline industry in India:- Civil aviation took its roots in India in December 1912 with the launch of the first domestic air route between Delhi and Karachi. In 1915, first Indian airline Tata Sons Ltd, initiated a regular airmail service between Karachi and Chennai. In 1953, the government nationalized the airlines industry, by enacting the Air Corporation Act. Subsequently, assets of nine existing airline companies were transferred to two new corporations - Air India International and Indian Airlines - creating a monopoly that perpetuated right up to 1993. In 1994, with the repeal of the Air Corporations Act, private carriers like Jet Airways were permitted to operate scheduled services, subject to fulfillment of certain criteria. However, some operators could not sustain and exited the business in 1997. The operating environment of the domestic airline industry underwent a substantial change between 1997-98 and 2011-12.
1997-98 to 2002-03: During this period, Indian aviation lacked focus, leadership and strategic direction, which kept the industry grounded. The sector was both, over-regulated and under-managed. No new entrants were permitted ...

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...r cent y-o-y to 4.7 billion-km during the same period. With supply outpacing demand, PLFs declined by around 300 basis points y-o-y to 77 per cent in 2011-12 from 80 per cent a year ago. The fleet size of the airline increased to 13 aircrafts in 2011-12 from 10 aircrafts a year ago owing to addition of 3 new aircrafts. The airline uses the Airbus A320-200 aircrafts for regional domestic routes. Given the requirement of minimum 20 aircrafts to start international operations, GoAir currently does not qualify to fly overseas. Go Air, is expected to see its fleet size increase from 13 to around 20 aircraft over the next 2-3 years, to be followed by the first of its 72 A320neos on order from 2017. The company has not been too aggressive with respect to market share; instead, it has been focusing on reducing costs and improving operational efficiencies.