1. Strategy for a new entrant in the
Indian aviation industry

2. Aviation
Support
Airlines Aerospace
Services
Design &
Passenger Cargo Group handling Training Catering
Manufacturing
MRO

6.  Airways (India) Ltd;
 Bharat Airways;
 Himalaya Aviation
 Kalinga Air Lines
 Deccan Airways
 Air India
 Air Services of India
 Indian National Airways The Air Corporations Act of 1953

7.  Open Sky Policy 1991
 East-West Airlines (India)
 Media Obsessions
 1.Bollywood
 2. The Indian Cricket
 3. Aviation ( India)

8. Source: Market Access for Goods and Services: Overview of the Results, GATT
Secretariat, Geneva, November 2004

9. Low Cost High Service

10. 1953: NATIONALISATION OF AIRCRAFT 1986: Private Sector Players permitted as
INDUSTRY Air taxi operators. Jet, Air Sahara, etc started
Assets of 9 existing companies transferred to service.
two entities in the aviation sector controlled by 1994: Private Carriers permitted to operate
the Government in scheduled services. Six operators granted
 Indian Airlines, primarily serving domestic license, however only Jet and Air Sahara able
sectors to service.
 Air India, primarily serving the 2003: Entry of low cost carriers. Air Deccan,
international sectors Spice Jet, Go Air, Indigo.
IMPLICATIONS
IMPLICATIONS  Aviation is now affordable with check fares
 Aviation became a preferred mode of and discount schemes.
transport for elite class  Various Operators with different business
 Restricted Growth of Aviation Industry model.
 High Cost structure  Huge growth foreseen in Aviation
 Underdevelopment of infrastructure

11.  1953- all airlines have been merged.
 East west airline and Modiluft have been stopped.
 In April 2007, Jet Airways took over Air Sahara for Rs.
1,450 crore.
 on 19 December 2007, Kingfisher acquired an initial
26% stake in Air Deccan for Rs. 550 crore.
 1 March 2007, The government-owned Air India and
Indian Airlines have joined to form the National
Aviation Corporation of India Ltd. (NACIL).
 "Low-cost carriers (LCCs) such as IndiGo and SpiceJet
also have significant capital requirements and will
need further flows of funding ...The next round of
consolidation is therefore most likely to occur in the
LCC sector."

12. Ministry of Civil
AAI DGCA
Aviation
• manages 127 airports • "Enable the people of • Endeavour to
in the country, which India to have access to promote safe and
include 13 safe, secure, efficient Air
international airports, sustainable and Transportation
7 custom airports, 80 affordable air services through regulation
domestic airports and with world class civil and proactive safety
28 civil enclaves. aviation". oversight system.
• There are over 450
airports and 1091
registered aircrafts in
the country.

13. Source : DGCA report nov-2011

14. AIRCRAFT DEPARTURES
600000
500000
Total departures
400000
300000
200000
100000
0
Passenger carried
50000000
45000000
40000000
No Of Passengers
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
Source : DGCA Report 2010

15. Source : DGCA report nov-2011

16. Source : DGCA report nov-2011

17. Source : DGCA report nov-2011

18. Source : DGCA report nov-2011

19. Source : DGCA report nov-2011

20. Source : DGCA report nov-2011

21. (Source: ICRA report, Civil Aviation 2010)

22. Source: Index mundi November 2011

23. 2009-10 Revenue Expense P/L (Rs
Rs. Rs Million)
Millions Millions
Jet 103672.6 101666.5 2006.1
Jetlite 16812.6 16203.2 609.2
Kingfishe 50679.2 61845.8 (11166.6)
r
Spicejet 21810.8 21204.8 606
GoAir 8961.2 9088 (126.8)
Indigo 26015 21548 4467

24. 30000000
25000000 Total Passengers 2010
Total Passengers 2009
20000000
15000000
10000000
5000000
0
Source : IATA

25. Source: OAG Max Online for w/c 5 December 2011

26.  Skytrax best low cost airlines
2007,2009,2010 and 2011
 Head quarter Malaysia
 operating cost $0.035 /seat-
km
 First airlines for ticket less air
travel
 106 routes – Flies international

27.  World no 2 low cost airlines
 Subsidiary of Qantas
 Flight entertainment system
using i-pad
 Flies international
 Has a business class

28. India has a population of 1.1 billion with an estimated middle
Market Size class of 300 million.
50% of the population is <25 years old. Therefore, the size of the
Demographics economically active segment will continue to grow for a number
of decades (unlike the developed countries and even China).
Average GDP growth of 6% p.a. sustained since 1991 and
Economic accelerating thereon.
Growth
India has an increasingly open economy, with strong growth in
Trade & international trade, healthy foreign exchange reserves and
Investment increasing foreign direct investment.

30.  India's domestic aviation market expansion has been the strongest in
the world – IATA report
 India is currently the ninth largest aviation market in the
world, according to a RNCOS report “
 it is expected that the civil aviation market will register a compound
annual growth rate (CAGR) of more than 16 per cent during 2010-2013.
 Passenger traffic has grown at 18 per cent year on year (y-o-y) basis and
the year 2010 closed at 90 million passengers both domestic and
international.
 India is the fastest growing aviation market and expected to be within
4-5 big aviation markets by 2020 and 3rd in terms of domestic market
after US and China.
 During the last two decades from a fleet of only about 100, the scheduled
operators now have reached 435 aircrafts connecting the nation and the
world.

32. M
i
l
l
i
o
n
Source : IATA projections based on goldman sachs projection

33. On December 9, 2010, SpiceJet made Go Air places order for 72 aircraft
a firm order for 15 Bombardier Dash 8 worth Rs. 32,400 crore
Q400 and took options to purchase a
further 15.[
20th, Nov 2005 On 30th Dec-2005, Air India's purchase
Kingfisher Airlines orders 20 new order for 111 aircraft involvingRs67,000
ATR72-500 Aircraft worth US$350 crore.
Million
On 12th Jan-2011, Indian budget airline Jet Airways has entered into a purchase
IndiGo has signed an agreement to buy agreement with Boeing to acquire 30
180 Airbus A320 aircraft, the European 737-800s to be delivered by 2015 and 10
plane maker said, in a record sale worth Boeing 787-8s to be delivered by 2014.
USD 16.4 billion.

34. The Reserve Bank of India (RBI) announced that foreign institutional investors
might have shareholdings more than the limited 49% in the domestic sector.
 Airports
 Foreign equity up to 100% is allowed by the means of automatic approvals
pertaining to establishment of Greenfield airports
 Foreign equity up to 74% is allowed by the means of automatic approvals
pertaining to the existing airports
 Foreign equity up to 100% is allowed by the means of special permission from
Foreign Investment Promotion Board, Ministry of Finance, pertaining to the
existing airports
 100 per cent tax exemption for airport projects for a period of 10 years.
 Air Transport Services
 Up to 49% of foreign equity is allowed by the means of automatic approvals
pertaining to the domestic air transport services
 Up to 100% of NRI investment is allowed by the means of automatic approvals
pertaining to the domestic air transport services
 74 per cent FDI is permissible in cargo and non-scheduled airlines.

35. Changing regulation policies
The government is planning to raise the foreign direct investment (FDI) limit to 74% for non-
scheduled airline operations, helicopter services and regional airlines using small aircraft. The
current FDI ceiling for airline services is 49%.
Increased privatization of airports
In 1997 the Government of India published a policy document to open up existing airports to
domestic and foreign private investors in order to meet the significant costs involved in
developing India’s airports to keep pace with the growth in air traffic. In Sep 2003, Govt leased
out Delhi and Mumbai airports to the private sector as part of its extensive modernisation and
growth plan for the sector.

36. Growing Infrastructure developments
Mumbai Airport - Planned investment of US$1.6 billion by 2020, of which US$1.3 bn will
take place by 2014
Delhi Airport - Planned investment of US$764 million by 2014 and USD$.7 billion by 2020
Kolkata Airport - Modernisation will be led by the Airports Authority of India. Total project
cost is estimated at US$360 million.
Hyderabad & Bengaluru Airports - Total investment of US$1.1 billion dollars. Both airports
have commenced commercial operations in April 2008.

37. 35Non-Metro Airports - Development of 35 non-metro airports will proceed at an estimated
cost of US $ 1.2 billion. City side development will require a further US$350 million, with the
modernisation process to be completed by 2009.
North East Region - Development of following airports :
• Pakyong Airport, Gangtok, Sikkim
• Cheithu Airport, Kohima, Nagaland
• Itanagar
Other Greenfield Airports –
• Mopa, Goa
• Navi Mumbai. Planning Commission discussing 3rd Mumbai Airport.
• Chakan/Rajguru, Pune, Maharashtra; Halwara, Punjab
• Kannur, Kerala.
• Hassan & Gulbaraga, Karnataka.

40.  Pure Low Cost: Air travellers want more value
for their money
 North American Hub and Spoke: Not enough
distance between airports
 Point to Point only: Inefficient
 Regional Jet Feeder: Not enough critical mass
Therefore , a unique model needs to be
developed.

41. Marketing Operations Finance
• Proper STP • Operate on • More equity
• Frequent flyer routes with high • Use of FCCBs
programs seat factor • Low interest –
• Tie ups with • Quick Turn around long term loans.
corporate time
• Holiday packages • Red eye
• Dynamic pricing operations
• Focus on • Optimal mix of
Branding ATR & jet
aircrafts
• Leasing of Aircraft