Airlines Industry In India-group 8
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AIRLINE INDUSTRY IN INDIA
Presentation By Group VIII
AGENDA
Objective
Current Scenario
Factors Driving Growth
Factors Obstructing Growth
The Scope Ahead
Key Learnings
OBJECTIVE Analysis of The Airline Industry:
Growth Factors
Impediments
CURRENT SCENARIO
Growing vigorously at a rate of 25-30% and is expected to continue
International Players making a beeline to enter this emerging market
Carriers operating in India has grown from two state-owned players in 1991 to more than ten today
Numbers of Flights operating: 2500 per day
Growth in Domestic Passenger Traffic Year ended 31 March
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Domestic Sector Passenger (millions) 10.4 11.2 11.5 12.0 12.7 13.7 12.8 13.9 15.7 19.9 25.5
Year-on-Year Growth
7.7% 2.7% 4.3% 5.8% 7.9% -6.6% 8.6% 12.9% 26.8% 27.9%
Source: Airport Authority of India
Some Major Players…
Factors Driving Growth
Wider Availability of Low Fares
Higher Disposable Income and Growth in Consumer Spending
Lifestyle Changes
Growth from Tier II Cities
Tourism
Government Policies
Wider Availability Of Low Fares
Large entry of Low Cost Carriers
Costs have become comparable to A.C. Train fares Indian Rupees (INR)
Sector
Rail Fare (Return) 2 AC - Sleeper Journey time
Delhi-Mumbai
4100
17 hours
Delhi-Bangalore
5700
35 hours
Mumbai - Bangalore
3000
23 hours
Source: Air Deccan Advertisement
Air Deccan fare (Return) 3 months
Re 1
2 months 1 month 3 days Journey time 4256
5452
64481hr. 45 min.
6656
8248
96482hr. 30 min.
3656
4952
54481hr. 35 min.
High Disposable Income
Growth in Income Level:
At 01-02 prices 50
43.6
190
mn
194 27.0 22.1
20 10
170 169
160
163
150
0
140 1998-99
2001-02
Urban middle class households (LHS)
180 Rs '000
40 30
200
2009-10
Avg middle class household income (RHS)
Increase in Leisure Travelers for the past few years; 5 years back 85% were business travelers
Lifestyle Changes
Younger Population (70% below 35 years)
Growth in Software/Manufacturing Industry
Air Travel no longer a luxury
Growth From Tier II Cities
Government plans to modernize 35 non-metro airports IT/Manufacturing companies plan to set up base According to CRISIL - Traffic at non-metro airport to exceed metro airports by 2010: Non Metro Airports = 74 million passengers Metro Airports = 19 million passengers This calls for investment of around Rs. 6000 crores
Tourism As a Growth Sector
High rate of growth in Tourism Industry 2004-05 had a 25% growth rate and is growing De-seasoning of various destinations (e.g. Goa, Kerala) 320 million domestic tourists International tourism increasing but domestic is going to be the biggest impact
Government Policies
Liberalization of the Aviation Industry (Open Sky Policy): Ended monopolies of state carriers Increased number of players in the market: Pre 1991 – Two Currently – More than Ten
Increased FDI limit in Air Transport Services
74% in Airports 49% in Airline Carriers
Government Policies (contd…)
Restructuring and development of Airports Privatization of Airports
Airport
Status
Operator
Hyderabad
Under Construction - to be commissoned in 2008
GMR-Malaysia Airports
Bangalore
Under Construction - to be commissoned in 2008
Siemens, L&T, Unique Zurich
Delhi
Concession awarded - modernisation and upgradation
GMR-Fraport
1,750
Mumbai
GVK-Bidwest
1,750
Kolkata
Concession awarded - modernisation and upgradation To be privatised
Chennai
To be privatised Total
4,100
Source: Airport Authority of India
Investment (USD million) 300 300
Impediments To Growth
Lack of Infrastructure
High Input Costs
Lack of Human Resources
Lack Of Infrastructure
Not enough operational Airports – only 89 out of 450 are operational Not enough night parking Shortage of runways Poor facilities for passengers – restrooms, restaurants, parking, etc Baggage system needs urgent upgrade Need for more Maintenance Repair and Overhaul (MRO) Centers
High Input Costs
Fuel Costs:
70% higher than International standards. Fuel bill - 40% of Operating Cost Annual industry bill - USD 1.7 billion.
Aviation Turbine Fuel (ATF) prices in India is around Rs. 37,800 per kilo litre against Rs. 21,800 in the Average International Markets
20% of the Operational Budget is spent on training pilots
Landing and Parking Charges: 78% higher than the International Average
Inadequate Human Resources
Shortage of Skilled Manpower:
Pilots Cabin Crews Ground Staff
Shortage of Air Traffic Controllers:
Currently 1000 ATCs handling 89 Airports Requirement of 2500 ATCs
SCOPE AHEAD…
25.5 million Domestic Travelers by next 12 months
Airline Industry to be worth Rs. 35000 crores by 2010
Growth to exceed that of China, France and Australia
KEY LEARNINGS
Macro-Environmental Factors affecting the industry:
Growth Factors Obstructing Factors
If all hindrances can be addressed then, SKY IS NOT THE LIMIT…
THANK YOU…
Presentation By Group VIII
AGENDA
Objective
Current Scenario
Factors Driving Growth
Factors Obstructing Growth
The Scope Ahead
Key Learnings
OBJECTIVE Analysis of The Airline Industry:
Growth Factors
Impediments
CURRENT SCENARIO
Growing vigorously at a rate of 25-30% and is expected to continue
International Players making a beeline to enter this emerging market
Carriers operating in India has grown from two state-owned players in 1991 to more than ten today
Numbers of Flights operating: 2500 per day
Growth in Domestic Passenger Traffic Year ended 31 March
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Domestic Sector Passenger (millions) 10.4 11.2 11.5 12.0 12.7 13.7 12.8 13.9 15.7 19.9 25.5
Year-on-Year Growth
7.7% 2.7% 4.3% 5.8% 7.9% -6.6% 8.6% 12.9% 26.8% 27.9%
Source: Airport Authority of India
Some Major Players…
Factors Driving Growth
Wider Availability of Low Fares
Higher Disposable Income and Growth in Consumer Spending
Lifestyle Changes
Growth from Tier II Cities
Tourism
Government Policies
Wider Availability Of Low Fares
Large entry of Low Cost Carriers
Costs have become comparable to A.C. Train fares Indian Rupees (INR)
Sector
Rail Fare (Return) 2 AC - Sleeper Journey time
Delhi-Mumbai
4100
17 hours
Delhi-Bangalore
5700
35 hours
Mumbai - Bangalore
3000
23 hours
Source: Air Deccan Advertisement
Air Deccan fare (Return) 3 months
Re 1
2 months 1 month 3 days Journey time 4256
5452
64481hr. 45 min.
6656
8248
96482hr. 30 min.
3656
4952
54481hr. 35 min.
High Disposable Income
Growth in Income Level:
At 01-02 prices 50
43.6
190
mn
194 27.0 22.1
20 10
170 169
160
163
150
0
140 1998-99
2001-02
Urban middle class households (LHS)
180 Rs '000
40 30
200
2009-10
Avg middle class household income (RHS)
Increase in Leisure Travelers for the past few years; 5 years back 85% were business travelers
Lifestyle Changes
Younger Population (70% below 35 years)
Growth in Software/Manufacturing Industry
Air Travel no longer a luxury
Growth From Tier II Cities
Government plans to modernize 35 non-metro airports IT/Manufacturing companies plan to set up base According to CRISIL - Traffic at non-metro airport to exceed metro airports by 2010: Non Metro Airports = 74 million passengers Metro Airports = 19 million passengers This calls for investment of around Rs. 6000 crores
Tourism As a Growth Sector
High rate of growth in Tourism Industry 2004-05 had a 25% growth rate and is growing De-seasoning of various destinations (e.g. Goa, Kerala) 320 million domestic tourists International tourism increasing but domestic is going to be the biggest impact
Government Policies
Liberalization of the Aviation Industry (Open Sky Policy): Ended monopolies of state carriers Increased number of players in the market: Pre 1991 – Two Currently – More than Ten
Increased FDI limit in Air Transport Services
74% in Airports 49% in Airline Carriers
Government Policies (contd…)
Restructuring and development of Airports Privatization of Airports
Airport
Status
Operator
Hyderabad
Under Construction - to be commissoned in 2008
GMR-Malaysia Airports
Bangalore
Under Construction - to be commissoned in 2008
Siemens, L&T, Unique Zurich
Delhi
Concession awarded - modernisation and upgradation
GMR-Fraport
1,750
Mumbai
GVK-Bidwest
1,750
Kolkata
Concession awarded - modernisation and upgradation To be privatised
Chennai
To be privatised Total
4,100
Source: Airport Authority of India
Investment (USD million) 300 300
Impediments To Growth
Lack of Infrastructure
High Input Costs
Lack of Human Resources
Lack Of Infrastructure
Not enough operational Airports – only 89 out of 450 are operational Not enough night parking Shortage of runways Poor facilities for passengers – restrooms, restaurants, parking, etc Baggage system needs urgent upgrade Need for more Maintenance Repair and Overhaul (MRO) Centers
High Input Costs
Fuel Costs:
70% higher than International standards. Fuel bill - 40% of Operating Cost Annual industry bill - USD 1.7 billion.
Aviation Turbine Fuel (ATF) prices in India is around Rs. 37,800 per kilo litre against Rs. 21,800 in the Average International Markets
20% of the Operational Budget is spent on training pilots
Landing and Parking Charges: 78% higher than the International Average
Inadequate Human Resources
Shortage of Skilled Manpower:
Pilots Cabin Crews Ground Staff
Shortage of Air Traffic Controllers:
Currently 1000 ATCs handling 89 Airports Requirement of 2500 ATCs
SCOPE AHEAD…
25.5 million Domestic Travelers by next 12 months
Airline Industry to be worth Rs. 35000 crores by 2010
Growth to exceed that of China, France and Australia
KEY LEARNINGS
Macro-Environmental Factors affecting the industry:
Growth Factors Obstructing Factors
If all hindrances can be addressed then, SKY IS NOT THE LIMIT…
THANK YOU…
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