The Indian Airlines Industry Prashi Agarwal Saurabh Goyal

1
The Indian Airlines IndustryPrashi
AgarwalSaurabh Goyal
2
The Rise Fall of Maharaja

• Maharaja Syndrome
• Air travel an elitist activity
• Prohibitive cost of air travel
• Air Corporations Act, 1953
• Air India nationalized in 1953
• all airlines merged into either Indian Airlines
  or Air India
• The Directorate General of Civil Aviation
  controlled every aspect of flying
• Airports Authority of administering every aspect
  of air transport operation through the Air
  Traffic Control.

• Post Maharaja (Liberalization)
• Open skies policy for domestic players in 1991
• Air Corporation Act repealed
• Private airlines reintroduced
• Partial open sky policy for international players
  only in November 2004
• Full cost carriers, low cost carriers (LCC),
  start-up airlines (total 21 today!!)
• Nose- diving prices
• Privatization of Delhi and Mumbai airports

3
Players 2006Taking Indians To Places

• Set up by J.R.D. Tata
• Nationalised in 1953
• National flag carrier
• 44 world-wide destinations
• Profitable in most years since its inception
• Net profit of Rs.97 m for 2005-06
• Growth of almost 15 over the previous year.

• State owned domestic airline
• Formerly known as Indian Airlines
• Company rebranded as Indian in Dec 05 to revamp
  image in preparation for an IPO
• GoIs plan to merge Air India and Indian into one
  giant airline consisting of 130-140 aircraft
• Could take place anytime from the end 06 to mid
  07

• Regular airline offering normal economy and
  business class seats.
• 300 flights, 43 Indian destinations
• Indian market share 32
• Does not own its brand. Brand owned by Jetair
  Enterprises Ltd. a separate company substantially
  owned by Naresh Goyal
• Prevents possible hostile takeover bid

• Began on 3 Dec 1993with two Boeing 737-200
  aircrafts as Sahara Airlines
• Initially services concentrated in northern India
  
• Rebranded as Air Sahara on 2 October 2000.
• Uncertainty over the airline's fare caused
  domestic markey share to slide from 11 in Jan 06
  to 8.5 in April

4
Players 2006Taking Indians Across India

• Low-cost airline (LCC)
• Began in May 2005
• Entered with Rs. 99 fares for first 99 days
• Offering low everyday spicey fares
• Aim Compete with Indian Railways AC sgment
• fleet of 6 Boeing 737-800 with 189 seats.

• GoAir The Peoples Airline
• established in June 2004
• LCC promoted by The Wadia Group
• GoAir FreeFares
• Relatively small player as compared to other LCCs
• Initial flights in southern western India with
  the first nine A320s
• Remaining 11 aircrafts being added in 2nd yr

• Services started in May 05
• Initially operates only on domestic routes.
• Owned by United Beverages Group under the
  leadership of Vijay Mallya
• Pushing for amendment of rule which requires an
  airline to fly a min of five years on domestic
  routes before it can start flying overseas
• Barring such an amendment, first international
  flights planned to start in 2010

• India's first low-cost carrier
• Started air operations in 2003
• Despite a disastrous maiden flight which caught
  fire, Deccan continues to grow
• Connects 55 cities within India
• Planning a secondary hub at Chennai International
  Airport. Due to stock market downturn Air
  Deccan's IPO barely managed to scrape through

5
Global v/s Indian Scenario

• At the macro-economic level Asia Pacific growth
  is impressive. India and China are growing
  between 8 and 10 each year
• International passenger traffic grew 7.6 where
  as Asian airlines were slowerat 6.3
• Asian freight traffic grew by only 4.2 in
  comparison to global growth of 3.2
• Globally airlines lost US6 billion in 2005 and
  in Asia it is a mixed picture. Some carriers are
  among the most profitable. Others however are
  struggling but still the best performance in the
  world
• India has moved from 2 state-run airlines to a
  vibrant industry with more than 10 players.
  Indian carriers stole the show in Paris with
  US12 billion of orders
• Huge potential still to be tapped in Indian
  markets. Only 40 million people travel by air4
  of the population

6
Path forward

• Things to Look Forward
• Technology Vision 2020
• Global airlines traffic to increase in lieu of
  the good performance
• Allowing of Private Participation FDIs in
  construction maintenance of air traffic
  infrastructure
• Air transport supports US3 trillion of global
  economic activity. That is 8 of global GDP and
  29 million jobs
• Challenges
• Infrastructure
• Avian Flu
• Tackling the rise in Fuel Price
• Waving of Tax Exemption on leasing from
  government
• With the advent of LCC, other airlines too
  reducing their price significantly
• Costs pressures (ATF Prices Staff Cost)