national conferance on civil aviation: the decade ahead
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National Conferance on
Civil Aviation: The Decade Ahead
Atilla KORKMAZOGLU Delhi, October 2011
Cargo Handling & Ground Handling What is happening, what to expect ahead
• Air Transportion Development
2
Though the ATM has revealed strong growth (6% CAGR between 1970-2010) in the past, only c.5% of world population has experienced air transportation
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1981 1985 1989 1993 1997 2001 2005 2009
RPK GDP
Income per capita($, 2009)
India
Russia,Brasil
Travel per citizen (2009)
China The future growth driver will be the
improvement in wealth of emerging economies, mainly India, China, Russia and Brasil
• Aircraft Manufacturing
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20.000
30.000
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1997 1999 2001 2003 2005 2007 2009
Global Manufacturing VolumesShip (GT)
Auto (Thousand units)
Aircraft (Unit)
0
500
1000
1500
2000
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3000
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Teslimat
Sipariş
Boeing & Airbus Manufacturing
Orders
Deliveries
Development in global business relations between countries affects transportation markets positively in the past decade
Demand increased to air
transportation while middle class got richer
Production orders made top in 2007 and deliveries in 2010, expected to increase in the future ......
• Airlines Market
4
Open Skies, Developing Country Airlines , LCC , Crisis , Consolidation of National Carriers put higher pressure on major flagship carriers day by day.
2001 American A. + Transworld
2002 Easyjet + GoFly 2003 2004 Air France + KLM
2005Lufthansa + SWISS US Airways + American West
2006Cathay Pasific + Dragon Air
2007TUIfly + Hapag LlyoydAir France KLM + VLM Air Berlin + LTU
2008
Lufthansa + bmiLufthansa + Austria AirlinesNorwegian + Fly NordicVueling + Clickair
2009 Air Berlin + TUIfly
2010British Airlines + Iberia Delta + Northwest
2011 United + Continental
Large Scale Mergers among Airlines
0%
5%
10%
15%
20%
25%
30%
35%
40%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
UK
N.America
EU
Asia Pasific
World
LCCs Dominating the Seat Capacity
• Passenger and Cargo Forecast
Long-term passenger forecasts shows a world average of %4-5 percent increase until 2019 India expectations are around %7
5
Long-term cargo forecasts shows an average of
%5,9 percent increase until 2029 for the overall world while India expectation is around % 6,5
According to the forecasts freighter fleets will grow%69
Passenger Forecast
Cargo Movement Growth Forecast
Source: Boeing Reports
6
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1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
India
World
GNP Growth Rate
MiddleClass of India is between 325-350 mio, expected to be 600 mio in 2025.
Expected to be the 5. biggest consumption market.
Tourism has % 5,6 in GNP. %87 of tourist are airline passengers.
Growth rate of India Economy is higher than the world average
Economical conjunctures affect India less than most of the others...
Source: McKinsey Global Institute
• GNP Growth Rates
• Aviation in India - Current
7
India become the 9th civil aviation market in the last decade
Scheduled route numbers doubled in last 10 years by reaching up to 82
72 National Airlines operate at India
Fleet size of 413 aircrafts
High Population per aircraft rate
Source: Ministery of Civil Aviation
• Aviation in India - Future
8Source: ACI publications
Average growing rate for India will be annually %8,2 until 2029
Becoming the third biggest market in 2029 after US and China
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2002 2003 2004 2005 2006 2007 2008 2009 2010
KingfisherSpiceJet
Air India Express
Go AirIndiGO
New domestic airlines established after 2005 has reached more than %50 of the domestic market share
• Aviation in India - Domestic Carriers PositioningDomestic Market Shares
Air India; 17,1%
Jet Airways; 18,1%
Jet Lite; 7,0%
Kingfisher; 19,8%
SpiceJet; 13,4%
GoAir; 6,2%
IndiGO; 19,2%
new
pla
yers
• Ground Handling Services
10
Ground and cargo handling services include a broad range of activities requiring significant operational and organizational expertise
Ground Handlin
gRamp
Services
Station Mgt& Admin
Pax Services
Cargo &Mail
Services
Line Maint.
Services
Fuel Services
Security ServicesExe.
Aviation Services
• Ground Handling Market Participants
11
Although airlines and airports continue to provide ground handling services, independent ground handlers are gaining share as the other participants (airlines/airports) focus on core business
Independents - Airlines/Airports
Ground handling market size is currently close to $50 bn and is expected to reach $150 bn in 2030, which indicates more than 5 % CAGR.
• Ground Handling Market Key Trends
12
Who can adopt itself will be the survivor
Strong Growth:The growth will be accompanied by pricing pressure
Airlines Purchasing Criteria:Price and quality are the key criteria in selecting the service provider
Barriers to Entry:Liberalisation facilitates penetration
Changing Market Participants:Airlines and airports focus on core business and dispose their handling activities
Consolidation:Still fragmented and new M&A activities are expected
• Ground Handling Market – Rationale for Consolidation
13
AirlinesNetwork Effect &
Economies of Scale
Competitive Advantage
Consolidation and development of
independent providers
Airports
Airport are moving away from operational control, focusing more on commercial activities
Low profits and rising cost pressures are resulting in focus on core business and outsourcing of GH activities.
Over the last 10 years several airlines
withdrawn from GH activites.
TP Sold , KL sold Cargo Services Centre, LH sold Globe Ground, AA sold WFSSR/LX sold SwissportBD sold ground handling activitiesAY sold parts of its handlingPAL plans to sell of catering and GH Serv.
Ground Handling
• Ground Handling Company Consolidations
14
TODAY
Budapest AGH Celebi AGI ASIG Boker
Menzies Odgen
Ground Star CSC Aero
Ground
Hudson
World Cargo
DynairSwissPort
Aviapartner
Globe Ground Global Servisai
r
Aer Lingus Handlin
g
France Handlin
g
Sabena
Fraport
Tristar
SEN WFSFrapor
t
FCCAeroporto di Roma
Globalia SPdH SFS
BBA
SWISSPORT
AVIA PARTNER
SERVISAIR
WFS
GROUNDFORCE
FCC
MENZIES
Independent handlers are not strong enough to facilitate large scale the consolidation process Several owners of independent handers are considering to dispose their
airport service It is expected to see even more consolidations in the next decade
PAST
Celebi
• Leading Ground Handlers – Turnover vs Profit
15
The difference among service providers is not too wide in terms of profitability contrary to turnover and
stations network
Turnover (€mio, 2010) (€mio, 2010) EBITDA
Locations
Turnover
• Air Traffic Figures in India- Past/Today/Future
16
In the past, domestic traffic has been the main driver for the development of aviation in India as well as it will be in the future
CAGR 10,6 %CAGR 9,8 %
• Air Transport Figures in India- Past/Today/Future
17
In the last 5 years, Indian airports experienced the drastic growth of the commercial air cargo served
Parallel to improving weight of Indian economy among the world trade, the growth in air freight can be over the expectation which still represents a strong growth
• Ground Handling & Cargo Handling in India
SRINAGAR
AMRITSAR
DELHIJAIPUR
AHMEDABAD
NAGPUR
MUMBAI
GOA
PORT BLAIR
HYDERABAD
KOLKATA
CHENNAIBENGALURU
CALICUT
COCHI
THIRUVANNA.
GUWAHATI
International Airports- governmentInternational Airports-private
Custom Airports - government
Large Domestic Airports - private
DELHI Handlers: Celebi, BWFS, Air India/SATS, CambataTraffic : 30 mio pax, 700k ton cargo
MUMBAI Handlers: Çelebi/NASCambata,Air IndiaTraffic : 29 mio pax, 670k ton cargo
COCHINHandlers : BWFS ,Air India/SATSTraffic : 4 mio pax, 40k ton cargo
BANGALOREHandlers: Globe GroundAir India/SATSTraffic: 12 mio pax, 220k ton cargo
HYDERABADHandlers: Menzies, Air India/SATSTraffic: 8 mio pax, 80k ton cargo
Metro airports already allowed independent handlers to provide ground handling works at respective airports
However, self handling activity of domestic airlines occupies substantial part of ground handling works at most of the metro airports
CHENNAIHandlers: Menzies, Air India/SATSTraffic: 12 mio pax, 390k ton cargo
KOLKATAHandlers: Bhadra, Air IndiaTraffic: 9 mio pax, 130k ton cargo
• Ground Handling & Cargo in India – Rationale for the privatisation of the
services
19
Proven fact from the experiences of EU access of independent/eligible GH companies and limiting the
number of self handlers increases the quality & safety at airports, decrease the costs and eliminate the congestion
New EU Directive proposalSelf handling airlines should not outsource their manpower :
outsource entire services to eligible handlers or establish their own organization
World trend Share of independent GH service provider
& Air Cargo Warehouse increases
All airports should privatise their GH services&
Self handling should diminish at airports in India
Increasing capacity needs can only be fullfilled with the help of professional GH services
with international service levels
• Celebi Aviation Holding in India
20
Though Celebi’s has short history in India, its activities are expanding and it is expected that India becomes the main base of its aviation related activities in the near future
As of today, India is the largest location of the group in terms of employed staff
Çelebi has already invested 65 million USD for ground handling and air cargo warehouse activities in India and total investment will be some 100 mio USD in 2 years time
65%14%
21%
Turnover - Breakdown by Country (2010)
Turkey Europe India
39%
54%
7%
Employment – Breakdown by Country (2010)
• Celebi Aviation Holding in India – Future Positioning
21
Çelebi intends to intensify its presence and activities both in ground handling and air cargo warehousing services in India. In this respect, it is targeting
To provide ground handling works at all metro airports in the medium term
To provide ground handling works at international airports of the country which in total covers at least 95% of the international passenger traffic in the long run
To prode warehousing activities at least at four international airports To become the leading independent airport service providers of the
country
2010 2020
6,000
15,000Number of
Staff
2010 2020
2
17Number of
Stations
2010 2020
400
1.500Cargo
Volume (k ton)
Teşekkürler...
Thank You....
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