analysis of aviation sector in india & its services

8/8/2019 Analysis of Aviation Sector in India & Its Services

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1. A Brief History of Indian Aviation

2. India is the second largest aviation industry of the

world

3. FDI Policy in Indian Aviation


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Strengths

1. Flying to about 10 12 airports where it has

monopoly

2. In-House simulators to reduce training costs

3. First mover advantage in terms of access to

airport infrastructure during peak periods

4. Deccan Kingfisher control almost 30% of the

domestic market


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Weaknesses

1. Weak Balance Sheet

Year ended June 08

Total Revenue

21,423.09

Net Profit after tax

(4,195.76)

Earning per share

(44.24)

2. Dependence on leased aircrafts- 3 aircraft, so incurshigher inventory cost

3. Poor perception regarding service quality and reliability

4. The strategy of flying to previously unconnected routes


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Threats

1. Over capacity in the sector leading to

deteriorating yields

2. Increasing competition

3. Low Entry Barriers leading to entry of new

players in LCC segment

4. High fuel prices in India

5. Shortage of trained manpower


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Opportunities

1. Growing middle class population and increased

standard of living

2. Change in perception of air travel as a necessity

rather than a luxury

3. Increase in tourism

4. Improvement in airport infrastructure

5. Potential Demand and Development of Tier II & Tier

III cities


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DECCAN

AVIATION

LIMITED

DeccanAviation

(Helicopter &CharterService)

Air Deccan

(LCC Model)

Air Deccan

Cargo

(ProposedCargo Airline)

DALPL

(48% JV with

Sri LankanCompanies)

BusinessSegments


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First mover advantage

Simplify!

Strong management team, with leading low-cost

carrier expertise.


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Naresh Goyal is the founder and Chairman of Jet

Airways, India's largest domestic airline.

In May 1974, Naresh Goyal founded Jet air

(Private) Limited to look after Sales and

Marketing operations of foreign airlines in India.

Naresh Goyal took advantage of Open Skies

Policy of the Government of India and set up Jet

Airways for the operation of schedule


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Jet Airways was established on 3 May 1991 with afleet of 4 Boeing 737-300 aircraft, with 24 dailyflights serving 12 destinations.

The Group has 85 aircrafts which includes 4Boeing 777-300 ER, 49 classic and nextgeneration Boeing 737-400/700/800/900aircraft, 4 Airbus A330-200 aircraft and 8 modernATR 72-500 turboprop aircraft and 20 new wide-bodied Boeing 777 and Airbus 330 aircrafts. TheGroup provides services in 8 internationaldestinations including Europe, the United Statesand Asia.


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Right from the start, Jet Airways focused

more on customer service than anything else.

It was because of its superior customer

service that Jet Airways had become themost popular airlines in India.


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1993: Jet Airways begins domestic

operations flying Boeing 737 jets.

1997: Kuwait Airways and GulfAir sell their stakes in Jet Airways.

1999: A regional network is

launched with turboprop aircraft.

2004: The first international services

are started.

2007: Acquired Air Sahara and re-launched it as jet lite.


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1. Jet Airways wins customer and brand loyalty award for the second consecutive time

2. Jet Airways wins airline with best first-class service in the world award at Business Traveller's

20th annual best in business travel awards gala in the USA

3. Jet Airways wins the 2008 Galileo Express Travel world best domestic full service airline

award for the sixth year in a row

4. Jet Airways wins the BEST CARGO AIRLINE OF CENTRAL ASIA award

5. Jet Airways' Jet Privilege wins Top Honours with Seven Awards at the prestigious Freddie Awards

2007

6. Jet Airways wins Double Honour at the 18th TTG (Travel Trade Gazette) Travel Awards 2007

7. Genius of the Web Awards 2007 for the Best Airlines website

8. Jet Airways (INDIA) LTD. awarded TOP HONORS at World Airline Entertainment Association

(WAEA) AVION AWARDS second year in a row!

9. Jet Airways' Chairman Mr. Naresh Goyal honoured with the TATA AIG - Lifetime Achievement

Award


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9. Jet Airways won the SAP ACE 2007

10. The Freddie Award - Highest Honour For Jet Airways

11. 'Best Full Service Carrier' category from Galileo Express TravelWorld Awards, 2006

12. Jet Airways once again voted Indias best airline at the TTG Travel Asia Awards (Oct 2006)

13. Jet Airways wins three Avion global Awards for In-flight Entertainment, 2006

14. Jet Airways voted Indias Leading Airline at the World Travel Awards, 2006

15. Jet Airways frequent flyer programme Jet Privilege wins laurels at the 18th Freddie

Awards, 2007

16. Jet Airways recognized for its popularity and spectacular growth by the Travel and Tourism

fraternity

17. Star Of The Industry Awards for the Best Domestic Airline For The Year 2005

18. Hero Mindmines First BML Munjal award for excellence in learning & development


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19. Jet Airways wins coveted award for Emerging Company of the year at the

Economic Times awards for Corporate Excellence (Nov 2005)

20. Jet Airways bags the coveted TTG Travel Asia's Award for the Best Domestic Airline

for 2005

21. Emerging Company of the year for Corporate Excellence, 2005

22. Jet Airways wins Freddie Awards (Apr 2005)

23. Jet Airways is 'India's Best Domestic Airline' for the second consecutive year (Nov

2004)

24. TTG Travel Award - The Best Domestic Airline, Asia Pacific (Oct 2004)

25. Jet Airways Bags Business world's 'Most Respected Company' Award For The Second

Consecutive Year (Oct 2004)

26. Galileo-Express Travel & Tourism Award for Indias Best Domestic Airline (Dec

2003)

27. Super brand Aug 2003


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28. Boeing Company Award for maintaining Best Technical Despatch Reliability for 2002

29. Indias Most Respected Company in the Travel and Hospitality Sector (Jan 2003)

30. Best Domestic Airline of Asia by Travel Trade Gazettes (TTG) Asia (Oct 2002)

31. Best Domestic Airline of the Year 2001 (Sep 2002)

32. Award in the Co-branded/Affinity Programme category at the MasterCard Annual

Meeting Asia-Pacific 2001

33. Air Transport World Market Development Award (Feb 2001)

34. Best Domestic Airline of the Year 1999 - H&FS (Mar 2000)

35. Vocational Excellence Award by Rotary Club of Mumbai (Jan 2000)

36. Best Domestic Airline of the Year 1998- H&FS (Dec 1998)


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37. Indias Best Domestic Airline at the International Brand Summit (Nov 1998)

38. Best Domestic Airline Award for Service Excellence (Nov 1997)

39. 'Best' Airline by Rangaswamy Tourism Foundation associated with the Karnataka Tourism

Development (Sep 1997)

40. Best Airline of the Year 1996-97 Award (Jan 1997)

41. Best Domestic Airline of the Year Award (Dec 1996)

42. The World Travel Market Global Award (Oct 1996)

43. Great Management Show Award (Oct 1996)

44. Citibank Diners Club Blue Moon Award for Service Excellence (Sep 1995)

45. Service Excellence Award (Oct 1994)


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International Market :

- British Airways - South West Airlines

Domestic Market :

- King Fisher - Indian Airlines

- Go Air

- Spice jet

- Indigo


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Total Revenues of INR 30.6 Billion (USD 628.8Million)

Loss Before Tax of INR 2,498 Million (USD 51.3Million)

Loss after Tax of INR 2,142 Million (USD 44.0Million)

Revenue Passengers carried 2.56 Million

Achieved Seat Factor of 66.2%


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Addition of 1 A330 and 3 ATR aircraft to fleet

Economic slowdown

26/11 terror attack

Agents Boycott (India) - December 2008

Lease out of 3 B777s (Turkish airlines) and 2

A330s (Gulf Air)


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Traffic Parameters Oct 08-Dec 08

Number of Departures

Passenger Load Factor %

Revenue Passengers (Million)Break Even Seat Factor (%)

Break Even Seat Factor (%) w/o Fuel

32,247

66.2%

2.5671.6%

42.2%

Average Gross revenue per passenger in INR

Average fleet size during periodAverage Head Count

10,374

85.513,710


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Oct 08-Dec 08

(INR millions)

Oct 07-Dec 07

(INR millions)

Variance %

Total Revenues

PROFIT / (LOSS)AFTER TAXATION

EBITDAR

30,631

(2,498)

3,577

25,172

(1,304)

2,907

21.7%

-91.6%

23.1%


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As on 31-Dec-08INR Million

As on 31-Mar-08INR Million

I SOURCES OFFUNDSShareholders' Funds

Loan FundsDeferred payments towards Jet Lite

Investments

Deferred Tax Liability

35,168

1 45,2214,125

45,517

1 16,0254,125

1,602

TOTAL SOURCES OFFUNDS 184,514 167,269

II.APPLICATION OFFUNDS

Net Fixed ssets:Investments

urrent ssets, Loans dvan es

Less: urrent Liabilities rovisions

Net urrent ssets

rofit Loss ount

1 65, 0017,423

42,1 6

45,542

(3,346)

4,537

1 53,07514,754

3 ,642

40,201

(55 )

TOTALAPPLICATION OFFUNDS 184,514 167,269


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Revised fare structure to maximize the load factor and

Yield

Zero Commission effective November

Capacity reduced by 22~25%

Integrated the services between Jet Airways and Jetlite

Changes in livery and new branding exercise nearly

complete


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Total Revenues of INR 4,741 Million (USD 97.3 Million)

Loss Before Tax of INR 216 Million (USD 4.4 Million)

Loss after Tax of INR 220 Million (USD 4.5 Million)

Positive EBITDAR of INR 509 million (USD 10.5 million)

Unit costs down by 30.8%

Revenue Passengers carried 0.8 million

Achieved Seat Factor of 67.8%

Breakeven seat factor down to 71% for the quarter


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Lower oil prices have reduced pressure on costs in the short term

Current apex fares introduced by airlines is expected to stimulate

additional demand in domestic market

Increased focus on corporate and broad basing the corporate reach;

tactical offerings in business class

Promoting web and direct booking channels with tactical and promotions

Domestic capacity expected to be flat or even negative for the next few

quarters

Capacity on international routes have been rationalized and the lease out

of surplus aircraft will reduce impact on breakeven


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Dr. Vijay Mallaya is the Chairman and CEO of Kingfisher

- Airlines.

Kingfisher Airlines Limited launched scheduled airlineservices on May 9, 2005 with 4 daily flights between

Mumbai & Bangalore.

It is a major Indian luxury airline operating an extensive

network to various destinations.Currently the Kingfisher airline operates the aircraft like the

airbus A320, A319 100 and ATC- 72.

After acquiring the Deccan Airways, Kingfisher has started a

new fleet known as Kingfisher Red.


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Indias No.1 Airline in customer satisfaction Business -

World.

Rated amongst Indias 25 Innovative Companies- Survey

conducted by Planman Media.

Kingfisher Airlines, has been conferred the 5 - Star Airline

Status`, the most prestigious award that honors airlineProduct and Service Quality Excellence, by Skytrax, the

world`s leading, independent travel forum and air travel

information organization.

Economic Times Avaya Award 2006 for Excellence inCustomer Responsiveness.


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Strengths:-

1. Strong brand value and reputation.

2. Quality of service.

3. First airline to have new fleet of airbuses.

4. Continuous Innovation.

Weaknesses:-

1. High ticket pricing.

2. Facing a tough competition from competitors.


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Opportunities:-

1.The expanding tourism industry.2. The non penetrated domestic market.

3. Untapped air cargo market.

Threats:-

1. Competitors

2. Infrastructure Issues.

3. Fuel Price Hike.4. Economic Slowdown.


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Net loss of Rs 626 crore for the quarter ended December 31,

2008.

Sales stood at Rs 1,447 crore.

Interest expenses during the quarter increased by Rs 103crore.

The company paid Rs. 30 crores as lease rentals and Rs.174

crores as initiation costs of international operations.


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DECEMBER 08 March 08

Total Income 607.66 1,452.11

Total Expenses 766.36 1,856.08

Operating Profit -208.75 -408.25

PBT -198.24 -626.24

Net Profit -199.65 -413.39


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As on 30-

June - 07Rs. In Crore

As on 31-

Mar-08Rs. In Crore

I. SOURCES OF FUNDSEquity Share Capital

Reserves

Total Debt

135.47

249.23

916.71

135.80

63.07

934.38

TOTAL SOURCES OF FUNDS 1,301.41 1,133.25

II. APPLICATION OF FUNDSNet Fixed Assets:

InvestmentsCurrent Assets, Loans & Advances

Less: Current Liabilities & Provisions

Net Current Assets

Miscellaneous Expenses

307.03

0.411,063.68

(456.09)

607.59

28.75

278.78

0.001,188.42

(696.83)

491.59

16.64

TOTAL APPLICATION OF FUNDS 1,301.41 1,133.25


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analysis of aviation sector in india & its services

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