problems faced by private airlines

8/6/2019 Problems Faced by Private Airlines

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A IATION INDUSTR

SUBMITTED BY: SUBMITTED TO:

ANAND SINGH RATHORE PROF. VIPIN AGRAWAL

PUJA NANDY

NEHA BHOLA

ABHISHEK SINGH


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MEANING

A GENERAL TERM INCLUDING THE SCIENCE

& TECHNOLOGY OF FLIGHT THROUGH THE AIR

MODE OF TRAVEL PROVIDED BY AIRCRAFTS

AS CARRIERS OF PASSENGERS & CARGO. IS APART OF TRANSPORTATION SYSTEM.

THE WORLD OF AIRPLANE ,INCLUDING THE

PEOPLE WHO MANUFACTURE,MARKET, &

REPAIR AIRCRAFT OR WHO WORK IN ALLIED

INDUSTRIES.


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DEVELOPMENT & OPERATION

IN 1783 THE BALLOON BECAME THE FIRST AIRCRAFT TO

CARRY HUMANS

PRODUCTION OF A SUCCESSFUL GLIDER IN 1891 &

REFINEMENT OF INTERNAL-COMBUSTION ENGINE.

IN 1903 WILBUR & ORVILLE WRIGHT SUCCESSFULLYPRODUCED ENGINE-POWERED AIRPLANE FLIGHT.

WORLD WAR I ACCELERATED EXPANSION & FIRST AIRLINES

CARRIED MAIL & PASSENGERS

WORLD WAR II,PERIOD OF INNOVATION IN

SIZE,SPEED,RANGE LATE 1940s JET ENGINE MADE DEVELOPMENT OF

COMMERCIAL AIRLINES.


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AVIATION IN INDIA

IN 1912 THE FIRST FLIGHT FROM KARACHI

TO DELHI BY INDIAN STATE AIR

SERVICES & IMPERIAL AIRWAYS UK

COLLABORATION.ACTUAL INSTIGATION OF INDIA AVIATION

INDUSTRY IN THE FORM OF TATA

AIRLINE BY JRD TATA IN 1932.TATA AIRLINES WAS TRANSFORMED INTO

AIR INDIA.


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Cont

IN 1953,THE GOVT OF INDIA NATIONALIZED ALL EXISTING

AIRLINE ASSETS

& FORMED INDIAN AIRLINE CORPORATION FOR DOMESTIC

AIR SERVICES

ALONG WITH AIR INDIA INTERNATIONAL FOR

INTERNATIONAL AIR SERVICES.

THE PRIVATE AIRLINES WERE ALLOTED THE AIR TAXI

SCHEME,

IN 1994,AS A RESULT OF A REPEAL OF THE AIR CORPORATIONACT,PRIVATE AIRLINES ALSO OBTAINED PERMISSION TO

OPERATE SCHEDULED AIR SERVICES.


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NEW TRENDS

2003, AIR DECCAN INTRODUCED BUDGET FLYING

BY LOWERING DOWN THE FARES TO 17% OF WHAT

OTHER AIRLINES WERE CHARGING.

LIST INCLUDES SPICE JET,GO AIRWAYS,&

KINGFISHER AIR.

THESE BUDJET AIRLINES TOOK UP THE MAJORINDIAN AVIATION INDUSTRY MARKET SHARE.


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GROWTH OF INDIAN AVIATION

INDUSTRY

THE INDIAN CIVIL AVIATION MARKET GREW AT ACAGR OF 18%,VALUED AT US$ 5.6 BILLION IN 2008.

THE DOMESTIC AIRLINERS FLEW 26% MOREPASSENGERS IN 2009 AS AGAINST 2007.

THE DOMESTIC TRAFFIC HAS GONE UP TO 30% IN2010 ALONG WITH A SURGE IN THE INTERNATIONAL

TRAFFIC BY 15%

THE INVESTMENT PLANS TO THE TUNE OF US$ 9BILLION HAS BEEN MADE BY THE AVIATIONMINISTRY FOR MODERNIZING THE EXISTING

AIRPORTS IN 2010.


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MARKET SHARE OF KEY PLAYERS IN THE INDIAN

AVIATION SECTOR

NAME OF THE PLAYERSMARKET

SHARE

KINGFISHER AIRLINES & KINGFISHER RED

(previously AIR DECCAN)

28%

JET AIRWAYS & JET LITE (previously AIR

SAHARA)

25%

AIR INDIA & INDIAN (previously INDIAN

AIRLINES)

16%

INDIGO 14%

SPICE JET 12%

GO AIR 3%

PARAMOUNT AIRWAYS 2%

MDLR AIRLINES 0.004%


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ROLE OF AVIATION INDUSTRY IN INDIA GDP FACTORS

The growth in the Indian economy has increased thegross domestic product above 8% and this high growth

rate will be sustained for a good number of years

Air traffic has grown enormously and expected to have a

growth which would be above 25% in the travel segmentIn the present scenario around 12 domestic airlines andabove 60 international airlines are operating in india

With the growth in the economy and stability of thecountry india has become one of the preferred locations

for the trade and commerce activities


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CONTI

The growth of airlines traffic in aviationindustry in india is almost four times aboveinternational average

Aviation industry in india have placed thebiggest order for aircrafts globallyAviation industry in india holds around 69% of

the total share of the airlines traffic in the regionof south asia


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` INDIGO AIRLINES

`GO AIR AIRLINES

`

SPICEJET AIRLINES`PARAMOUNT AIRLINES

` JETLITE AIRLINES

`KINGFISHER AIRLINES` JET AIRWAYS


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` the major problem faced by the airlines wasthe number of decreasing customers and this

was leading to the more debts on the airlines.

`

most of the transactions was started takingplace in credit as it is the main principle of

aviation industry that most of the things in the

industry takes place in credit.

` making airlines not able to pay their debt on

time and got in condition to get merged with

other airlines to get survive in the industry.


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` The overall airfares have come down by about 20-25 per cent in the

past week, official sources said, adding that the "pressure" mounted

by the Civil Aviation Ministry and the Directorate General of Civil

Aviation (DGCA) against exorbitant airfares had been a success,

officials told PTI here.` The fare range on Delhi-Mumbai sector was Rs 5,000 to Rs 20,000

on economy class ticket, while that on Delhi-Chennai and Delhi-

Kolkata stood between Rs 5,000 and Rs 15,000, the officials said.

` Two weeks ago, the lowest last-minute Delhi-Mumbai fare was

about Rs 17,000, even though holiday travel season had not begun.` The lowest available fares at the same time last year was about Rs

3,000 for Delhi-Mumbai and Rs 4,000 for the Delhi-Chennai and

Delhi-Kolkata sectors.


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` When it is asked to the officials of DGCA that what is

the effect on on the fares of the high demand sectors

like like Delhi-Leh stood at less than Rs 4,500 while

those from the national capital to Kullu, Shimla and

Dehradun ranged between Rs 6,000 and Rs 9,000.

` Asked whether these fares were at the same level as

last year, they said these were at least 20 per cent

higher than the same period in 2009, of not more.

` Rebutting Kingfisher chief Vijay Mallya's statementthat government should not regulate airfares, they

said the basic intention of the government was to

bring in more transparency in the fixing of fares by

airlines.


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`

With pressure mounting on them, domestic airlineshave lowered the overall fares on several sectors

though they are yet to return to the average levels

during the same period last year. The overall airfares

have come down by about 20-30 per cent in the pastweek, official sources said, adding that the pressure

mounted by the Civil Aviation Ministry and the

Directorate General of Civil Aviation (DGCA)

against exorbitant airfares had been a success, saidthe officials. The fare range on Delhi-Mumbai sector

was Rs 5,000 to Rs 20,000 on economy class ticket,

while that on Delhi-Chennai and Delhi-Kolkata stood

between Rs 5,000 and Rs 15,000, the officials said.


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` The most important and the common factor is

the hike in the petrol prices.

` The price of petrol increased a lot per gallon.

` The business which they were doing in credit

were started doing in cash and which made

airlines hanicap in making more profit with

the given or present high rate of price onATF(Air Turbine Fule)


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` Next reason was the increase in the steel prices and

due to recession to recover the market the prices of

steel also gone up.

` So the material required to manufacture the parts ofaircraft got so high that it was not possible to keep

the same fare and to give better services.

` The needs or the demands of the customers in the

flight of high quality services,and this was notpossible to provide them at low cost so the fare for

elite and business class increased and this also leads

to increase in the fare of economy class also.


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` Due to the hike in the petrol price many aircrafts were

landed and not able to do business so the cost of

maintainence increased and due to this fleet size of the

airlines decreased which leads to less number of flightsgoing to a specific sector and this made airlines a

chance to make high profit by applying more charges

on odd route.


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` IATA, in its July-August Airlines Financial Monitor,

stated airline share prices have increased 73% from

the lows of 2009, due to improved profitability

among the worlds airlines and outperforming thebroader equity market.

` Clearly financial markets are expecting much

improved financial performance from airlines in the

upturn phase of this cycle." However IATA addedthat difference still exist by region, adding: "Markets

are positive on Asian and US airlines but European

airline share prices are lagging."


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Airline share prices by region: Jun-2005 to Aug-2010


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` According to IATA and echoed in individual carrierstraffic/financial reports fares on international markets have

risen on the back of returning demand, with average one-way

economy fares now 15% up on last years low at USD286.

` Meanwhile, premium fares, typically four times the price of

economy seats, have risen by a lower 10% by mid-year over

2009 levels, and remain some 20% below pre-recession

highs. IATA also added that despite the increases average

fares are still down on pre-recession levels, with economy

fares 5% below this level, unlike travel volume which has nowreturned to pre-crisis levels.

` IATA also warned that average fare increases are now slowing,

commenting: There is much volatility but also signs that

stabilising load factors, and therefore supply-demand

conditions, are slowing the recent rise in fares."


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` IATA also raised concerns about the potential for future oil priceincreases, with carriers, in their second quarter financial reports,echoing the concerns. Jet fuel prices have continued to fluctuatearound USD87/barrel average of past 12 months

` IATA stated the past 12 months have been unusually tranquil in

oil and jet fuel markets, compared with the 2H2007 to 1H2009period. Crude oil prices have fluctuated around a flat trend atUSD76/barrel and jet fuel prices around USD87/barrel, withIATA commenting: Both with a relatively low standarddeviation of US4-5/barrel. The crack spread remainshistorically low at 15%. Jet fuel prices are similar to the 2006-07

period."` However, the association warned that forward curves and most

forecasts suggest relatively little change in the next year, but thelong-term trend remains upwards.


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Jet fuel and crude oil prices: Jul-2005 to Aug-2010


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` Airlines have generally been careful regarding their capacity

management throughout the crisis (little capacity was added in2009), IATA noted that since May-2010, there has been a notable

increase in the number of aircraft being taken out of storage.

` In Jun-2010 and Jul-2010, more than 40 of the aircraft taken out of

storage were being retired rather than brought back into service,

although deliveries of new aircraft remain at or above 100 a monthand, since the start of the year the in-service fleet has grown by 2%.

` IATA, however, expressed concern that lots of new aircraft have

been ordered, with a threat of excess capacity now existing.

However, IATA added that published schedules suggest capacity

growth will remain in line with demand.` IATA also commented that since passenger capacity on international

markets has expanded by 5% since the start of 2010, with a 9%

increase in freight capacity, there must have been some

improvements in aircraft utilization, which is encouraging.


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Airline aircraft retirements and deliveries: 2006 to Aug-2010


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` Flight charges after attrition between

Delhi and Mumbai

` Price in aug - september price indecember

` Indian Airlines=Rs 8000 ..Rs6000

` Kingfisher=9000 Rs5000` Jet Airways=7500 rs 4500

` Deccan=Rs6000 ..Rs 3000


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` At Jet Airways, service on the ground is asimportant as service in the air.

` Whether it is the process of booking ticket ochecking in for flight, Jet Airways ensures thatevery need on the ground is met.

` Handicapped and infirm passengers can alsolook forward for a

comfortable, safe and hassle free journey bywheel chair assistance.

` Expectant Mothers till 36 weeks of pregnancycan be permitted to fly on Jet Airways flights


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`Booking of ticketprocess of booking ticket o checking infor flight, Indian Airlines ensures that every need on the ground

` Cabin Crew Training Indian Airlines gains strength from its experienced

and well-trained cabin crew, who trained technically in safety and

emergency procedures, aircraft type specific training, Crew Resource

Management etc

` Meals Indian Airlines offers a wide variety in its in-flight meal menus, with

a multi-cuisine approach to cater to the predilections of the range of

passengers. The meals are hygienically packed from reputed hotel chains

like the Taj Group and Ambassador. Besides the regular normal vegetarian

and non-vegetarian meal, Indian Airlines also provides special meals suchas Jain meal, Diet meal, child meal etc.


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` Fare charges should be same for foreigners asfor Indians..Debit/Credit cards should be accepted forreservation.

There should be more transparency (clarity) inthe announcement of the flight.

` To open separate counters for single baggageand last minute departure

` Check-in time should be reduced.

` Security checks need improvement. Personnelneed to be more


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` The outlook for the aviation industry is improving, withinvestors also betting on a strong recovery in the highly

cyclical aviation business. The improved outlook has occurred

among stronger financing results amid growing passenger

traffic and improved economic conditions, after the industry

took a battering through the global economic downturn in2008-2009.

` The steady recovery has prompted IATA to upgrade its

profitability forecast for 2010, to a collective industry annual

net profit of USD2.5 billion, up from the USD2.8 billion lossit had forecast only in Mar-2010.

` However, the industry still remains weak, with a number of

recent failures with Mexicana and Sama ceasing operations

and Aer Arran being placed in interim examiner ship in the

past couple of weeks highlighting the fragility of the


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problems faced by private airlines

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