unfolding of the indian aviation industry-presentation

8/14/2019 Unfolding of the Indian Aviation Industry-presentation

1/16

UNFOLDING OF THE INDIAN AVIATIONINDUSTRY


2/16

A peep into its early history

In 2003 the whole world celebrated the centenary of powered flight. But we Indians have to wait till 2010 toobserve the centenary of flight in India.

After the flight of the Wright Flyer, it took just sevenyears, for the first aircraft to get airborne at Allahabad in UP.

There was hectic activity to bring planes to India andshow them off in December 1910.


3/16

From then to now.

1953: NATIONALISATION OF AIRCRAFTINDUSTRYAssets of 9 existing companies transferredto two entities in the aviation sector controlled by the Government in

Indian Airlines , primarily serving domesticsectors

Air India, primarily serving theinternational sectors

IMPLICATIONSAviation became a preferred mode of

transport for elite classRestricted Growth of Aviation IndustryHigh Cost structureUnderdevelopment of infrastructure

1986: Private Sector Players permitted asAir taxi operators. Jet, Air Sahara,

NEPC, East West, Modiluft, etc startedservice.

1994: Private Carriers permitted to operatescheduled services. Six operators grantedlicense, however only Jet and Air Saharaable to service.

2003: Entry of low cost carriers. Air

Deccan, Spice Jet, Go Air, Indigo.IMPLICATIONS

Aviation is now affordable with checkfares and discount schemes.Various Operators with different businessmodel.Huge growth foreseen in Aviation


4/16

Macro Fundamentals that will drive

Aviation Growth.

Market Size

Demographics

EconomicGrowth

Trade &Investment

India has a population of 1.1 billion with an estimated middleclass of 300 million.

50% of the population is


5/16

Rise of the middle class..

A socio-economic revolution is underway as the consumer profilebecomes increasingly middle class


6/16

Change in travel preferences will continue to drivegrowth

CAPA Indian Domestic Market Forecast:Business vs Leisure/VFR


7/16

New government initiatives to develop Indiaspotential as the worlds fastest growing

aviation marketChanging regulation policies

Increased privatization of airports

The government is planning to raise the foreign direct investment (FDI) limit to 74% for non-scheduled airline operations, helicopter services and regional airlines using small aircraft. Thecurrent FDI ceiling for airline services is 49%.

In 1997 the Government of India published a policy document to open up existing airports todomestic and foreign private investors in order to meet the significant costs involved indeveloping Indias airports to keep pace with the growth in air traffic. In Sep 2003, Govt leasedout Delhi and Mumbai airports to the private sector as part of its extensive modernisation andgrowth plan for the sector.


8/16

CONTINUED

Growing Infrastructure developments

Mumbai Airport - Planned investment of USD1.6 billion by 2020, of which USD1.3 bnwill take place by 2014

Delhi Airport - Planned investment of USD764 million by 2014 and USD1.7 billion by2020

Kolkata Airport - Modernisation will be led by the Airports Authority of India. Totalproject cost is estimated at US$360 million.

Hyderabad & Bengaluru Airports - Total investment of USD 1.1 billion dollars. Both

airports have commenced commercial operations in April 2008 .


9/16

CONTINUED

Growing Infrastructure developments

35 Non-Metro Airports - Development of 35 non-metro airports will proceed at an

estimated cost of USD1.2 billion. City side development will require a further USD350 million, with the modernisation process to be completed by 2009.

North East Region - Development of following airports : Pakyong Airport, Gangtok, Sikkim Cheithu Airport, Kohima, Nagaland

Itanagar Other Greenfield Airports Mopa, Goa Navi Mumbai. Planning Commission discussing 3 rd Mumbai Airport. Chakan/Rajguru, Pune, Maharashtra; Halwara, Punjab Kannur, Kerala. Hassan & Gulbaraga, Karnataka.


10/16

EXPECTATIONS OF THE INDUSTRY FROMGOVERNMENT

Lowering taxes on aviation turbine fuel (ATF) which is 35% of the operating cost of airlines. As per international standards, it is 10-15% of the operating cost.

The industrys wish list includes :

Extending exemption of withdrawal tax on lease rentals of aircraft

Relaxing fringe benefit tax (FBT)

Removing service taxes on first and business-class travellers.

The Indian aviation sectors double-digit growth has been the fastest in the world. Butthe airlines have not made much out of the profitless growth, with most playersstepped deep in red.

Reduction in landing charges In India low cost carriers (LCC) pay the same as full

service airlines. As per international standards, it is lower for LCCs.


11/16

The growth opportunity in Indian Aviation...

Indias airports handledmillion domestic passengIn 2006/07, posting growtalmost 40% year-on-year,over 25 million internatiopassengers, up approx 15

Growth is underpinnedeconomic expansion, incrcapacity and price stimulresulting from increasedcompetition.

Centre for Asia Pacific Aviation projects domestic traffic in India will grow 25-30% p.a., and international by 15% p.a. until 2010


12/16

CURRENT SCENARIO.

The relentless rise in global crude prices is threatening to takethe sting out of aviation industrys tail.

Jet fuel prices have gone up by 50 per cent since January. 08. STEEL PRICES

Losses of industry is in the range of Rs.4000 crore and it is expected to double bythe end of next year

The operating cost for airlines across the country during the past six months hasgone up from 30 percent to a whopping 47 percent now

Airlines across the country are finding it difficult to pay the increased fuel bill and in

some cases the wages, industry experts say.


13/16

COMPARISION WITH RAILWAYS

HELI AMBULANCE Heli-ambulance services are gaining ground with the first step beingtaken by Deccan Aviation and Apollo Reports listing statistics said that the Apollo group has made 400 emergency air-lifts inthe past two-and-a-half years and each trip can cost the patient Rs 1-2 lakh depending on the distance to the hospital, or around Rs 75,000 an hour.

AVIATION FOR TOURISM INDUSTRY


14/16

TECHNOLOGY


15/16

OUTLOOK INDIA 2020

The growth of Indias aviation sector has the potential to absorb up toUS$120 billion of investment by 2020.

However, we must close the gap between the demand for aviationservices and the ability of our aviation system to meet that demand.

India must prepare a blueprint for the expansion of system capacitywhilst maintaining safety, security and the environment.

India must develop a roadmap for infrastructure development beyond2010.


16/16

OUTLOOK INDIA 2020

Air Traffic - CAPA research projects that domestic passenger traffic willreach 150-180 million by 2020, with international traffic in excess of 50million.

Scheduled Aircraft - The total aircraft fleet is likely to reach 1000,including replacement of the current fleet of 312 aircraft, with anestimated value of US$80bn +

General Aviation - Market for 500 Plus aircraft in the Non-Scheduled

Category by 2020 and 300 aircraft in the private category use.Estimated Investment of Usd 4 billion.

Airports US d 30 billion plus investment requirement by2020(Included 9 billion already committed).

unfolding of the indian aviation industry-presentation

Documents