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7/31/2019 Crisis in Indian Aviation (1)
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Air transportation is the quickest, modern,and latest mode of transport
Huge potential
Under penetrated market Total Passenger Traffic : 50 Million
Passenger trips Per Annum:
India:0.05
United States: 2.02
Untapped air cargo market.
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1912
1st domestic air route in between Delhi and
Karachi under Indian State Air services along
with Imperial Airways,UK
1915
Tata Sons Ltd, the 1st Indian airline started
airmail services between Madras and Karachi
1948
the Government of India along with Air India
(Tata Airline) established the Air India
International Ltd.
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1953
Indian Government nationalized all the airline assets existing
then and thereby formed the Indian Airline Corporation and
Air India International for domestic and international air
service respectively
1993 Rajiv Gandhi Contemplated the open skies policy
1994
End of monopoly of IA and AI in the air transport services Air Corporations (Transfer of Undertaking and Repeal) Act,
1994
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1995
Several private airlines had ventured into the aviation business
and accounted for more than 10 percent of the domestic air
traffic
1996 Private air taxi operators carried 49.08 lakh passengers which
amounted to a 41.14 per cent share in the domestic air passenger
traffic
2003 budget flying trend introduced by Spice Jet, Kingfisher Air, Go
Airways and Paramount Airways
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The Domestic Aviation Market Share
34%
20%
21%
8%8%
6%
2%
1%
Jet airways
IndianAir Deccan
Air Sahara
Kingfisher
Spicejet
Goair
Others
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S
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Cause of Crisis
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Indias National Carrier :- Theflagship of the Nation or the flagship
of the crisis ???
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Annual Losses Rs. 5000 crore
Total Debt Rs. 16,000 crore
10 % of total global losses
.35 % Global Traffic
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Highly overstaffed 200:1 employees toaircraft
Annual wage bill Rs. 3000 crore
Corporate buildings in posh areasunnecessarily
Stalled merger of Air India and Indian Airlines
Political Bureaucracy
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Probe into managements decisions on aircraft selectionand leasing and acquisition. Probe into "gifting of bilateral rights" to foreign air-
carriers and the so-called open-sky policy. [indirectlyaimed at the massive growth of Emirates in India]
Probe in to the reckless sale and transfer of Air India and
Indian Airlines land assets in Kalina and Sahar (Mumbai) toprivate developer, Mumbai International Airport Limited,on a platter for construction of 5-star hotels and offices inthe name of airport development.
Probe into payment of arrears to senior engineeringexecutives just ten days before the announcement of
deferment of salaries to staff. Direct intervention by the Prime Minister and a thorough
probe by a Joint Parliamentary Committee (JPC) in Air Indiaaffairs
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Loss of over Rs. 1000 crore for threeconsecutive years
Total debt exceeds Rs. 7000 crore
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Delayed
Salary
Fuel Dues
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Service tax
Bank arrears
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Spicejet losses Rs. 240 crore Air Deccan Already taken over by Kingfisher
IndiGo the only company making profits.
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DGCA reports- Kingfisher and Air India notmeeting standards of safety requirements
IndiGo- also in same class as the above twoeven though they have managed to makeprofits.
Report not conducive for airlines as it createsdoubts in the mind of potential customers
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Existing models useless; need to develop newmodel
Govt. to be helpful
Foreign Investment
Smart and Innovative decision making
Simplest solutions often the best one
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