Privatisation in Indian Aviation

7/28/2019 Privatisation in Indian Aviation

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PRIVATISATION OF INDIANAVIATION INDUSTRY


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INTRODUCTION

The Indian aviation industry is one of the fastest growingaviation industries in the world.

Private airlines accounting for more than 75 per cent ofthe sector of the domestic aviation market.

The industry is growing at a compound annual growthrate (CAGR) of 18 per cent.

The country has 454 airports and airstrips, of which 16are designated as international airports.

Total Passenger Traffic : 50 million With the growth in the industry, airport retailing has also

gained pace in the recent times.


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HISTORY

Indian Aviation Sector (till 1986)

Industry from 1986-2003

Airline industry from 2003 2006

Aviation from 2006 onwards

The next big thing- the aviation industry!


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MARKET SIZE The rapidly expanding aviation sector in India handles

about a staggering 2.5 billion passengers across the worldin a year.

Also handles 45 million tonnes (MT) of cargo through 920airlines using 4,200 airports and deploys 27,000 aircraft.

Today, 87 foreign airlines fly to and from India and fiveIndian carriers fly to and fro across 40 countries in theworld.

Increase to a 10-12 per cent range over the next 12

months is expected.

The Private carriers are supposedly estimated to post acombined profit of US$ 350 million US$ 400 million forthe financial year ending March 31, 2012.


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MARKET SHARE OFAIRLINES


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THE PLAYERS


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DRIVERS TO GROWTH

Increase in Consumerism

Increasing Tourists Travel

Increasing Business Travel

Entry of Low Cost Carriers

Untapped Market

Rising Disposable incomes

Rising Middle Class Population Increasing Competition

Government Reform Measures


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ISSUE OF THE CONCERN

Mounting losses of the airlines

The new Ground Handling policy

High Aviation Turbine Fuel (ATF) prices

High airport charges

Shortage of qualified pilots and technicalmanpower

Safety and security issues Closure of old airports

Congestion at airports

High taxation etc.


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MAJOR LOSS RESULTINGFACTORS

Rising Fuel Prices

Congestion

High Airport (aeronautical) Charges

Low share of Non-Aeronautical Revenue

Substitutes Availability

a) Indian Railways

b) Virtual Platform Cut-throat Competition faced by Premium Airlines

on their Pricing

THROUGH TURBULENT


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THROUGH TURBULENTTIMES

The Indian Aviation Industry has been goingthrough a turbulent phase over past several yearsfacing multiple headwinds high oil prices andlimited pricing power etc.

In the beginning of 2008-09, the sector wasimpacted by sharp rise in crude oil prices.

decline in passenger traffic growth which led tosevere underperformance in 2009-10.

High prices of Aviation Turbine Fuel(ATF).

Internationally, too airlines are going throughperiod of stress.


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FDI IN AVIATION


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WAY FORWARD Direct ATF Imports

International Routes

Financial guarantees to the debt-ridden nationalcarrier in securing funding at competitive rates

Increase supervision on pricing policy by certaincarriers, to bring relief to the airline sector

Enable an open bilateral regime to stimulatecompetition and traffic growth and make India regional

aviation hub Operationalize Centralized ATFM system to

optimize the capacity vs. demand to ensureregulated flow of traffic to minimize delays and

congestion


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CONCLUSION

Indian Aviation Industry has been one of the

fastest-growing aviation industries in the world private airlines accounting for more than 75 % of

the sector of the domestic aviation market

compound annual growth rate (CAGR) of 18 %and 454 airports and airstrips

Aviation in India supports 1.7 million jobs, 0.5% ofGDP and 90% of international tourist arrivals.

India is a market of about 100 million passengersannually.


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Privatisation in Indian Aviation