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Page 1: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Soaring opportunities in aviation sector

Gujarat Aviation Conclave, Ahmedabad

July2017

Page 2: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 2Soaring opportunities in aviation sector

Agenda

• Performance of Indian aviation sector over last 10 years

• Shift in the aviation market towards developing economies

• Performance of Gujarat aviation sector

• Opportunities in Gujarat

Page 3: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 3Soaring opportunities in aviation sector

Performance of Indian aviation sector (1 of 2)

► During FY2017 vis a vis FY2016 total traffic, domestic and international traffic grew with 18%, 22%,8.3% respectively

► Domestic traffic lead the growth and thriving Indian Economy in the later half of FY2008-17 fuelled the growth

► Competitive fares primarily on account of reasonable Aviation Turbine Fuel Price translated in robust demand for air travel

► Allotment of additional Bilateral rights to Middle Eastern carriers sustained the growth of international traffic

Source: Airports Authority of India

Trend of cargo traffic

Trend of passenger traffic

Trend of ATM

► During FY2017 vis a vis FY2016 total traffic, domestic and international traffic grew with 14.2%, 16.2%,6.7% respectively

► Domestic cargo traffic grew at a faster rate than International and its share out of total grew from 34% to 39%

► This can be attributed to increasing FTK on scheduled passenger flights on one hand and demand driven on account of e-commerce on the other hand

► The development of cargo terminals at tier2/tier3 airports is likely to facilitate the growth in the years to come

► During FY2017 vis a vis FY2016 total traffic, domestic and international traffic grew with 10.1%, 7.4%,11.9% respectively

► Continuous aircraft induction by Indian carriers especially IndiGo coupled with high aircraft utilization rate translated in high growth of ATM

► Installation/upgradation of landing aids and a better airspace management at many Indian airports also facilitated the growth of ATM

1.1 1.0 1.0 1.1 1.2 1.2 1.2 1.3 1.4 1.6

0.2 0.3 0.3 0.30.3 0.3 0.3 0.3

0.40.4

-

0.5

1.0

1.5

2.0

2.5

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

million

Domestic International

87.1 77.3 89.4 105.5 121.5 116.4 122.4 139.3 168.9 205.7 29.8 31.6 34.4

37.9 40.8 43.0 46.6

50.8 54.7

59.3

-

50.0

100.0

150.0

200.0

250.0

300.0

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

million

Domestic International

0.6 0.6 0.7 0.9 0.8 0.8 0.8 1.0 1.0 1.1 1.1 1.1 1.3

1.5 1.5 1.4 1.4 1.5 1.7 1.9

-

1.0

2.0

3.0

4.0

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017Carg

o i

n m

illion t

one

Domestic International

CAGR FY2008-17; Total: 9.5%, Domestic: 10%, International:7.9%

CAGR FY2008-17; Total: 6.3%, Domestic: 7.9%, International:5.5%

CAGR FY2008-17; Total: 5.1%, Domestic: 5.0%, International:5.4%

Page 4: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 4Soaring opportunities in aviation sector

Performance of Indian aviation sector (2 of 2)

Source: Directorate General of Civil Aviation

33.541.7 37.7

44.052.7

59.1 56.6 59.167.0

81.0

48.760.6 59.2 61.1

68.278.6 75.8

80.7 84.8

97.768.8% 68.9%63.7%

72.0%77.3% 75.1% 74.6% 73.3%

79.0%82.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

0.0

20.0

40.0

60.0

80.0

100.0

120.0

PL

F

RP

K/A

SK

in

billio

n

RPK ASK PLF

Demand and Capacity trend of domestic sector

Domestic cargo carried-Belly vs Dedicated

82.1 79.7 78.8 76.9 80 79.9

17.9 20.3 21.2 23.1 20 20.1

0

20

40

60

80

100

120

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

% s

hare

of

carg

o

Belly cargo Dedicated cargo

During past few years, reasonable price of ATF has helped airlines to keep operating costs under check and sell inventory at a competitive price. Once the costs goes up on account of increase in ATF price, pricing of inventory above costs could be

challenging

Airlines proactively needs to rationalize capacity induction to avoid any mis-match in supply and demand

► Indian carriers continuously deployed capacity during FY2007-16 which grew with a CAGR of 8.0% and interestingly

► Revenue Passenger Kilometres (RPK) grew with a CAGR of 10.2%

► Drop in capacity in FY2009 and FY2013 was a capacity rationalising exercise to counter the diminished demand on account of global financial crisis & sluggish Indian Economy, grounding of Kingfisher airline respectively

► Passenger Load Factor (PLF) grew significantly in FY2015 & FY2016 on account of thriving Indian economy and competitive air fares

► Nearly 80% of air cargo is being transported in the belly of passenger aircraft, primarily due to competitive rates offered by scheduled carriers to utilize belly capacity to earn ancillary revenues

► Notably dedicated cargo is also picking up, especially on account of demand rising due to popularity of e-commerce

► Many companies are expected to revisit their Supply Chain Strategies post implementation of the GST and same is likely to give a further push to air cargo demand in the years to come

Page 5: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 5Soaring opportunities in aviation sector

India is expected to be third largest aviation market by 2026

Source: IATA

1

6

5

4

3

2

7

9

8

10

1

6

5

4

3

2

7

9

8

10

Page 6: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 6Soaring opportunities in aviation sector

Shift in the aviation market form developed to developing economy

Source: IATA

0 100 200 300 400 500 600 700 800

Mexico

Australia

Philippines

Brazil

Turkey

Indonesia

Vietnam

India

United States

China 5.2%

2.6%

6.7%

3.5%

8.2%

5.2%

2.6%

6.0%

3.0%

4.2%

Corresponding CAGR

0.7%

0.7%

0.8%

0.8%

0.8%

0.9%

1.2%

1.3%

1.4%

1.5%

2.5%

3.9%

4.7%

4.8%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

Japan

Italy

Germany

Canada

France

United States

United Kingdom

Brazil

Mexico

Russia

Turkey

Indonesia

China

India

Change in domestic O-D market in millions

(2015 to 2035)

Growth in per capita incomes (2015 to 2035)

Page 7: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 7Soaring opportunities in aviation sector

Performance of Gujarat aviation sector

Source: Airports Authority of India

Trend of cargo traffic

Trend of passenger traffic

Trend of ATM

3.45 3.00 3.69 4.36 5.19 4.75 5.03 5.35 6.64

7.62 0.70 0.68

0.85 0.83

0.74 0.82 1.00 1.22

1.57 1.79

-

2.00

4.00

6.00

8.00

10.00

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

million

Domestic International

0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.05

0.06 0.06

0.01 0.01 0.01 0.01

0.01 0.01 0.01 0.01

0.01 0.01

-

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

million

Domestic International

21.49 15.86 13.70 18.39 23.35 37.84 38.36 44.17 46.74 48.85 6.71 10.29 11.66

12.98 11.79

12.83 15.71 17.53

23.46 31.05

-

20.00

40.00

60.00

80.00

100.00

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

00

0 t

one

Domestic International

CAGR (%)

Domestic International Total

Gujarat 9.2 10.9 9.5

National 10 7.9 9.5

CAGR (%)

Domestic International Total

Gujarat 3.7 7.4 4.2

National 7.9 5.5 6.3

CAGR (%)

Domestic International Total

Gujarat 9.6 18.8 12.3

National 5.0 5.4 5.1

Page 8: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 8Soaring opportunities in aviation sector

Opportunities in Gujarat aviation sector

Aero sports park,

Amreli

Aviation Park

Bagodara

Sector wise

opportunities

► Regional air connectivity

► MRO development

► Aviation park

► Aero sport actives

► Airport development

► Aviation training institute

► Helipad development

► Airfreight and cargo

MRO facility

Ankleshwar

Flight simulation

4D cinema

Aircraft exhibition

Air ballooning

Paragliding festivals

Parachuting, skydiving

Facility for private flying

MRO solutions

Conditioned

hangers for

modern

helicopter

Page 9: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 9Soaring opportunities in aviation sector

Sector wise MOU’s signed for development of Gujarat aviation sector

Sector MOU signed on Expected investment

(INR crore)

Expected employment

Helicopter operations for

promotion of tourismJanuary 2017 650 1300

Seaplane operations January 2017 40 50

Aviation training January 2017 250 200

Regional air connectivity January 400 500

Page 10: Soaring Opportunities in Aviation Sector - Gujarat · Soaring opportunities in aviation sector Page 2 ... IndiGo coupled with high aircraft utilization rate translated in ... pricing

Page 10Building robust eco system for Indian Aviation Sector

Thank You