Aanchal Final MRP

IN DEPTH STUDY OF INDIAN CIVIL AVIATION INDUSTRY
SECTION # 1
S.V.INSTITUTE OF MANAGEMENT, KADI. 1

CHAPTER – 1
RESEARCH METHODOLOGY
The study has following objectives:
 Main objective:
o An In depth Study of Indian civil aviation industry

(specific focus on domestic passengers only)
 Secondary objective:
o To study the major players and their Market Share

o To find the problems and prospect of aviation industry
o To know the political, economical, social, and technological factors affecting
Indian aviation industry
o To know the likely future scenario of aviation industry
o To know the strategies of Market leaders & Market challengers in to the
market.
 Research design:
o Descriptive study
 Data collection & sources :
o Secondary data:
1. Newspaper-Business Standard, Times of India, Economic Times
2. Websites

SECTION # 2

CHAPTER:-2
SERVICE MARKET DESCRIPTION:-
2.1 AVIATION SERVICE:-
Because of all of the equipment and facilities involved in air transportation, it is to use sight
of the fact that this, fundamentally, a service industry. Airlines perform a service for their
customers; transporting them and their belongings from one point to another for an agreed
price. There is no physical product given in return for the money paid by the customers, nor
inventory related and stored for sale at some letter date.
2.2 TYPES OF AIR SERVICES:-
1. Scheduled Air Transport Service means an air transport service undertaken between
the two or more places and operated according to a published time table or with flights so
regular or frequent that they constitute a recognisably systematic series.
2. Non-Scheduled Operation includes services other than scheduled air transport service
Eg: charter basis and/or non-scheduled basis. The operator is not permitted to publish
time schedule and issue tickets to passengers
3. An air cargo service means air transportation of cargo and mail. Passengers are not
permitted to be on these operations. It may be on scheduled or non-scheduled basis.

2.3 HISTORY:-
 The origin of Indian civil aviation industry can be traced back to 1912, when the first
air flight between Karachi and Delhi was started by the Indian State Air Services in
collaboration with the UK based Imperial Airways. It was an extension of London-
Karachi flight of the Imperial Airways. In 1932, JRD Tata founded Tata Airline, the
first Indian airline.
 At the time of independence, nine air transport companies were carrying both air
cargo and passengers. These were Tata Airlines, Indian National Airways, Air service
of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and
Mistry Airways. After partition Orient Airways shifted to Pakistan.
 In early 1948, Government of India established a joint sector company, Air India
International Ltd in collaboration with Air India (earlier Tata Airline) with a capital of
Rs 2 crore and a fleet of three Lockheed constellation aircraft. The inaugural flight of
Air India International Ltd took off on June 8, 1948 on the Mumbai-London air route.
The Government nationalized nine airline companies vide the Air Corporations Act,
1953. Accordingly it established the Indian Airlines Corporation (IAC) to cater to
domestic air travel passengers and Air India International (AI) for international air
travel passengers. The assets of the existing airline companies were transferred to
these two corporations. This Act ensured that IAC and AI had a monopoly over the
Indian skies. A third government-owned airline, Vayudoot, which provided feeder
services between smaller cities, was merged with IAC in 1994. These government-
owned airlines dominated Indian aviation industry till the mid-1990s.
 In April 1990, the Government adopted open-sky policy and allowed air taxi-
operators to operate flights from any airport, both on a charter and a non charter basis
and to decide their own flight schedules, cargo and passenger fares.
 In 1994, the Indian Government, as part of its open sky policy, ended the monopoly of
IA and AI in the air transport services by repealing the Air Corporations Act of 1953
and replacing it with the Air Corporations (Transfer of Undertaking and Repeal) Act,
1994. Private operators were allowed to provide air transport services. Foreign direct
investment (FDI) of up to 49 percent equity stake and NRI (Non Resident Indian)
investment of up to 100 percent equity stake were permitted through the automatic
FDI route in the domestic air transport services sector. However, no foreign airline
could directly or indirectly hold equity in a domestic airline company.

2.4 INTRODUCTION OF MAJOR PLAYERS:-
Indian skies are housing a decent number of airlines today vis-à-vis the one man army
Scenario prior to 1990’s. The proud residents of Indian skies include the following:
1. Air India : India’s Legacy Carrier:
The history of Air India is the History of Indian Aviation. Air-India began operating in
1932 as Tata Airlines, named after J. R. D. Tata, its founder. Founded as a small, private,
domestic carrier in 1932, Air-India is now government owned. It flies only International
routes and has negligible presence felt while catering to the domestic traffic.
2. Indian Airlines :
With nationalization of Air Transport in 1953 via Air Corporation Act,1953 , National Flag
carriers : Indian and Air India were born. Indian was born from merger of 8 domestic
carriers .It caters mainly to domestic routes with some presence felt in neighbouring nations.
Like Air India it’s a full service carrier. It has a subsidiary ‘Alliance Air’ .Its Symbol is
Asoka’s Chakra. For a long spell of time, the two national carriers enjoyed sole monopoly in
the air transport segment as private carriers were barred from entering the segment as per Air
Corporation Act, 1953. It was after the New Economic Policy, 1991 after which things fell in
the right places and successful attempts were made to enter the segment by private players
like Jet, Sahara and others. Yet another, turning point has come in the history of the Indian
Aviation Sector when Air India was granted permission from the Government of India to
merge with Indian Airlines, the two flag carriers of India. This Mega Merger marked the first
marriage in the Indian skies which was followed by two more marriages. The name of the
new airline will remain Air India, since it is known worldwide. They have been in the works
of completing the merger since January 2007, after permission.
3. Jet Airways :
In 1993, Jet commenced its operations after the ban was lift by the government following the
repeal of Air Corporation Act.1956. Jet Airways will be the most preferred domestic Airline
in India. It will be the automatic first choice carrier for the travelling public and set standards,
which other competing airlines will seek to match. It is the only airline that stood the crunch
of late 1990’s. Jet started its International Operations in 2004 and carries more than 7 million
passengers per annum. Recently, the company made news when Naresh Goel led Jet Airways
took 100 % stake in their arch old rival Air Sahara in May, 2007. This earmarked the second
marriage of the season in the Indian Skies after the AIIA deal.
4. Air Sahara:
Like Jet, Sahara too began its operations in 1993 after the domestic Air Market was opened
by the govt. in 1990’s. Air Sahara Limited is a leading private airline in India, owned by the
diversified Sahara India Parivar group. After Jet, it was only airline that could stand the
torrential winds of late 1990’s. After series of controversies Air Sahara has been taken over

by Jet Airways in May, 2007. The airline is now renamed as “Jet Lite”. Jet has intensions of
converting Air Sahara in sync with LCC model to reach every segment of air travellers.
5. Air Deccan:
India’s first budget carrier and now the largest flew its first carrier in 2003.Headed by
Captain Gopinath, Air Deccan truly redefined the accessibility to the Indian Skies. It injected
competitive spirits into the system and gave common man wings by reducing air fares which
matched the first Class Railway Fares. The third wedding in skies was marked when Dr Vijay
Mallya of Kingfisher Airlines picked up 26 % stake in Air Deccan.
6. Kingfisher:
The Airline began its operation in May, 2005 .it’s the by far the most flamboyant airline in
India, giving tough competition to Jet Airways in in-flight services. It is a major Indian
luxury airline operating an extensive network to 34 destinations, with plans for regional and
long-haul international services. Kingfisher Airlines, through one of its holding company
UB holdings Ltd has acquired 26% stake in the budget airline Air Deccan and has offered to
buy further of 20% stake from the secondary market.
7. Go Air:
The most colourful airline in India (comes in 6 colours) started its operations from
November, 2005. It belongs to the Wadia group.
8. Indigo:
The airline made heads turn when it placed the ambitious order of 100 aircrafts with
airbus. The carrier began its operations in August, 2006.
9. Paramount:
It’s the only high value flier that India can boast of .It is the only carrier that uses 70
passenger capacitated Embracer Aircraft. The airline started operations in October 2005. It
was established by Madurai-based textile company Paramount Group. Paramount presently
operates only in South India. There was news of Paramount showing interest in picking up
stake in Go Air and Spice jet so as to foray into Northern India easily. However, so far dotted
line has not been signed with any carrier.
10. Spice jet:
Spice Jet, a reincarnation of ModiLuft marked its entry in service by offering fares priced at
Rs.99 fares for the first 99 days since its inception in 2005. The carrier is giving tough
competition to Railways. This airline is known to have had made the least number of
mistakes.

SECTION # 3

CHAPTER:-3
GLOBAL SCENARIO:-
3.1 GLOBAL AVIATION INDUSTRY:
2008 will be remembered for many reasons – many of them negative. The subprime financial
disaster spilled into the wider economy, bursting the commodity price bubble and taking most
leading world economies into recession. Record fuel prices played havoc with airline cost
structures, while rapidly slowing world economies bit into airline demand in the second half
of 2008. The aviation industry is currently facing challenges unlike any other industry. In
particular, the current economic climate, financial chaos of some airlines and increasingly
competitive environment are heightening the need for a radical restructuring of the air
transport industry.
Today, the global airline industry consists of over 2000 airlines operating more than 23 000
commercial aircraft, providing service to over 3700 airports (ATAG, 2008). In 2007, the
world’s airlines flew more than 29 million scheduled flights and transported over 2.2 billion
passengers (IATA, 2008). The growth of world air travel has averaged approximately 5% per
year over the past 30 years, with substantial yearly variations due both to changing economic
conditions and to differences in economic growth in different regions of the world.
Historically, the annual growth in air travel has been about twice the annual growth in GDP.
Even under relatively conservative assumptions concerning economic growth over the next
10–15 years, a continued 4–5% annual growth in global air travel will lead to a near-doubling
of total air travel during this period.
Unlike other industries, consolidation and acquisitions would be inevitable going forward. Total
worldwide passenger traffic reached an all time high in 2007, increasing by 6.9% over 2006.
Final reports from 1200 Airport Council International (ACI) member airports confirm that they
processed 4.8bn passengers, 88.5mn tons of cargo and 76.4mn aircraft movements.

Worldwide international passenger traffic grew at a brisk pace with strong markets in China,
India and the UAE boosting results in the Asia Pacific (+9.1%) and Middle East (+13.4%)
regions. Africa also showed very strong growth in 2007, up 11.2% on the previous year. Europe
showed growth of 7.4% and, at 31% of world passengers, looks set to overtake North America
(32%) as the largest region for air traffic in the next few years if current growth patterns hold.
Airports which were counted as the busiest in the world were: Atlanta staying on top with over
89mn passengers, followed by Chicago O’Hare (76mn), London Heathrow (68mn), Tokyo
Haneda (67mn) and Los Angeles (62mn). However, when just international traffic is taken into
account, the top five busiest airports are London Heathrow (62mn), Paris Charles de Gaulle
(55mn), Amsterdam (48mn), Frankfurt (47mn) and Hong Kong (46mn).
Nevertheless, the numbers achieved in the past are seemingly felt distant for 2009 onwards as the
global credit crunch has not left any industry to prosper. The aviation industry's revenue cycle
had already peaked in 2006 and the impact of a credit crunch spreading from the ailing US
economy is still being calculated. However, Low cost carriers (LCCs) will outpace their full
service rivals in terms of traffic growth and earnings in 2009, according to IATA. Storm
conditions in 2008 have already helped the LCC segment gain a larger slice of global aviation.
Now predicted tougher economic conditions and lower fuel prices will give the LCC sector a
major advantage in 2009.
Middle East Aviation Sector

The Middle East economies have been witnessing a double digit growth rates in nominal terms
on the back of petrodollar wealth, creating unprecedented levels of liquidity in the region.
Average real GDP growth for the GCC economies over the past three years was 5.8%, while
average nominal GDP growth was 14%. With no other ways of transport such as railways and
buses, airline is the only way for travel between the countries. And the prospects of getting the
rail line or buses don’t seem to work hence the prospects of airline industry in the Middle East are
very bright. Keeping that in view, many players in the Middle East are undergoing doing
expansions and increasing their fleet and destinations. It is estimated that over US$40bn
expansion are planned by Middle East aviation sector. The region enjoys a central location on
the world map making it a perfect connecting point between several destinations in the world. In
addition, according to the Centre for Asia Pacific Aviation, the latest long-range aircraft
technologies, with ranges of up to 8,000 nautical miles, make it possible to fly long-haul non-stop
from the Middle East to anywhere in the world. Tourism and business travel into and within the
region - has boomed, with high net worth individuals from around the world making the most of
the central location as well as its liberal regulatory and tax regimes.
In terms of demand and supply, measured by Revenue Passenger Kilometers (RPK) and
Available Seat Kilometers (ASK), the Middle East region was one of the leaders in terms of
RPK, and ASK growth, reporting a y-o-y growth of 9.6% and 9.8% respectively during June
2008 as compared to the industry’s RPK and ASK growth of June 2007. During June 2008, the
industry’s average passenger load factors continued to increase improving trends across all
regions. The industry’s average passenger load factor stood at 77.6%. Besides, the thriving real
estate and construction sector attracted a larger number of expatriate workforces. Expatriates in
GCC countries are account for more than 40% of the total population. These large percentages of
expatriates have boded well for the Middle East aviation sector.

Most of the countries in Middle East are monopolized by a single domestic airline usually owned
by the government. However, most have realized the need for change in order to capture the
growth opportunities in the region and improve their competitiveness. Countries like Saudi
Arabia and Kuwait with no privatization plans for their flag carriers in the short term, their
governments have started to liberalize the market through the relaxation of entry for other private
lower cost carriers (LCCs) forcing their flag airlines to improve their efficiency. Kuwait’s
aviation sector exhibits traits of bi-polarism. It at once features one of the region’s most
progressive access and domestic competition policies and has fostered the Middle East’s second
LCC. The centrepiece of Kuwait's expansion plan is a US$2bn upgrade of Kuwait International
Airport. An integral part of the government's drive to establish the country as a regional financial
and trade hub, the project will expand the airport's existing two runways and build a third, as well
as increasing fuel storage facilities. Altogether, the projects will double the airport's capacity
from 5mn passengers to nearly 10mn. Kuwait is also home to the Middle East's first wholly
private commercial air carrier, Jazeera Airways. Unlike most of the older regional carriers
Jazeera is neither owned nor subsidized by any national government. It has evolved over the past
two years from a small start-up with a fleet of two aircraft servicing five destinations, to a
recognizable brand covering 20 destinations with a fleet that will soon include ten Airbus A320s.
Recently, Wataniya Airways has made its debut in Kuwait. Wataniya, which was founded in
2005 by a consortium of Kuwaiti shareholders, already started its operation for Dubai and will
start covering the regional destinations in near future.
FOREIGN OWNERSHIP IN INDUSTRY IN VARIOUS COUNTRY

3.2 MAJOR GLOBAL PLAYERS IN TO THE INDUSTRY
1. BRITISH AIRWAYS
British Airways PLC (LSE: BAY) is an airline of the United Kingdom. The airline has the
largest fleet of aircraft of any British airline, but is only second in terms of international
passengers carried. Its main hubs are London Heathrow and London Gatwick.
The British Airways Group was formed on 1 September 1974 consisting of BOAC and BEA.
These two companies were dissolved on 31 March 1974 to form British Airways (BA). The
company was privatized in February 1987. It expanded with the acquisition of British
Caledonian in 1988 and some of the routes of Gatwick-based carrier Dan-Air in 1992. The
formation of Richard Branson's Virgin Atlantic in 1984 began a tense relationship with BA
which ended in "one of the most bitter and protracted libel actions in aviation history" in
1993 in which BA apologized "unreservedly" for a "dirty tricks" campaign against Virgin and
paid damages and legal costs. British Airways is listed on the London Stock Exchange and is
a constituent of the FTSE 100 Index. Until 2008 British Airways was the largest airline of the
United Kingdom, measured by passenger numbers. In 2008 the airline carried 35.7 million
passengers
2. SINGAPORE AIRLINES

National airline of Singapore. Singapore Airlines operates a hub at Singapore Changi Airport
and has a strong presence in the Southeast Asia, East Asia, South Asia, and "Kangaroo
Route" markets. The company also operates trans-Pacific flights, including two of the world's
longest non-stop commercial flights from Singapore to Newark, New Jersey and Los
Angeles, California on the Airbus A340-500.
Singapore Airlines was the launch customer of the "super-jumbo" Airbus A380. SIA has
diversified into airline-related businesses such as aircraft handling and engineering. Its
wholly-owned subsidiary, Silk Air, manages regional flights to secondary cities with smaller
capacity requirements. Subsidiary Singapore Airlines Cargo operates SIA's dedicated
freighter fleet, and manages the cargo-hold capacity in SIA's passenger aircraft. SIA has a
49% shareholding in Virgin Atlantic and has also responded to the threats posed by the low-
cost sector by investing a 49% stake in Tiger Airways.
Singapore Airlines Limited is the world's largest carrier by market capitalization. It ranks
amongst the top 15 carriers worldwide in terms of revenue passenger kilometers, is the 8th
largest airline in Asia and ranked 6th in the world for international passengers carried.
Singapore Airlines was ranked 17th in Fortune's World’s Most Admired Companies rankings
in 2007 and has built up a strong brand name as a trendsetter in the aviation industry,
particularly in terms of innovation, safety and service excellence, coupled with consistent
profitability. It has won numerous awards and is an industry bellwether for aircraft purchases.
The airline was Asia's first and the world's third airline to be accredited by IATA with the
IOSA (IATA Operations Safety Audit).
Singapore Airlines flies to 65 destinations in 35 countries on five continents from its primary
hub in Singapore. It has a strong presence in the Southeast Asian region, which together with
its subsidiary SilkAir, connects Singapore with more international destinations in the region
than any other Southeast Asian airline.
3. EMIRATES
Emirates Airline (shortened form: Emirates) is a subsidiary of The Emirates Group based in
Dubai, United Arab Emirates (UAE). In 2008 the airline was the eighth-largest airline in the
world in terms of international passengers carried, and fifth-largest in the world in terms of
scheduled international passenger-kilometers flown. It is also the ninth-largest in terms of
scheduled freight tonne-kilometers flown (eighth in scheduled international freight tonne-
kilometers flown).
The airline ranks amongst the top 10 carriers worldwide in terms of revenue, and has become
the largest airline in the Middle East in terms of revenue, fleet size, and passengers carried
and is the eighth largest airline in Asia, in terms of passengers carried. The airline operates
over 3,710 passenger flights per week, to 101 destinations in 61 countries. Cargo activities
are undertaken by the Emirates Group's Sky cargo division. Its main base is Dubai
International Airport.
On 16 October 2008, Emirates moved all operations at Dubai International Airport to

Terminal 3, a new terminal dedicated exclusively to Emirates. Terminal 3 is over 1,500,000
m2 (370 acres), the single largest building in the world by floor space.

4. AIR FRANCE
Air France (formally Société Air France), based in Paris, France, is one of the world's largest
airlines. It is a subsidiary of the Air France-KLM Group and a founding member of the
SkyTeam global airline alliance. Air France operates worldwide scheduled passenger and
cargo services to 185 destinations in 83 countries. The airline's global hub is at Paris Charles
de Gaulle Airport. Air France was formed on 7 October 1933, from a merger of Air Orient,
Air Union, Compagnie Générale Aéropostale, Air France was formed on 7 October 1933,
from a merger of Air Orient, Air Union, Compagnie Générale Aéropostale, Compagnie
Internationale de Navigation Aérienne (CIDNA), and Société Générale de Transport Aérien
(SGTA). In 1990, the airline acquired the operations of domestic French carrier Air Inter and
international rival Union des Transports Aériens (UTA). Air France served as France's
primary national flag carrier for seven decades prior to its 2003 merger with KLM. Between
April 2001 and March 2002, the airline carried 43.3 mn passengers and had total revenues of
€ 12.53 bn. In November 2004, Air France ranked as the largest European airline with 25.5%
total market share, and was the largest airline in the world in terms of operating revenue. Air
France operates a mixed fleet of Airbus and Boeing wide-body jetliners on long-haul routes,
and utilizes Airbus A320 family aircraft on shorthaul routes. The carrier's regional airline
subsidiary, Régional, operates the majority of its regional domestic and European scheduled
services with a fleet of regional jet and turboprop aircraft. Air France has received IATA
accreditation with the IATA Operational Safety Audit (IOSA) for its safety practices.
Air France's slogan is "Making the sky the best place on Earth."

SECTION # 4
CHAPTER:-4
COMPREHENSIVE STUDY OF INDIAN MARKET:
4.1 COMPREHENSIVE STUDY OF INDIAN AVIATION INDUSTRY
Domestic Indian Carriers

 The country has twelve domestic carriers with four National Carriers and eight private
scheduled operators. Of these eight, Jet Airways and Jet lite operate on international
sectors as well.
 The fleet size of the scheduled domestic airlines increased from 305 aircrafts in 2006-
07 to 381 aircrafts in 2007-08, which indicated a total increase of 24.9 % in the fleet
size.
 Of the 381 aircrafts, only 146 belonged to the National Carriers in 2007 -08. Presence
of Private Carriers has increased from just two airlines (Jet Airways and Paramount
Airlines) till 2002 -03 to eight as on 31st March 2008. Number of aircrafts has also
increased from 53 in 2002 -03 to 235.

 The total operating revenue of all th e domestic Indian carriers was Rs.344,877.4
million during 2007-08 whereas the operating expenses for the same period was
Rs.406,911.8 million resulting in overall loss of Rs.62,034.4 million.
 Both National and Private Carriers experienced a loss during 2007-08, the respective
amounts being Rs.2529.78 crore and Rs.3673.66 crore respectively. Only 2 airlines
viz., Air India Express and Paramount Airways had made a profit.
Carriers engaged in Domestic Operations
 A total of 44.38 million passengers were carried by all the scheduled domestic Indian
Carriers during the year 2007-08.
 The scheduled domestic traffic passengers witnessed a growth rate of 24% during
2007-08. The corresponding figure for the year 2006 -07 was 42%. The scheduled
domestic cargo(including Blue Dart) grew by 14.50% during the year 2007-08.
 While passengers carried by the National and Private Carriers are in the ratio 1:4, that
of freight carried is 1:2. Scheduled Domestic Aircraft departures per day increased
from 1153 in 2006-07 to 1367 during the year 2007-08.
 The domestic average PAX load factor increased marginally from 68.8% in 2006-07
to 68.9% in 2007-08. This factor was 59.3% for the National Carriers as against 7
1.6% for the private carriers.

 The domestic average weight load factor decreased from 67.1% in 2006-07 to 65.7%
in 2007-08. Weight load factor was 56.9% and 68.3% respectively for national and
private carriers.
 The number of pilots engaged by all the domestic Indian carriers increased from 3302
during 2006-07 to 3997 in 2007-08.
 The number of technical employees engaged by all the domestic Indian carriers
decreased from 13343 during 2006-07 to 13308 in 2007-08.
 The number of cabin crew employees engaged by all the domestic Indian carriers
increased from 9774 during 2006-07 to 11696 in 2007-08.
 The average no. of employees per aircraft declined from 197 in 2006-07 to 169 in
2007-08.
 Expenditure on personnel accounted for 17% of the total expenses in case of national
carriers as aginst 9.5% for private carriers during 2007 -08.
 The market share in terms of domestic passenger carried was highest for Jet Airways
(22.01%) followed by Air Deccan (15.99%) and Indian Airlines (15.55%).
 The market share in terms of domestic freight carried was highest for Jet Airways
(31.03%) followed by Indian Airlines (23.04%) and Blue Dart (17.79%).
Airport Statistics
 Total passengers handled at the Airports were 116.7 million during the year 2007-08.
Of these, international airports handled 103.3 million and domestic airports 13.4
million only. Total cargo (freight and mail) handled at the airports was 1.8 million.
 On an average 3606 flights were handled per day by the airports in 2007 -08 with
2931 pertaining to domestic traffic and the remaining to international traffic.
 Mumbai airport continued to be the busiest airport during the year 2007 -08. The
average no. of flights handled per day for international traffic was 169 whereas the
average no. of flights handled per day for the domestic traffic was 468. This was true
for cargo movement also.
 The three busiest airports handling international traffic during the year 2007 -08 were
Mumbai, Delhi and Chennai.
 The three busiest airports handling domestic traffic during the year 2007 -08 were
Mumbai, Delhi and Bangalore.
Non -Scheduled Traffic

 The no. of non scheduled operator increased from 66 in year 2007 to 99 in the year
2008.
 The total no. of aircraft with non scheduled operator permit holder increased from 229
in the year 2007 to 272 in the year 2008. This number has more than doubled in the
last six years (129 in 2003). Growth rate over the previous year was 10.4%. A total of
397062 passengers were carried by all non scheduled operators (excluding Pawan
Hans Helicopters Limited) during the year 2007 -08. The corresponding figure for the
year 2006-07 was 355811.
 The growth rate in terms of passenger carried by all the non -scheduled operators
(excluding Pawan Hans Helicopters Limited) was 11.6% during the year 2007-08. The
corresponding figure for the year 2006 -07 was 10.7 %.
 The growth rate in terms of flights operated by all the Non -Scheduled operators
(excluding Pawan Hans Helicopters Limited) was 10.4% during the year 2007 -08.
 The no. of aircrafts leased out by Pawan Hans Helicopters Limited during the year
2007 - 08 increased to 29 from 24 in the year 2006-07. A total no. of about 4.35 lac
passengers were carried by Pawan Hans during the year 2007 -08. There was a
growth rate of 6.7% in terms of passengers carried by Pawan Hans Helicopters
Limited during the year 2007-08.
 The revenue earned by Pawan Hans Helicopters Limited witnessed a growth rate of
24.5% during the year 2007-08. The corresponding figure for the year 2006 -07 was
6.4 %.
CHAPTER:- 5
VALUE CHAIN OF AVIATION INDUSTRY:-
5.1 VALUE CHAIN ANALYSIS:-
Value chain analysis help companies to analyze specific activities, through which firms can
create a competitive advantage, it is also useful to model the firm as a chain of value creating
activities. Michael porter identified a set of interrelated generic activities common to a wide
range of firms. The resulting model is known as the “value chain” and is depicted below.
The goal of these activities is to create value that exceeds the cost of providing the product or
services, thus generating a profit margin.
The following diagram contained value chain of the industry, which includes primary as well
as supporting activity. Contribution of each and every activity has been mentioned as follow
as particularly for Aviation industry.

Primary activities
Inbound logistics: Refers to goods being obtained from the organisations suppliers ready to
be used for producing the end product.
Operations: The raw materials and goods obtained are manufactured into the final product.
Value is added to the product at this stage as it moves through the production line.
Outbound logistics: Once the products have been manufactured they are ready to be
distributed to distribution centres, wholesalers, retailers or customers.
Marketing and Sales: Marketing must make sure that the product is targeted towards the
correct customer group. The marketing mix is used to establish an effective strategy, any
competitive advantage is clearly communicated to the target group by the use of the
promotional mix.

Services: After the product/service has been sold what support services does the organisation
have to offer. This may come in the form of after sales training, guarantees and warranties.
With the above activities, any or a combination of them, maybe essential for the firm to
develop the competitive advantage which Porter talks about in his book.
Support Activities
The support activities assist the primary activities in helping the organisation achieve its
competitive advantage. They include:
Procurement: This department must source raw materials for the organisation and obtain the
best price for doing so. For the price they must obtain the best possible quality
Technology development: The use of technology to obtain a competitive advantage within

the organisation. This is very important in today’s technological driven environment.
Technology can be used in production to reduce cost thus add value, or in research and
development to develop new products, or via the use of the internet so customers have access
to online facilities.
Human resource management: The organisation will have to recruit, train and develop the
correct people for the organisation if they are to succeed in their objectives. Staff will have to
be motivated and paid the ‘market rate’ if they are to stay with the organisation and add value
to it over their duration of employment. Within the service sector eg airlines it is the ‘staff’
who may offer the competitive advantage that is needed within the field.
Firm infrastructure: Every organisations needs to ensure that their finances, legal structure
and management structure works efficiently and helps drive the organisation forward.

Primary activities
5.1.1 INBOUNDS LOGISTIC:-
Route Selection, Passenger Service System, Yield Management System (Pricing),Fuel, Flight
Scheduling, Crew ,Scheduling Facilities, Planning ,Aircraft Acquisition.
1) ROUTE SELECTION:-
Generally there are different routes available for reaching at a particular place. Different
companies go through different routes and they will find a route which is shortest and
efficient .
2) PASSENGER SERVICE SYSTEM:-
There are different services provided by different companies. As kingfisher gives luxurious
services to customer for eg:- T.V. for passenger they show in plane how the plane take off ,
Jet airways provides IVR(interactive voice response), and Air Deccan is the low cost provider
.
3) FUEL
Fuel is the basic requirement for our industry. There are various types of fuel available. They
are unleaded petrol, premium unleaded petrol, 98RON, ethanol etc. 40% of the total cost is
carried by aviation turbine fuel.
5.1.2 OPERATION:-
Ticket Counter Operations ,Gate Operations ,Aircraft Operations ,On-board Service ,Baggage
Handling ,Ticket Offices
1) TICKET COUNTER OPERATIONS

They provide high speed ticketing and the services of ticket counter are fast. they provide
instant answers. Quenning is not the question in that. Instant analysis through their own
network.
2) AIRCRAFT OPERATIONS
All persons that navigate, land, service, maintain or repair aircraft at LAX,shall do so in
conformity with Federal Aviation Administration (FAA),Transportation Security
Administration (TSA), National Transportation Safety Board (NTSB) and State Department
of Aeronautics Rules and Regulations, and the Rules and Regulations contained herein
No person shall interfere or tamper with any aircraft at the Airport, or start the engine of
such aircraft without the operator's consent; nor shall any employee of LAWA move or
handle such aircraft, except in cases of emergency.
No person shall enter an aircraft without the consent of the owner or representative in-charge.

3) ON BOARD SERVICES:-
At On-Board, superior customer service, quality candidates, and competitive pricing, are the
foundation to every business relationship.
4) BAGGAGE HANDLING:-
The baggage handling system at an airport plays a crucial role in keeping travelers happy. It
also can make the difference in an airport's ability to attract or keep a major airline hub ("an
airport that serves as a central connecting point through which many flights of a particular
airline are routed"
A baggage-handling system has three main jobs:
• Move bags from the check-in area to the departure gate

• Move bags from one gate to another during transfers
• Move bags from the arrival gate to the baggage-claim area
Each airport has its own requirements. For instance, the time allotted for a bag to make it
from the check-in area to the gate is determined by how fast a passenger can make the same
trip. In some airports, it might only be a short walk to the passenger terminal, while in others,
passengers might have to take a train.
5.1.3 OUTBOUND LOGISTICS:-

Baggage System, Flight Connections, Rental Car and Hotel Reservation System
BAGGAGE HANDLING:-
• Personal Identification
• Baggage X-ray
• Free Baggage Allowance
• Piece Concept
• Cabin Baggage
• Baggage Identification
• Baggage retrieval
• Baggage Mishandling
• Liability of Air-India (IC)
PERSONAL IDENTIFICATION:-
Most air travellers carry similar looking popular baggage brands. It is advisable to always put
your own personal identification sticker on your checked baggage so that a fellow passenger
does not claim it by mistake..

BAGGAGE X-RAY:-
Before approaching the check-in counters, you may be

required to pass all your pieces of baggage to be checked in
through the X-ray machines operated by security personnel.
CABIN BAGGAGE:-
In order to ensure safety of the aircraft and passengers as well as the convenience of fellow
passengers, only one piece of cabin baggage of specified dimensions can be carried in the
cabin. The sum of three dimensions should not exceed 45 inches for Jet Aircraft & 34 inches
for other aircrafts.
In addition to one piece of cabin baggage or package, you may also be permitted to carry the
following items, subject to Security Regulations:
• Lady's hand bag.

• An overcoat or wrap.
• A rug or a blanket
• A camera or a pair of binoculars
• Reasonable amount of reading material for the flight.
• Infant's feed for consumption during the flight and infant's carrying basket if an infant
is carried.
• Collapsible wheelchair or pair of crutches or braces for passenger's use if dependent
on these.
• A gift item purchased from the Airport duty free shop.
• Walking stick.
• Umbrella (Folding type)
• Feeding bottle.
• Shaving kit, excluding razor blade and straight razors.
• Medicines required during Flight like Asthma inhaler etc.
• Laptops.
• Cell phones.
An odd sized cabin baggage not conforming to the specified dimension will not be allowed in
the cabin. Such baggage will be removed at the gate / boarding point, Will be affixed with a
"Limited Release Baggage Label" and will be loaded in the hold.
Children are entitled to the same cabin baggage allowances as adults.
When an infant (not entitled to a seat or free baggage allowance) accompanies an adult, a
carrycot, or a fully collapsible push chair/stroller is allowed. This may be carried in the cabin
if space is available, or else as checked baggage.

Due to security reasons / Government regulations, passengers travelling on flights originating

from certain stations like Jammu, Srinagar etc. are not allowed to carry any hand baggage.
Please check the current regulations of the station.
Due to security requirements, passengers may be asked to physically identify their checked
baggage before boarding. Baggage identification ensures that the baggage of a passenger,
who does not board after check-in for any reason, is not loaded on the aircraft.
5.1.4 SALES & MARKETING:-

Promotion, Advertising, Advantage Program, Travel Agent Programs, Group Sales
1) PROMOTION
The significant steps taken by Indian Government on liberalization on Indian aviation

industry include:- (1) Foreign Direct Investment limit in Air Transport Services (domestic
airlines) has been increased from 40% to 49% and is soon expected to be increased further.
However, the NRI’S and the persons of Indian origin (PIO) have been allowed 100% FDI. (2)
Tourist charter guideline liberalized (3) Fleet expansion plans of Air India/Indian Airlines
approved (4) Restructuring of Delhi Bombay Airport and work of development of Greenfield
airports at Bangalore & Hyderabad airports.
2) ADVERTISING
The airline provide various types of advertisements like offers on net, or any of their blog.
They also give advertisements on newspapers, magazine. Special discount offers on any well

know sites and in newspapers. They also give special discount on honeymoon trips and at the
time of any festivals.
3) GROUP SALES
They provide higher discounts to group of people. They provide special discount on
buying of group tickets. They also provide good discounts to companies for staff
booking.
5.1.5 SERVICES
• Lost Baggage Service

• Complaint Follow-up
1) LOST BAGGAGE SERVICE
Loss of Baggage & Compensation
 In the event of damage/loss of baggage, claims will be settled as per the applicable
convention. As per the WARSAW CONVENTION, the compensation is computed at the
rate of USD20/- per kg. As per the MONTREAL CONVENTION the compensation is
computed to a maximum of (Special Drawing Rights)SDR1000/- per passenger for
loss/damage/delay of baggage.
 However, a passenger can benefit from a higher liability limit by making a special
declaration at the latest at check-in and by paying a supplementary fee.
 Liability for loss of or damage to baggage on domestic sectors of Air India, is governed
by 'Carriage By Air Act 1972' and limited as follows : a) to a sum of Rs.450/- per Kg., of
baggage checked-in by the passenger. b) to a sum of Rs.4,000/- in respect of objects of
which the passenger takes charge himself.
 The Warsaw Convention or the Montreal Convention will be applicable if the domestic
travel is in conjunction with an International sector.
Delayed Delivery of Baggage

 If delivery of baggage is delayed beyond 24 hours when a passenger is on a visit to a
foreign country and has no access to their own wardrobe, then an interim expense of GBP
50.00 or equivalent in local currency is reimbursed. In India, the amount is INR 3,000.00.
 For purely domestic travel, the airline is not liable to pay Interim Expenses for delayed
delivery of baggage.
Damaged Baggage
 For passengers travelling on International routes, in case of damage to baggage,
complaint must be made in writing to the Carrier forthwith after discovery of damage and

not later than 7 days. In case of delayed delivery of baggage and in case of damage, the
complaint must be made within 21 days from the date the baggage was delivered.
 For purely domestic passengers, the complaint must be made within 3 days/14 days
respectively. If baggage is damaged beyond repair, the airline will endeavour to provide a
suitable replacement. Luggage is designed to protect its content. In the course of normal
handling, your luggage will acquire evidence of use such as, minor cuts, scratches, dents
or soil. We trust you understand that we are not responsible for this type of damage or any
of the following :
• Broken feet/wheels or handles
• Damage to overpacked/oversized bags
• Damage to pull handles
• Items of a fragile or perishable nature
• Lost pull handles
• Manufacturer/s defects
Supportive activities
5.2.1 FIRM INFRASTRUCTURE
-Financial Policy – Accounting, Regulatory Compliance Legal - Community Affairs
The Indian Economy is booming with a steady pace for quite some time. With this many job
opportunities are being created in various domains. The Aviation industry is one such
domain. In early days, scope of a career in this sector was very limited. But now, due to the
arrival of a number of domestic and international Airlines with cheap airfares, the need for
airline staff has risen.
The current growth rate in domestic and international travel exceeds 25%, the highest in the
world. The Indian domestic market grew at almost 50% in the first half of 2006.
5.2.2 HUMAN RESOURCE MANAGEMENT
Flight, route and yield analyst training, Pilot Training ,Safety Training, Baggage Handling
Training, Agent Training, In-flight Training.
1) PILOT TRAINING
Training Process
Basic qualification for pilot training is successful completion of 10+2/equivalent with 50%
marks in Physics and Maths. The applicant should have completed 17 years of age. The first

step in Pilot training is acquiring of Student Pilot Licence (SPL). Thereafter he can start flight
training to get Private Pilot Licence (PPL). This includes 60 hours of flying comprising 20
hours of dual flying, 20 hours of solo flying and 5 hours cross country flying. Theoretical
examination's have to be passed in subjects like Air Regulation, Navigation, Aviation
Meteorology, Aircraft and Engines, After PPL another 190 hours of flying training is
required for Commercial Pilot's Licence (CPL) i.e., a consolidated 250 hours of flying
training. A flight radio operators licence and radio telephone licence have to be obtained.
During CPL, the candidate should have exposure to a range of aircraft and fulfill other
conditions like specified hours of solo flying, cross country flying and height flying.
Theeoretical papers have to be cleared and medical tests passed. It usually takes 2 to 3 years
before required flying hours and classroom learning are completed. Entry to the PPL course
is through an entrance test conducted at certain centres. The test is based on subjects like
English, General Knowledge, Maths, Physics and Chemistry. Applications are called in April
and sent to The Director General of Civil Aviation (Training Section) Technical Centre, Opp.
Safdarjang Airport, New Delhi-110 003.
Prospects:
After getting an Indian license, one can apply to the airlines for jobs. One may join as a pilot
and work upwards to become a Commander. In Indian Airlines, it may take 8-10 years to get
command of a jet aircraft. Private airlines may take only half the time, since the flying hours
that the pilot puts in are much higher. These days there is a shortage of pilots and foreign
airlines such as Gulf Air, Emirates, Singapore Airlines and Air Lanka frequently hire Indian
pilots. With Asia opening up, salaries have multiplied and it is not surprising to hear of a
monthly salary of $6,000 after taxes (about Rs 2 lakh) or even a higher figure of $12,000.
Apart from this, one may get to fly a bigger and more modern aircraft with a foreign airline.
A word of caution may be in order here. Many pilots switched to private airlines a few years
back, lured by high salaries. With many such airlines folding up and running into losses, the
high salaries have not been sustainable. In the past year, Damania was sold while Modiluft
and East West were in serious trouble and were grounded due to various problems. This is
not to say that the prospects are poor for a pilot. The domestic private airlines may be failing
because of restrictive rules and this has been pointed out by owners of airlines. Government
policy is also very confused and a proposal of a tie up between Tatas and Singapore Airlines
has not been allowed by the government. The country's privatisation programme is clearly
aimed at protecting the government monopoly. So the career opportunities at present are
limited to Air India and Indian Airlines and foreign airlines.
Training Centres in India :
• Academy of Carver Aviation Pvt. Ltd.Doddanavar Trade Centre,Near Fort,Dharwad

Road,5:16 AM 1/9/99Belgaum-16.
• Andhra PRadesh Flying Club, Begumpet Airport, Hyderabad.
• Assam Flying Club, Guwahati Airport, Guwahati-7.
• Bangalore Aeronautics Technical Services, Mysore Aerodrome, Karnataka.

• Bihar Flying Institute, Civil Aerodrome, Patna-1.

• Coimbatore Flying Club, Civil Aerodrome, Coimbatore, Tamil Nadu.
• Faculty of Flight Safety Services, Delhi Flying Club Ltd. Safdarjang Airport, New
Delhi-110 003.
• Flying Club, Civil Aerodrome, Indore-452 005, MP.
• Flytech Aviation Academy, 102, AI-Kauser, Road No. 10, West Maredpally,
Secunderabad-500 026.
• Government Aviation Training Institute, Civil Aerodrome, Bhubaneshwar.
• Government Flying Training School, Jakkur Aerodrome, Yelahanka Post, Bangalore-
560 064.
• Gujarat Flying Club, Civil Aerodrome, Hasni Road, Baroda-390 006, Gujarat.
• Indira Gandhi Rashtriya Uran Akademi, Fursatganj Airfield, Rea Bareli-229 302,
Uttar Pradesh.
• Jamshedpur Co-operative Flying Club Ltd. Sonari Aerodrome, Jamshedpur, Bihar.
• Ludhiana Aviation Club, Civil Aerodrome, PO Sahnswal, Ludhiana, Punjab.
• Nagpur Flying Club, Sonegaon Aerodrome, Nagpur, MAharashtra.
• Orient Flight School, Adminstrative Office 40, GST Road, St. Thomas Mount,
Chennai-600 016,
• Operations at Civil Aerodrome, Pondicherry -605 008.
• Sahara India Aviation Academy 249/250, Block A, Road No.6, National Highway
No. 8, Mahipalpur (Near I.G International Airport) New Delhi-110037.
• The Bombay Flying Club, Juhu Aerodrome, Juhu, Mumbai-400 049.
• Udan Flying School, Indore-452 005, Madhya Pradesh.
• West Bengal Flying Training Institute, Behala, Calcutta-700 060.
Popular Pilot Training Institutes in India
One of the most reputed commercial pilot training institutes in India is the Indira Gandhi
Rashtriya Academy at Rae Bareli in Uttar Pradesh. Some other Commercial Pilot Training
Institutes in the country are Academy of Carver Aviation Pvt. Ltd, Andhra Pradesh Flying
Club, Assam Flying Club, Bangalore Aeronautics Technical Services, Mysore Aerodrome in
Karnataka, Flying Club in Indore, Flytech Aviation Academy and West Bengal Flying
Training Institute.
Benefits of these Pilot Training Courses
Pilots trained in the commercial pilot training institutes in India can fly both passenger planes
and cargo planes.
A commercial pilot should be well aware of his responsibilities which include mastery and
control over the equipments and machines he handles, the ability to chart out flight timings
and schedules and above all the dexterity and mental strength to land an aircraft to safety.
With the opening up of the private sector for airline operations, the opportunities for
commercial pilots have amplified by leaps and bounds leading to increase in the popularity of
commercial pilot training courses in India.

Eligibility Required for Pilot Training Courses
A candidate desirous of enrolling in pilot training institutes in India should pass his/her
Higher Secondary Examination with at least 50% marks in Physics and Mathematics and
should be over 17 years of age.
The entrance test for a Private Pilot License course is taken on subjects like English, General
Knowledge, Mathematics, Physics and Chemistry.Applications for this test have to be sent to
the Director General of Civil Aviation, Safdarjang Airport, New Delhi 110003 in the month
of April.
Scope for Commercial Pilots in Abroad
With globalization, economic liberalization and a boom in the aviation industry, jobs as
commercial pilots are available in airline companies outside India also. However, a
commercial pilot needs to have a certificate for flying in the country he chooses. With the
highest number of airlines, the US is the most desired destination for most commercial pilots.
Even UK, Australia and some European countries can also be happy hunting grounds for
ambitious commercial pilots.
Commercial Pilot Institutes
• Commercial Pilot Institutes in Andhra Pradesh

• Commercial Pilot Institutes in Assam
• Commercial Pilot Institutes in Delhi
• Commercial Pilot Institutes in Maharashtra
• Commercial Pilot Institutes in Tamil Nadu
• Commercial Pilot Institutes in Uttar Pradesh
Pilot training scenario in India
 The Indian market for air travel has witnessed rapid growth, and has seen new
entrants grow rapidly in the last 5 years. Pilot training in India has seen various levels and

scenarios. In the organised space, it started with the establishment of Indira Gandhi
Rashtriya Uran Akademi, at Rae Bareli in UP.
 It was launched when there were only national airlines and hence demand was
limited and accordingly capacity was established. The Indian market then witnessed a boom
in the aviation industry and formation of many institutes and flying clubs, with limited
facilities and old aircraft.
 Also, limited knowledge of selecting a pilot training institute coupled with heavy
advertising of overseas flying clubs, a lot of students started going overseas. It was only mid
way during the course that the students realised, what they were receiving was only flying
and not a license course preparation or a license valid for flying in India.
 This led to a lot of discontentment amongst the students and the situation only got
worse with excessive admissions in Indian flying clubs and students taking over 2 years for
completing their flying. This has created a huge demand for qualified aviation professionals.
Despite the current slowdown, India needs approximately 600 pilots every year.
 Internationally, the airline industry like Etihad, Qatar, Emirates continue to grow and
projections show that there is a requirement of 19,000 pilots over the next 4 years, as against
the availability of 16,000 pilots, thus creating a huge gap. While the pilots retirement age
has been increased from 60 years to 65 years by several civil aviation regulators, this is only
to "fill the gap" and not the best practice.
The following factors also need to be considered:
* Global demand supply mismatch of pilots, yawing gap of 3,000 pilots year on year.
* 30% of the current pilots deployed by commercial airlines in India being expats and would
eventually be replaced by Indian pilots
* Robust growth on the horizon in International and domestic cargo segment.
* Absence of quality and corporate pilot training school in India.
Only weeks ago due to the unprecedented rise in fuel costs, analysts were predicting doom
for the airline industry. Today, crude oil is over 60% less than it was just over three months
ago and the price of jet fuel is about what it was in early 2007. In anticipation of lower
demand, every major airline reduced capacity starting with the current Q4 2008.
W.r.t training in 2009, students have become more conscious of quality standards and now
they have witnessed that placements won't be a cake walk and that's true whether the
industry is booming or facing recession as pilot training is a highly regulated training
module.
The emphasis on quality would lead to bigger tie-ups and collaboration as now every
academy would like to prepare global pilots (de-risk domestic recession). 2008 witnessed
the establishment of CAA, India's largest & most modern integrated academy training global
pilots. Gondia academy in tie-up with CAE is another example of focus on global standards.
5.2.3 TECHNOLOGY DEVELOPMENT
Computer Reservation System, In-flight System ,Flight Scheduling System, Yield

Management System , Product Development Market Research, Baggage Tracking System.

E-Ticketing:
 An electronic ticket or e-ticket is used to represent the purchase of a seat on a

passenger airline, usually through a website or by telephone.
 This form of airline ticket has rapidly replaced the old multi-layered paper tickets
(from close to zero to 100% in about 10 years) and became mandatory for IATA
members as of June 1, 2008.
 During the last few years, where paper tickets were still available, airlines frequently
charged extra for issuing them.
 Once a reservation is made, an e-ticket exists only as a digital record in the airline
computers. Customers usually print out a copy of their receipt which contains the
record locator or reservation number and the e-ticket number.
Checking in with an e-ticket:
 To check in with an e-ticket, the passenger usually comes to the check-in counter and
presents the e-ticket itinerary receipt which contains a confirmation or reservation
code.
 In some airports and airlines it's not even necessary to present this document or quote
the confirmation code or e-ticket number as the reservation is confirmed solely on the
basis of the passenger's identity, which may be proven by a passport or the matching
credit card.
 After confirming the reservation, the passenger checks-in his/her luggage and is given
a boarding pass which usually says "Electronic Ticket" or "E-ticket."
Self-service and remote check-in:
 The option to check-in online is available on some airlines. A passenger enters their
confirmation number at the airline's website, and the passenger prints the boarding
pass on their home printer.
 Online check-in is typically permitted up to twenty-four hours before the flight's
scheduled departure time, though this may vary by airline.

 On airlines without assigned seating such as Southwest, it typically guarantees a

passenger early boarding and a better seat. Besides identification, the boarding pass
that has been printed is all that needs to be presented upon arriving at the airport.
 On airlines without online check-in, the check in may take place at a self-service
kiosk in the airport, or at the check-in counter.
 A boarding pass is required to board an aircraft; in some countries, such as the United
States, it is also needed to pass through airport security checkpoints.
E-tickets are very popular because they allow extra services like:
• online/telephone/self-service kiosk check-in

• early check-in
• printing boarding passes at airport kiosks and at locations other than an airport
• automated refunds and exchanges online, by telephone and at kiosks
 Several web sites exist to help people holding e-tickets accomplish online check-ins in
advance of the twenty-four-hour airline restriction.
 These sites store a passenger's flight information and then when the airline opens up
for online check-in the data is transferred to the airline and the boarding pass is
emailed back to the customer.
Information Display
• Flight, Delay, Check-in or Boarding Information

• General Information to Passengers
• Seasonal Flight Schedules / Timetables
• Automatic Scheduling of Daily Flight from pre-defined seasonal schedule
• Manual Flight Scheduling
• Display can also be used to provide Travel / Tourist Information or for Advertising, to
enhance market opportunities
Features
• Split Flap Display Integration

• Video Display Facility for Advertisements
• Integration with Gate Display
• TV Display option
• Integration with ADAS (Automatic Digital Announcement System)
• Multi-lingual Language Support
• Latest News Display option
• Weather Display of the Destination Country
• World Time
• Website Integration for Online Information Update
5.2.4 PROCUREMENT
1) Information Technology Communications

Now a days there is a vast change in communication technology for customers. Now a days
due to uncertainity there is a need of fast communication technology. So at the time of
booking they take mobile numbers and e mail address of the passengers and if there is any
change in timings and flight schedule they communicate to passengers by calling or by
sending SMS to customers on mobile phones. So this ways they communicate to them. In
past there is no availability of mobile phones so sometimes the customer miss the flights and
company have to provide seats at another flight and this way the incur loss of one seat but
now due to technological change they can communicate easily and now they cannot incur
losses.
The recent innovations in Information Technology and Telecommunications and its
convergence will adorn human services. The services will be cheaper, faster and mobile with
time. The author in his own views addresses certain issues on the technology trends in Indian
Civil Aviation Scenario. The paper focuses on the influence of Information Technology in
empowering for a paperless Office administration and IT-enabled Terminal operations for
efficient and cost effective services for the best customer satisfaction. It also addresses on the
communication advanced technologies in Air traffic management and security services,
which create new opportunities to increase the productivity of the organization.
2) INFORMATION TECHNOLOGY ASSURES ADMINISTRATION EFFICIENT
 IT-enabled services through office Automation systems assure efficiency in

Administration. Certain areas of administrative functions for automation are:
 Establishing IT infrastructure with intranet / internet system connecting all

administrative offices.
 Empowering staff with use of computers, file transactions, Instant Messaging, peer
discussion and administrative transactions through intranet system with the main
objective of paperless office.
 Fast and instant message transfers from regions and airports to corporate office
through e-mail, Internet services and Video Conferencing System. Automation in
Personnel and Finance functioning with IT softwares, which will increase the
productivity of staff.
 Automation and inventory management system in procurement of equipment services

and spares.
 Empowering functional units with automated Airport Information Management

System that will increase productivity and improve quality of service to users and
equip decision-making processes faster, accurate and efficient through statistical
analysis of functional data bank.
 Creating and managing website with technical data of airports with administrative
information of the organization. The dissemination of information to employee,
decision-makers and users ensure customer satisfaction, employee satisfaction and
provides a quick data bank for reference by Management.
 Computerized Public Grievance Redressal and Monitoring system. This system

provides users facilitation to register grievances from customers, employees and

vendors to address their problems. This helps to identify the weak areas for addressing
the grievances effectively and improves the customer satisfaction.
 All employees including executives are trained in IT related programmes with an

objective of empowering all employees' technology savvy.
 Planning, Administration and Operations will be equipped with IT tools to improve

the productivity in Planning, Estimation, Project Monitoring and budget control of the
projects for faster infrastructure creation. The above IT- enabled services contribute to
the following benefits :-
Reduce expenditure on tours of executives by way of travel, stay and allowances.
 The Instant Messaging, voice over IP services over intranet will reduce the telephone
expenses substantially.
 Project proposals received from distant offices are examined, discussed and decision
communicated from corporate office, by use of Video Conferencing system, assuring
speedy decision-making process.
 Customer satisfaction and quality of services will increase due to efficient
administration
3) ADVANCED TECHNOLOGY ENABLES BETTER AIRPORT SERVICES
 IT-enabled services bring out cost reduction in providing better services to Passenger
Handling and Terminal Facilitation Services. Information Technology and
Telecommunication Services can provide the following improved services Providing
Technical data of Airports, flight plan and real time flight information in the Web site.
 Customer Relation Management (CRM) applications with speech-enabled technology
with integrated voice and data for information and value added services such as Flight
Information, news, weather reports, stock quotes, traffic reports and sports results
which will create a new source of revenue.
 Long distance telephone services using VoIP through intranet instead of PSTN
(Public Switched Transmission Network).
 Customer's call centers directly to the website and interactive sessions with callers
through voice processing applications.
 Providing self-service kiosks at the airports with facilities for voice- recognition,
smart cards and e-commerce to help customers make reservations, obtain e-tickets,
check baggage or simply find information. The kiosks shall have facility to access
through wireless communication services for journey travel plan, organize his
schedule of travel, selection of seat in the aircraft, terminal reporting time all over his
personal area network devices fitted with blue tooth devices. This facility shall help to
manage congestion in the Terminal building.
 Providing hand writing recognition devices and optical character recognition systems
(OCR) available at a cost to busy business executive to communicate his last minute
directions to his office.
 IT could provide facilities to see what customers experience as they pass through the
terminal. The Integrated CCTV system can display passenger arrival, queue up at
ticket counters, security checkpoints and baggage carousets. These details are

captured, documented and database made, which will be useful for future planning,
flight departure programme etc.
 The IT model with the impact of new technology opens up statistical data for
optimum investment plan such as.
1. Visualize dynamic relationships between customer service personnel and

information technologies.
2. Determine the impact of new technologies on traffic flow and customer
services levels.
3. Examine "what if" scenarios to streamline new processes before
implementing.
4. Improve customer satisfaction and cost effectively process more customers
through existing facilities without creating additional infrastructure.
5. Improve asset utilization and employee productivity.
6. Enhance Infrastructure planning for future increases in passenger volume.
•
•
• Unified Authority for all functions including airline activities inside the terminal
building through networking and virtual private network for the following functions
through single window with opportunities for faster and efficient passenger handling:
1. Issue ticket for any airline
2. Issue Boarding Pass
3. Accept Baggage Handling
4. Clear Security
5. Clear Immigration
6. Clear Customs
7. Gate Check-in
8. Boarding control up to aircraft
•
 Baggage is one of the major causes of irritation to travellers. Radio Frequency

Identification Device (RFID) technology is available to improve baggage handling.
IT-enabled Baggage Monitoring Services ensure the following:
1. Tracks every bag as it moves through the airport by scanning each bag as it
passes various points in the baggage system and recording the location and
time.
2. Monitors the overall baggage system, providing both graphical and text-based
views of the baggage volume currently in the system, plus a forecast of the
expected volume of baggage in the immediate future.
3. Displays the track history of each bag, including the time taken to travel
between each location it visits.
4. Exports this baggage data to a data warehouse for off-line analysis.
The above information allows operational staff to anticipate capacity problems and
take preventive measures and enables aircraft dispatchers to make informed decisions
on departures based on real status of transfer baggage.
Biometric passenger profiles system facilitates quick check in, faster security check and
passenger traffic analysis of frequent flyers and their personalized airport services. This will

improve quality of service and customer satisfaction. More than that, the congestion of
passengers in terminal lounges is managed well by dynamic creation of space within the
existing infrastructure. This allows handling more passengers without additional investment
on infrastructure building.
4) COMMUNICATION TECHNOLOGY EMPOWERS AIR TRAFFIC

MANAGEMENT
 The technology advances in communication services add to the following improved

facilities to empower Air Traffic controllers and Pilots for better and accurate
decision-making in Air Traffic Management. Text to speech technology is used for
conversation from ATC tower to pilots.
 Speech Recognition applications are used in Airline Flight Information Services.
 Voice portals in websites will be useful to pilots to access technical details on
Airports, Weather conditions of en-route etc. through information-rich web site.
 Display of Digital Map of Accident Prone Zone of Airports and its terrain conditions
through web site to facilitate Accident Rescue Operations and disaster management.0
Statistical details of ATM operations in an Airport and access to instructions on
procedures on landing & take off. Added and accurate information on data and
operation services through ADS, SPS, GNSS and SATCOM services.
 Use of Satellite Navigation (SATNAV) system with GPS and GLONASS for
precision approach and landing.
 Global Navigation Satellite System (GNSS) with SBAS and GBAS to augment GPS
signals.
 The coverage of SBAS would extend much beyond designated Indian airspace, which
will overcome the current limitations of the existing ATC system.
 Implementation of CNS / ATM Transition Plan in consonance with the ICAO
Transition Plan.
 The SATCOM network connecting major airports will serve as a backbone for
transition to the new communication system.
 Progressive implementation of ATN replacing existing AFTN services.
 Changeover from HF voice transmission to HF data transmission.
 Implementation of ADS and CPDLC systems to replace voice communication
between air traffic controller and pilot by data communication.
 Introducing AIDC system using SITA Communications Services.
 Networking of Radars to get an integrated picture of the total airspace and
restructuring of Indian air space for safe and economic air route.
•
• 5) TECHNOLOGY ENSURES CONFIDENCE IN SECURITY SERVICES
The post-September 11 scenario calls for stringent security measures, which create irritation
and delay in passenger handling. In view of the impending security threat perception, certain
hard security measures are necessary. However, technology driven devices and procedures
simplify the security checks but with sure of security of the passengers and aircraft
movements. The following technology enabled systems add value to security services:
• Installation of CCTV cameras and microwave sensors along the perimeter wall.
• IT-enabled perimeter security surveillance system.

• Biometric process for check-in, security-check etc

• Color X-ray baggage machine for screening baggage.
• Radio frequency identification device (RFID) for baggage movement monitoring
• Bluetooth technology for boarding card and passenger tracking.
• Encrypted communication links between aircraft, satellites and ground-based users to
provide real time information on aircraft, weather, air traffic flow and air traffic
conditions.
• Provide 3D model of an aircraft integrated with information of various security
systems and models of passenger flow.
• Provide and analyze weather, chemical, biological on nuclear events throughout the
transportation system.
• Synthesized variety of information on airplane position, altitude, speed and intended

flight path into a unified graphical representation, which will be used by ATC to
predict future plans to avoid congestion.
6) IT- ENABLED SERVICES INCREASE THE PRODUCTIVITY
IT-enabled services can increase the productivity of the Organization. The areas of target to
increase revenue through technology driven services are:
1) Aviation experience is unique, and is highly experience specific. The problem faced
and solution techniques followed to a particular situation is knowledge. The unique
experiences are received, documented, analyzed and made available for future
generations. The Knowledge Management modules (KM) on such experiences could
be well used as a new source of revenue earning.
2) Marketing through website for preferred routes with short air travel distance,
comfortable flight levels etc. may attract more over flying flights through India.
3) Providing SATCOM to local and International Communication backbone for airline
operations.
4) India could be a leader as Air Traffic Service Providers in Asia pacific region with the
knowledge potential available with the experience-rich executives through
consultancy.
5) Revision of IATA tariff structure periodically to link up with distance weight formula,
facility based services, safety based technology upgrades used for Air Traffic
Management.
6) Improving the efficiency of decision-making processes through IT empowered
infrastructure. Paperless and travel less administrations through Intranet, Internet
mailing and video conferencing.

7) Integrating all terminal operation of services including that of Airline operators and
Govt. Regulatory units inside the terminal building through single window services to
the passenger from Unified Authority by using Common Use Terminals and single
database with virtual private network.
8) Diversification to IT-enabled personalized services to frequent flyers and notified
passengers for e-CRM as a new source of revenue.
9) Empowering the high quality HR potential of technology executives and competent
administrative executives for better work culture and high productivity with training
on multi skill development and restructuring on a sound re-engineering process.
10) Procedural simplification on project infrastructure planning, execution, and IT based
project management to reduce cost and time over run. Faster expenditure on
infrastructure building with quality construction and reduced project cycle. This is a
major area where investment process and early return on investment process will
increase the revenue earning.
11) Expenditure audit and energy audits to control expenditure on services and tax-
adjusted investments, such as R&D and air safety related projects, by using statistical
database.
12) Land utility plan for exploiting potential revenue earning through extending the scope
of business processes to specialty hospitals, budget hotels, entertainment spots,
commercial service centers, call centers etc.
Better Resource utilization and redeployment strategies to provide consultancy on areas of

strength through MOUs with aviation expertise starved countries like Afghanistan, Gulf
countries, East Asian Countries etc.
CHAPTER:-6
PEST ANALYSIS OF THE INDUSTRY
A PEST analysis is an analysis of the external macro-environment that affects all firms.
P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the
external macro-environment. Such external factors usually are beyond the firm's control and
sometimes present themselves as threats. For this reason, some say that "pest" is an
appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation
sector:
6.1 POLITICAL FACTOR
POLITICAL FAVOURABLE NEUTRL UNFAVOURABLE

BUDGET 2008- 
09
Tax rates on ATF: 

FDI Policy in Indian 

Aviation
Monopoly of PSU 
Oil companies
Throughput 
charges & bidding
processes
Fuel Hedging 
1. Budget 2009-10:
 Focusing on rapid development of civil aviation infrastructure in the country, the

government increased the budget allocation to the civil aviation ministry to almost Rs
12,165 crore.
 The budget proposal to abolish the Fringe Benefit Tax (FBT) will help airlines save
substantial expenses as they were paying this tax for expenses on hotel
accommodation of their cabin and cockpit crew.
 Compared with the 2009-10 allocation of Rs 12,165 crore, the budget allocation to the
Ministry for 2008-09 was Rs 10,031 crore and revised allocation Rs 7,490.06 crore.
The total budgetary support this year stands at Rs 190 crore.
 Of this, the Airports Authority of India (AAI) has been allocated Rs 99.15 crore to
modernise major metro airports at Kolkata and Chennai and another 35 non-metro
airports.

 While Rs 20 crore of the AAI's budgetary allocation has been earmarked for
development of airports in the Northeast, the remaining Rs 79.15 crore will be spent
for the same purpose in crucial places like Jammu, Srinagar as also Agatti
(Lakshadweep) and Puducherry.
 The Directorate General of Civil Aviation has been given a budgetary support of Rs
50 crore, while the Bureau of Civil Aviation Security was allocated Rs 14 crore to
pursue their plan schemes.
 The Pawan Hans Helicopters Limited, which is constructing a heliport in Delhi for the
upcoming Commonwealth Games next year and will provide disaster management
and mitigation measures, has been allocated Rs 10 crore.
 The Rae Bareli-based Indira Gandhi Rashtriya Uraan Akademi and Aeroclub of India
have been provided grants-in-aid of Rs eight crore and Rs five crore respectively.
Effects:
As more budget allocated to Indian aviation industry compare to earlier years which
will help the Industry for building better infrastructure and will help airlines save
substantial expenses as they were paying this tax for expenses on hotel accommodation
of their cabin and cockpit crew. So the budget of 2009-10 is favorable for the Industry.
2. Tax rates on ATF:

 High ATF prices are mainly high because of high sales taxes levied by the states. To
bring down the sales tax to an uniform low rate, the Centre will have to create
unanimity among the state governments, which is a long and arduous task.
 ATF is the single largest element contributing to the cost of operation of airlines. In
India, ATF bill accounts for 40%-45% of the operating cost compared to 25%-30%
globally.
 Aviation fuel was Rs 38,000 per kilolitre in India as against Rs 24,000 in Singapore,
Rs 25,000 in New York, Rs 24,500 in Hong Kong, Rs 25,000 in Bangkok, Rs 26,000
in Tokyo, Rs 26,500 in Paris and Rs 26,000 in Dubai.
Reduction of even Rs 1000 per kiloliter would lead to a savings of Rs 300 crore for
the sector, during the period when diesel and petrol prices increased by 15% and 18%,
ATF \prices rose by 99.6%.
 In a blow to the beleaguered aviation industry, states have decided not to review the
current sales tax rates on jet fuel. States also do not want the Centre to bring ATF in
the declared goods category, a move that will be binding on them to levy a uniform
4% sales tax on the commodity.
 Sales tax on ATF varies widely among states. The aviation industry is demanding a
cut in the sales tax rates on jet fuel which constitute 40% of their operation costs as
against 20%-25% globally. In fact, the Centre recently formed an empowered group
of ministers to study the impact of jet fuel prices on the aviation industry.
 Until now, only three states have reduced sales tax on ATF to 4%-Andhra Pradesh,
Rajasthan and Maharashtra (barring Mumbai and Pune)-while the sales tax on ATF is
zero in Andaman and Nicobar.
 In India there is no direct import of ATF and the ATF supplied by the Indian oil
companies is from imported crude refined by them.
 The import duty for ATF is 20%. Oil companies thereby follow an import parity
principle and levy a 20% add-on to the refinery transfer price.
 Apart from the import parity principle, oil companies also include a 16% to 49% add
on towards marketing margin and contingencies on the refinery transfer price (the add
on varies between various cities).
 On this central government levies an excise duty of 8%.

Sales Tax Rate on ATF of different states:
Northern States Eastern States Western States Southern States
Rajasthan Bihar Gujarat Andhra Pradesh

28% 29% 30% 33%
West Bengal Maharashtra Tamil Nadu

Himachal 25%
25% 25% 29%
UP Chhatisgarh Madhya Pradesh Karnataka

21% 25% 28% 28%
Delhi Assam Goa Kerela

20% 22% 20% 28%
Punjab Nagaland Andaman

20% 15% 0%
Mizoram
0%
Source Data: Industry Data PL Research
Effects: ATF is the main element contributing to the cost of operation of airlines. In
India, ATF bill accounts for 40%-45% of the operating cost compared to 25%-30%
globally. The main element of high price of ATF in India is sales tax varies state by state
and as India imports ATF so airlines have to pay import duty also i.e. 20% which
increase the price of ATF and after that also airlines have to pay 8% excise duty. So in
simple language all these tax rates increase the price of ATF which is not favorable for
the Industry.
3. FDI Policy in Indian Aviation:
 Paving the way for foreign investment in domestic airline companies, the Reserve
Bank of India (RBI) has said that foreign institutional investors (FIIs) can pick up
stake in these airlines beyond the sectoral FDI cap of 49 per cent through secondary
market purchases.
1. Airports
 For greenfield airports, foreign equity up to 100 per cent is permitted through
automatic approvals.

 For existing airports, foreign equity up to 74 per cent is permitted through

automatic approvals and upto 100 per cent through special permission (from
FIPB).
2. Air Transport Services

 Foreign equity up to 49 per cent and NRI investment up to 100 per cent is
permissible in the domestic air transport services through the automatic route;
 Equity from foreign airlines is not allowed, directly or indirectly, in the
domestic air transport services.
Effects: As FDI cap increased from 40% to 49%, foreign investors will get more attract
towards the Industry and it is very much favorable for the Industry.
Airport Charges:
(i) Route Navigation Facility Charges (RNFC)
RNFC for Landing Flights:
RNFC = Rs.( Rx D x W )
R = Rs.4620/=
D = √(GCD/100) with GCD cap as 1200 NM
W = √(AUW/50000) with AUW cap as 2,00,000 Kilograms
Abbreviations used:
R=Service Unit Rate
D=Distance Factor
W=Weight Factor
GCD= Great Circle Distance in NM
AUW = All Up Weight of aircraft in Kilograms
Rates for Small Aircrafts Registered in India
Route Navigation Facility Charges(RNFC) in respect of aircrafts with maximum All-Up-
Weight:
(i) Upto 10,000 Kgs Shall be levied @ 20% of the applicable rates of weight –cum–

distance formula.
(ii) more than 10,000 Kgs to 20,000 kgs shall be levied @ 40% of the applicable rates of
weight-cum- distance formula.
Note:- Incase of Overflying --- RNFC worked out above is increased by fixed cost of
Rs.4400/-
(ii) Landing Charges:
Domestic Flights
Weight of Aircraft (Amount in Rs.)
Upto 10,000 kgs Rs. 67.10 per 1,000 Kgs
10,001 kgsto 20,000 kgs Rs. 671/- Plus Rs. 117.70 per 1,000 per kgs
in excess of 10,000 kgs
Over 20,000 kgs Rs. 1,848/- Plus Rs. 231/- per 1,000 kgs in
excess of 20,000 kgs
1) Landing Charges for Small Domestic Aircrafts up to maximum All Up Weight of21000
Kgs shall be levied @ Rs.64.90 per thousand Kgs. There is no minimum charge for this
category .
2) Landing charges should be reduced by 15% of the current rates for Domestic Scheduled
Flights subject to the condition that airport charges are paid within the credit period of 15
days. Wherever payments are made beyond the credit period, existing rates will be
applicable.
3) No landing charges shall be payable in respect of :- (a) aircraft with a maximum certified
capacity of less than 80 seats, being operated by domestic scheduled operators ; and (b)
Helicopters of all types.
4) Landing & Parking charges at all airports in the North Eastern Region, Jammu & Kashmir,
A&N Island and Lakshadweep (other than Defence Airports) to be reduced by 25% of the
current rates.
5) Charges shall be calculated on the basis of nearest MT ( i.e 1000 kgs.)
(iii) Housing Charges: (International / Domestic flights)
Upto 40,000 kgs Rs. 3.50 per hour per 1,000 kgs
40,001 kgs to 1,00,000 kgs Rs. 140/- Plus Rs.6.80 per hour per1,000 kgs

in
Over 1,00,000 kgs Rs. 548/- Plus Rs.10.30 per hour per1,000
kgs
in excess of 1,00,000 kgs
(iv) Parking Charges: (International / Domestic flights)
Upto 40,000 kgs Rs.1.80 per hour per 1000 Kgs
40,001 kgs to 1,00,000 kgs Rs.72/- +Rs.3.40 per 1000 Kg per hour in
excess of 40000 Kgs
Over 1,00,000 kgs Rs.276/- +Rs 5.20 per 1000 Kg per hour in
excess of 100000 Kgs
(v) Night parking charges:
Night parking charges between 2200 hours to 0600 hours are @50% of the existing parking
charges at all airports except Kolkata and Chennai Airport.
Night parking charges between 2200 hours to 0600 hours will be as under:
Upto 40,000 kgs Rs 0.90 Kg per hour per 1000 Kgs
40,001 kgs to 1,00,000 kgs Rs.36/- +Rs.1.70 per 1000 Kg per hour in
excess of 40000 Kgs
Over 1,00,000 kgs Rs.138/- +Rs.2.60 per 1000 Kg per hour in

excess of 100000 Kgs
NOTE:
(i) No parking charges shall be levied for the first two hours. For calculating free parking
period, irrespective of actual time taken, a standard time of 15 minutes, on account of time
taken between touch down and actual parking and another 15 minutes of Taxing from parking
shed to take-off point shall be added.
(ii) For calculating chargeable parking time, part of an hour should be rounded off to the
nearest hour. Charges for each period of parking are also rounded off to nearest rupee.

(iii) Landing / RNF charges for cargo operations are same as for passenger operations.
(iv) In all cases, total weight of the aircraft is calculated to the nearest thousand kgs and
charges to be rounded off to the nearest rupee.
(v) Terminal Navigational Landing Charges: (TNLC)
Domestic Flights
Upto 10,000 kgs Rs.9.90per 1,000 kgs
10,001 kgs to 20,000 kgs Rs. 99/- Plus Rs. 15.40/- per 1,000 per kgs in
Over 20,000 kgs Rs. 253/- Plus Rs. 30.80 per 1,000 kgs in
(vi) X-Ray Baggage Charges:
Aircraft up to Seating (Amount in Rs.)
Capacity
25 110/-
26 to 50 220/-
51 to 100 495/-
101 to 200 770/-
201 and above 880/-
(vii) Service Charges for extension of watch hours:
Service charges for extension of ATC watch hours beyond designated watch hours are
categorized as follows:
• Category A-ILS operating stations - Rs. 4500/- per hr.
• Category B-Non-ILS operating stations - Rs. 1200/- per hr.

In case of Small Domestic Aircrafts having MTOW 21000 Kgs and below EWH would be
levied @ 25% of the applicable charges.
1. The charges are payable by all operators/agencies operating outside the watch hours
,except Defence , NCC , BSF etc . .
2. The charges are payable at the Aerodromes where extension is availed at the time of
landing / taking off as the case may be. Where credit facilities have been already authorized
(for example scheduled operators, State Govt. aircraft etc.), payment will be accepted only in
demand draft along with the Routine bills.
3. When the two aircraft use the facility at the same time, extension of watch hours for each
Airline should be charged separately and no sharing of charges between the users is
permissible.
4. Fraction of hours may be rounded off to the next half an hour and charged accordingly.
5. If the aircraft has taken off just before the closing of watch hours, watch hours should be
extended at least for a period of 30 minutes after take off as is the normal practice, this will
not attract extra service charge. If the aircraft returns to land due to any technical reason,
extended period beyond the normal watch hour, if any, should not be charged. However, any
extension required after such landing should be charged as per rates applicable.
6. Any extension of ATC watch provided to accommodate an aircraft experiencing technical
problem and requesting emergency landing should not be charged. Any extension required
after such landing should be charged as per rates applicable.
7. No charges will be levied for extension of watch hours due to inescapable delays because
of runway block/VVIP Movements/weather conditions at the station.
4) Monopoly of PSU Oil companies:
 A major reason for high price even after deregulation of ATF price, is the monopoly
of the 3 state owned Oil companies.
 Because of limited number of suppliers there has hardly been any effective choice for
the airline industry, with the 3 state owned oil companies fixing the ATF price on a
mutually agreed common formula between them.
 The main reasons for the high ATF prices is also due to high base prices fixed by the
oil marketing companies to cross-subsidies the low prices of kerosene and LPG.
 The government has granted marketing rights to some companies in the oil sector like
Reliance, Essar, ONGC etc.
 None of these companies however, could start supply of ATF as they were not
allotted space by the Airport Authority.
 Recently Reliance has been allotted land at 25 airports in India; and is moving
towards setting up Aviation Fuelling stations at some of these airports.

Effects: As there are only three companies for supplying ATF to the Industry i.e. Indian
Oil, BP and HP, there has been hardly any choice for the airline Industry.
Generally companies keep high base price to cross-subsidies the low price of
Kerosene and LPG. So this factor is very much unfavorable to the Industry.
5) Throughput charges & bidding processes:

 A throughput fee is being levied by Airport Authority of India (AAI) on oil
companies. Whilst oil companies are expected to absorb this throughput fee, in
practice, it is simply passed through in entirety to the airlines. This throughput fee is
an unnecessary base cost which adds to the total price of ATF applicable to the
Airlines.
 Recent competitive bidding exercises for erecting fuel facilities at select airports use
throughput fee as a criterion for tender award. A supplier that bids the highest
throughput fee wins the tender and the winning throughput fee is then similarly
applied to all the existing fuel suppliers at the airport concerned.
 There is a serious flaw in using throughput fee as an award criterion. Since the bidders
(the oil companies) are not the ultimate payers of the throughput fee, they would have
no qualms in submitting incredulously high bids.
 In unit price terms, an award of license to bring in an additional fuel supplier would
result in a higher cost of around 30 USD/Metric tonne, essentially negating any
benefit derived from increased competition amongst the fuel suppliers.
 IATA has also highlighted that throughput fees should be cost-based in accordance
with ICAO Policy on User Charges (Document 9082/7). The high throughput fees at
Indian airports suggest an absence of correlation with cost which then makes them
inconsistent with ICAO policies.
 It would be a major setback for the Indian aviation industry if the high charges are not
rescinded and consequently be used as a benchmark for throughput fees at other
airports.
Effects: A throughput fee is being levied by Airport Authority of India (AAI) on oil
companies. This throughput fee is an unnecessary base cost which adds to the
total price of ATF applicable to the Airlines. The Industry will affect very badly
if high charges are not rescinded for throughput fees. So this factor is
unfavorable for the Industry.
6) Fuel Hedging:
 In its Annual Monetary & Credit policy 2007-08, the RBI has now allowed authorised
banks to permit airlines to hedge their exposures in the international commodity
exchanges, based on airlines' domestic purchases of ATF.
 For their domestic operation, the Airlines earlier had to procure ATF only through
domestic refineries at International Prices. Since the carriers were not physically
importing the commodity, the airline companies were not permitted to hedge the

commodity risk. The Monetary Policy has now allowed actual users of ATF viz. the
Airlines, to hedge economic exposure.
 The announcement on the expansion of hedging facilities by the Central Bank, is a

positive step which will allow the airlines to employ hedging as a tool to smoothen
their exposure to the volatile fuel price movements.
 Hedging will allow airlines to reduce their fuel price risk to some extent – with a
possible downside of incurring losses in case the price movement is infact against the
hedged positions.
 Allowing fuel hedging for the airlines is thus only a small step to bringing about
moderation in the excessively priced ATF in India.
Effects: Earlier the Airlines had to procure ATF only through domestic refineries at
International price but as now the Monetary Policy has allowed actual users of ATF to
hedge economic exposure which will help airlines to reduce their fuel price risk. So fuel
hedging is favorable to the Industry.
6.2 ECONOMICAL FACTORS:

ECONOMICAL FAVOURABLE NEUTRL UNFAVOURABLE
Recession 
Major investment 
Inflation 
1. Recession:
 Global economic slowdown reflects the impression of hard time in airline sectors of
India too. The most popular airlines (Jet Airways, Kingfisher Airlines) which
providing their operations in India are facing a tough time in festive seasons. The
situation had become so worse that the management of various airlines services was
forced to begin sacking of their employees as the aviation industry facing big loss.
 The whole world witnessed the dramatic scene of firing of 1900 employees of Jet
Airways those were taken back under the political pressure. Kingfisher Airlines which
is principal rival of Jet Airways also declared some deduction in their number of
employees.

 What is the reason behind this whole scene? Has the number of customers for various
airline flights decreased? Have the airfares of various airline flights go down? Which
are the factors which reduces the net profit of various airline flights services? These
are the common queries which strike in brain of normal human beings.
 Global economic slowdown may be one of the answers of all these questions which
contribute its role to create this scene in India. The various airlines blame the high
cost of air fuel in this year in India as compared to the rest of the market. As the
aviation sector was growing last year in India. The various airline flights to India were
competing in providing more facilities and deduction in air fares to attract the
maximum number of air travelers.
 The financial standing of the industry suffered due to the 7.6 % fall in global
passenger traffic and worldwide USD 10.4 billion cumulative losses.
Effects: As recent global recession affects every Industry, the Indian Aviation Industry
also could not be able to prevent itself from the Global crisis. Many employees lost their
jobs during this period. During the recession period the fuel of cost was also very high
and upon that the traffic of Domestic passengers Airline were also going down which
affects all the Airline’s financial report.
2. Inflation:
 Inflation in any economy affects adversely to the various sector. Inflation money
means too much money chasing some few goods. In inflation, money supply in the
economy is increased day by day. So for getting the particular things, everybody run
after that. So it will automatically lead to increase in to the price. So, to recover the
excess money from the economy, government takes various steps like change in to the
monetary policy, imposes various taxes, increase in tax rate etc.
 In our case, aviation sector is also affected. India imports more than 70% of its oil. So
whenever the inflation increases the prices of oil also increases. Through this aviation
sector has to survive.
 To recover the money from the economy, sometimes government hikes the excise
duty. So on the production of the aircraft, the excise duty has been levied. So, it
automatically increases the prices of the aircraft and at end the aviation sector has to
survive.
 Many times the government also hikes the local taxes for recover the money from the
economy. So as when the inflation increases than the respected sector has to suffer a
lot.

Source: mongabay.com
Effects: As inflation fluctuates very rapidly specially during the Recession period which
affects the crude oil price and because of that ATF prices was also at peak and as India
imports more than 70% of its oil so whenever inflation increases the price of oil also
increases. So the instability of inflation rate is very much unfavorable to the Industry.
3. Major Investments
The Indian civil aviation market holds great promise for potential investors. Over the past
year, various companies have shown an interest in the Indian aviation industry.
 Investment in airport infrastructure was over US$ 5 billion in 2008 and will go up
US$ 9 billion by 2013, of which close to US$ 6.8 billion is expected to come through
public private partnerships (PPP) model, according to a study by research firm Frost
& Sullivan.
 Tata Advanced System Limited (TAS), a unit of the Tata group, will set up a US$
113.63 million helicopter manufacturing unit at the Aerospace Special Economic
Zone (SEZ) in Adhibatla village near the Hyderabad international airport.
 Global Vectra Helicopters, a dedicated offshore transportation services company
servicing the oil & gas exploration and production sector in India, plans to invest US$
130 million during the next two years to increase its fleet strength as well as
consolidate its operations.
 GMR Infrastructure is looking to tap the growing corporate jet market in India with
investment plans to the tune of US$ 151 million. It is also in talks with aircraft
component manufacturers such as Honeywell and Safran to set up a components
assembly plant in the country. The company plans to invest US$ 60 million for the
proposed JV.
 US aircraft maker, Boeing Co, will deliver 100 planes worth US$ 17 billion over the
next four to five years to India.
 Changi Airports International is ready to enter into joint ventures with more Indian
companies in developing airports. The company, which has picked up a 26 per cent

stake for US$ 20 million in Bengal Aerotropolis Pvt Ltd (BAPL) is looking at other
opportunities.
 Richard Branson, who controls UK carrier Virgin Atlantic Airways Ltd, has sought
permission to start a domestic airline in India.
 ETA Star, one of Dubai's household names, will invest over US$ 1 billion to cash in
on booming sectors such as ports and aviation.
 The US pioneer in fractional aircraft ownership, NetJets is planning to expand in India
after foraying into the Middle East market and establishing itself in Europe with 140
aircrafts.
 Major private equity firm, TPG Capital, figures among the potential investors lining
up to invest over US$ 400 million for a substantial stake in Vijay Mallya-led
Kingfisher Airlines, according to multiple sources. Kingfisher, with over 20 per cent
share of the domestic aviation market, with a fleet of 86 Airbus and ATR aircraft, is
into the 40th month of operations and started flying international, with the maiden
Bangalore-London flight on September 5, 2008.
Effects: As GDP is growing at good pace and because of the attractiveness of the
Industry more investors get attract towards the Industry which is very much favorable
to the Industry.
6.3 SOCIAL FACTORS:

SOCIAL FAVOURABLE NEUTRL UNFAVOURABLE
Consumer psychology 
Population and 
demographics
Change in Lifestyle 
Security 
Employment 

1. Consumer psychology:
 There is an extensive change in the Indian skies. The Indian civil aviation industry has
to change as the preference of the customers are changing i.e. they are now more
concentration on value of money rather than their previous thinking of saving money.
 In this technological era the consumer are now aware about the value of money and
importance of words like time, safety, status, comforts etc. all these things are now
been seen in the minds of Indian customers.
 Thus, we can say that the psychology of the Indian customer is going towards the
high-end services taking the Indian civil aviations sector to the new heights.
Passengers Carried By Scheduled Domestic Airlines:
Source:dgca.nic.in
Passengers carried by domestic airlines from Jan-Oct, 2009 were 360.09 lakhs as against
348.51 lakhs in the corresponding period of 2008 thereby registering a growth of + 3.32%.

Effects: As day-by-day consumer’s psychology is becoming more specifically, they are

focusing on value of money more than the price. Consumers demand status, comfort,
safety and time more in today’s time. So the factor is much favorable to the Industry.
2. Population and demographics:
 As we know that India ranks just second after china in the world population, India has
a larger untapped middle class with increasing deposable incomes, which is the
opportunity for the aviation sector.
 Well as already mentioned above India has a large middle class population that is
been highly untapped. The various modes of transportation in India and one of them
are Airways.
 The Indian customer still belief that traveling by air in not their cup of tea. Thus there
is a lot of opportunity that can be explored by the industry.
India-population graph:
Source: indexmundi.com
Year Population
2000 1014003817
2001 1029991145
2002 1045845226
2003 1049700118
2004 1065070607

2005 1080264388
2006 1095351995
2007 1129866154
2008 1147995904
2009 1166079217
Effects:
India ranks just second after china in the world population; India has a larger
untapped middle class with increasing deposable incomes, which is the opportunity for
the aviation sector. Growing population will help to increase the traffic of Domestic
Passenger Airlines which is very much favorable to the Industry.
3. Change in Lifestyle:
 Average income of middle class household is expected to rise to 194000 Rs by 2010

from 169000 Rs in 2001-02.No of households projected to be 43.6million in 2010. So
there is going to be change in lifestyle and spending of people.
 Due to this change people will prefer Low cost airlines instead of Railways first air-
conditioned thus rise in air traffic.

Effects:
In India there is a large segment of middle class people and day-by-day average income
of middle class household is rising rapidly which changes the standard of living of the
people. Now-a-days there is not much difference between the fare of A/C Railway and
the fare of LCCs. So people prefer to travel through airways rather than other mode of
transport.
4. Security:
 The objective of airport security will be to safeguard the passengers, crew, ground
personnel, the general public and the airport infrastructure against unlawful acts as per
ICAO Standards and Recommended Practices laid down in Annexure-17 to the
Chicago Convention. The level of security will be calibrated by the BCAS according
to the threat perception at any point of time. Security will have to be cost-effective
when compared to internationally accepted norms. New staffing patterns, different
from the normal police stations, will have to be innovated for airports. There will be
greater accent on modern technology and mechanization, so as to reduce the need for
manpower and increase the effectiveness of the force deployed.
 Airport security will be looked after by specialized police agencies, state police and
airport security organizations, depending on the internal security conditions prevalent
in a particular area. BCAS will continue to coordinate the working of the various
agencies to ensure that all security norms are followed by them.
 Govt. recognizes the urgent need to develop an airport security organization, in order
to have a quietly efficient, specialized, commercially conscious, passenger-friendly
force, at the international airports to begin with. Private security agencies will also be
allowed at certain airports, if the threat assessment so permits.
 There will be constant training of security personnel posted at airports in order to
improve their effectiveness and passenger-friendliness. The present training centre at
BCAS Headquarters will be upgraded and strengthened for this purpose.
Effects:
Because of recent few terror attacks consumers become more conscious regarding
safety and by providing tight security the Industry can improve their effectiveness and
passenger-friendliness. So the factor is favorable to the Industry.
5. Employment:
 Best Aviation Employers in India is one of the fastest growing aviation industries in
the world. With the liberalization of the Indian aviation sector, aviation industry in
India has undergone a rapid transformation.
 Domestic traffic will increase by 25% per annum till 2010, creating a large number of
jobs.

 HR Practices in Aviation Industry, From being primarily a government-owned

industry, the Indian aviation industry is now dominated by privately owned full
service airlines and low cost carriers
 Best Aviation Employers in India sector is likely to generate nearly 2.5lakh jobs by
2010 as fleet expansion is on the rise.
 There is presently a shortage of trained pilots. The industry is expected to add 130
airliners to its current fleet of 270 airliners, which would, in turn, increase manpower
demand.
 As a consequence of commonwealth games, approximately 10million tourists will be
visiting India by 2010. There is a growing demand for training 1,500 pilots every year
due to the phenomenal growth in the civil aviation sector.
 The growth in the aviation sector and capacity expansion by carriers have posed
challenges to aviation industry on several fronts.
Effects: As Domestic traffic will increase by 25% per annum till 2010, creating a large
number of jobs. Students will pursue different courses to make their career in the
Industry and the Industry will get fresh and talented employees which is very much
favorable to the Industry.

6.4 TECHNOLOGICAL FACTORS:
TECHNOLOGICAL FAVOURABLE NEUTRL UNFAVOURABLE

Introduction of 
Airbus A380
ILS-Instrument 
Landing System
E-Ticketing 
1. Introduction of Airbus A380:
 The double deck Airbus A380 is the most ambitious civil aircraft program yet was
launched in December 2000.
 An all new design super jumbo, the Airbus A380 is the world’s first twin-deck, twin-
aisle airliner. It could be outfitted for special passenger uses such as sleeper cabins,
business centers or even child care service.
 In a one-class configuration, the A380 could accommodate as many as 840 passengers

advantages of the A380 include lower fuel burn per seat and lower operating costs per
seat.
 Airbus states the A380 will use 20% less fuel and will fly quieter, cheaper and more
environmentally friendly than the 747
Effects: With the Introduction of Airbus A380, the Airlines can save their fuel cost as
A380 use 20% less fuel, fly quieter and could accommodate as many as 840 passengers
which leads lower operating cost per seat to the Airlines.
2. ILS-Instrument Landing System:
 Instrument landing system (ILS) facilities are a highly accurate means of navigating
to the runway under low visibility conditions various runway environment lighting
systems serve as integral parts of the ILS system to aid the pilot in landing when using
the ILS, the pilot determines aircraft position by instruments.

 ILS is classified according to capabilities of the ground equipment.
 Category I ILS provides guidance information down to a decision height (DH of not
less than 200 ft).
 Improved equipment (airborne and ground) provide for Category II ILS approaches.
(DH of not less than 100feet).
Effects: Instrument Landing System helps pilot to take-off and landing the plane under
low visibility and give safety promise to passengers. So the factor is very much
favorable.
3. E-Ticketing:
 An electronic ticket or e-ticket is used to represent the purchase of a seat on a

passenger airline, usually through a website or by telephone.
 This form of airline ticket has rapidly replaced the old multi-layered paper tickets
(from close to zero to 100% in about 10 years) and became mandatory for IATA
members as of June 1, 2008.
 During the last few years, where paper tickets were still available, airlines frequently
charged extra for issuing them.
 Once a reservation is made, an e-ticket exists only as a digital record in the airline
computers. Customers usually print out a copy of their receipt which contains the
record locator or reservation number and the e-ticket number.
1. Checking in with an e-ticket:
 To check in with an e-ticket, the passenger usually comes to the check-in counter and
presents the e-ticket itinerary receipt which contains a confirmation or reservation
code.
 In some airports and airlines it's not even necessary to present this document or quote
the confirmation code or e-ticket number as the reservation is confirmed solely on the
basis of the passenger's identity, which may be proven by a passport or the matching
credit card.
 After confirming the reservation, the passenger checks-in his/her luggage and is given
a boarding pass which usually says "Electronic Ticket" or "E-ticket."
2. Self-service and remote check-in:
 The option to check-in online is available on some airlines. A passenger enters their
confirmation number at the airline's website, and the passenger prints the boarding
pass on their home printer.

 Online check-in is typically permitted up to twenty-four hours before the flight's

scheduled departure time, though this may vary by airline.
 On airlines without assigned seating such as Southwest, it typically guarantees a
passenger early boarding and a better seat. Besides identification, the boarding pass
that has been printed is all that needs to be presented upon arriving at the airport.
 On airlines without online check-in, the check in may take place at a self-service
kiosk in the airport, or at the check-in counter.
 A boarding pass is required to board an aircraft; in some countries, such as the United
States, it is also needed to pass through airport security checkpoints.
E-tickets are very popular because they allow extra services like:
• online/telephone/self-service kiosk check-in

• early check-in
• printing boarding passes at airport kiosks and at locations other than an airport
• automated refunds and exchanges online, by telephone and at kiosks
 Several web sites exist to help people holding e-tickets accomplish online check-ins in
advance of the twenty-four-hour airline restriction.
 These sites store a passenger's flight information and then when the airline opens up
for online check-in the data is transferred to the airline and the boarding pass is
emailed back to the customer.
Increasing Share of E-Ticketing:
FY08 FY09
Source: Industry Data PL Research
Effects:
As E-Ticketing is growing day-by-day, Passengers get more comfort and value for moey
because it reduces intermederies and no need to spend extra time to go at airport and
collect ticket. So it is very muc

CHAPTER:-7
Michel Porter’s Five Force Model
THREATS OF NEW
ENTRANTS
LOW
BARGAINING REVALRY AMONG BARGAINING

POWER OF EXISTING POWER OF BUYERS
SUPPLIERS COMPETITORS
LOW
HIGH HIGH
THREATS OF
SUBSTITUTE
PRODUCTS
LOW

7.1 THREAT OF NEW ENTRANTS: -(LOW)
HIGH TO MODERATE L
MODE
FACTORS HIGH O
MODERATE RATE TO LOW W
capital requirement 
Market Retaliation 
Inadequate airport 
infrastructure
Govt. regulation 
Brand identity 
Capital requirement
It is obvious that an aviation company to launch itself needs a high base of capital for
purchasing planes and other stuffs. An airline is required to have capitalization of min 30
cores with out which it is not allow taking off
Effect: As the industry require high capitalization, the threat of new entrants is low

Market retaliation:
Market is concentrated in the hands of a few players. Kingfisher, Nacil & Jet airways are
some of the major players in the industry to compete with is not an easy job. So market
retaliation will be high. Kingfisher have a market share of 23.3%, Nacil have an market share
of 17.5%
Effect: There fore threat from new entrants will be low
Inadequate airport infrastructure
Inadequate airport infrastructure often makes it difficult for the existing airlines to function
smoothly and thus deters new ones from entering the market. 80% of the flights between
Europe and Asia flew through only 2 crossing points between India and Pakistan. We need to
increase this to 4.
Effects: Here the threat of new entrants is low
Government Regulation:
Along with equity restrictions for floating an airline they also compel the airlines to operate
on uneconomical routes
Effects: As the government regulations are high the threats of new entrants is low
Brand identity
Brand identity is high because the number of airline industry is low. Only some of the airline
industries have a brand name for example Kingfisher, jet airways, Air India. & even the
consumer is not aware of other airline that is prevailing in the market.
Effects: As brand identity is high in the industry, the threat of new entrants is low

7.2 THREAT FROM SUBSTITUTES:-(LOW)
HIGH TO MODERATE
FACTORS HIGH MODERATE LOW
MODERATE TO LOW
Switching cost 
Availability of

substitute
Information availability 
Substitute’s price value 
Switching cost
The switching cost in aviation industry is very low because when passenger wants to switch
over to another service provider than it would less costly to the passenger. In the table, we
find that there are less costly to switch over from one player to another.
Players Bangalore to Kolkata to

Pune Guahati
Kingfis 2361 2215

her

Spice 2245 2101

jet
The attractiveness of switching cost in airline industry is low as the switching cost is
negligible in terms of money. As they are not suppose to pay switching.
Effects: As the switching cost is negligible than the threat from new entrants will be high.
2) Availability of substitutes
There are three substitutes for the airplane. They are railways, roadways and marine. But they
are far away from the airlines. The fast service that is provided by the airlines is not provided
by any other substitutes. So the Availability of substitute is low.
No Far Close
. substitute substitute
1 Scooters Railways
2 Bikes Buses
3 Cycle Cars
4 carts Ships
If we consider only availability of substitute than there are two types of them.
1) Far substitute 2) Close substitute. In close substitute, railways, cars, buses and ships are
there. So, the availability of substitute will become moderate.
Effects: Threats of substitute will also be moderate.
3) Information Availability

If we see at sight of availability of information than it would be less to the passengers. For
availability about airlines, than the passengers have to go for internet or for some other data
source. The users of internet users are very less. According one survey, the no. of users are
about 4%. So, the availability is very low.
Effect: threat from substitutes becomes moderate to low.
4 ) Substitute’s price value
Substitute’s price value is very low compared air traveling. As there are many augmented
services being provided by the aviation industry..
Effects: As the price value of substitute is low the threat of substitute will be high
7.3 BARGAINING POWER OF THE SUPPLIER (HIGH):-
HIGH TO MODERATE
MODERATE TO LOW
Number of supplier (air 

crafts)
Fuel supplier 
Forward integration 
Foods 
Number of suppliers (Air crafts)
Number of suppliers in aircrafts is low. And as result the bargaining power of the suppliers
will remain high Boeing & Airbus are the main two suppliers.

Effects: As the number of suppliers is very low, the barging power of suppliers is very
High
Fuel Suppliers:
Bharat Petroleum, Hindustan Petroleum & Indian oil are the three major companies who
provides Fuel to the airline industry. As the fuel suppliers are low the barging power of
supplier will be high.
Forward Integration:
Airlines also face a threat of forward integration as the suppliers have or know about most or
the technical aspects of the industry but this chance s are low because they might be
interested in same job & there are only a few suppliers
Effects: Bargaining Power of the supplier will be high
Food: The supplier of food in airlines is moderate. So the bargaining power of food supplier
become moderate because both the parties have the need of each other

7.4 BARGAINING POWER OF BUYER (MODERATE)
HIGH TO MODERATE
MODERATE TO LOW
Number of

buyers
Availability of
substitutes 
Switching cost 
Number of buyers
The number of buyers is high to moderate because the target of aviation industry is Middle
class & Upper class, they cannot target all the market and there fore bargaining power is
Moderate. 20% of total populations are in Upper class & 50% of total population falls in
Middle class.

Availability of substitutes
Availability of the substitutes is high to moderate if traveler of the Indian airlines wants to
switch over to another substitute then they have number of options with him. But if any
individual wants to go to Mumbai in 2 hours & if he misses planes then he will be going
through plane only rather than buses & trains
Switching cost
SOURCES PRICES
Planes Mumbai to 1780

Ahmedabad
Train Mumbai to 1330

Ahmedabad
Bus Mumbai to 213

Ahmedabad
The substitutes are relatively moreover same so the cost of switching over to the substitutes is
high to moderate.

7.5 RIVALRY AMONG COMPETITORS:-(HIGH)
HIGH TO
MODERATE
FACTORS HIGH MODERA MODERATE LOW
TO LOW
TE
Number of 
competitors
Switching cost 
Exit barrier 
Fixed cost 
The competition in the industry is high but the intensity of the competition has been reduced
as it is an expanding market.
Number of competitors
Intense Competition amongst low cost airlines and the full service airlines. Apex fares and
promotional schemes offered by all the full service carriers, offering prices at lower or similar
to the low cost ticket fares are a tremendous competitive force.

Effect: Rivalry among the competitors is high
Fixed Cost:
High fixed costs and input constraints also add to the competitive pressures in the industry.
The fixed costs in the airline industry remains high.
Effects: Due to high fixed cost the rivalry among competitors remains high
Switching Cost:
There is no differentiation between the services offered by the different airlines. There fore
the switching cost will be low.
Effects: Low switching cost means consumer can easily switch to other airline. Therefore
rivalry among competitors is high.
Exit Barrier:
The high capital requirements makes its difficult for the companies to exit the market but
being a growing industry the existing players are willing to acquire and make exit for an
operator less difficult. & therefore rivalry among existing firms will be high.

CHAPTER:-8
THE BOSTON CONSULTANCY GROUP’S (BCG) MATRIX
MARKET SHARE & RELATIVE MARKET SHARE OF THE PLAYERS:-
MARKET RELATIVE
NO INDUSTRY SHARE MARKET
. PLAYERS (SEPT-09) SHARE
1 Kingfisher 23.3 1.33
2 NACIL 17.5 0.75
3 Jet Airways 15.8 0.68
4 Indigo 14.3 0.61
5 Spice jet 13.2 0.57
6 Jetlite 7.7 0.33
7 Go Air 5.8 0.25
8 Paramount 2 0.09
9 MDLR 0.4 0.02
Total 100 -
Source: DGCA (Sept-09)

CHART
BCG CHART 0.3
3 0.2
20% 5
I
18% 0. 0. 0.0
N 0.7 0.6 0.02
1.33 8 61 57 9
5
D 20%
U
S
T
R 18%
Y STAR QUESTION MARK
G 10%
R
O
W
T
H
R CASH COW DOG

A
T S.V.INSTITUTE OF MANAGEMENT, KADI. 73
E
0%
10x 1x 0x
RELATIVE MARKET SHARE

(Note: All players are plotted on the basis relative market share as mentioned in the above table)
Formula
Relative leader market share = Leader market share / Next Position company’s market share
= Kingfisher market share / Nacil
= 23.3/17.7
=1.33
Relative other players market share = player market share / leader market Share
BCG MODEL IMPLICATION FOR INDIAN CIVIL AVIATION

INDUSTRY IN INDIA:-
FINDINGS:-
 We have put all the companies on the BCG Matrix table as per Industry Growth &
Relative Marker Share. We can easily see that Kingfisher airline is market leader
having 23.3% market share. Followed by NACIL, Jet airways, indigo & spice jet
respectively 17.5%, 15.8%, 14.3% and 13.2%.
 We find that only Kingfisher airline which is market leader is in STAR quadrant
having highest relative marker share of 1.33 & other all companies are in the Question
Mark Quadrant.
 We have also found that rest of the companies is in the Question mark quadrant. This
means that they have a small market share in a high growth market. These business
units require resources to grow market share, but whether they will succeed & become
star is unknown.
STRATEGIES:-
Strategy for the challengers firms in Question mark quadrant:

 The firms lying in the question mark should adopt the following strategies Market
Penetration to make use of the service in the current market. The second will be to
expand the market and next will be make tear down analysis where they are lacking.
Strategy for the market leader:
 Kingfisher airline is the market leader so the leader have two options either to acquire
some small rival firms or try to capture market share of other companies by the way
of losing some short term profit margins.
CHAPTER:- 9
GE NINE CELL MATRIX (ALTERNATIVE PORT FOLIO MODEL).
9.1 INDUSTRY ATTRACTIVENESS MEASURES
1. Market size
2. Govt. rules & regulations
3. Entry barriers
4. Profitability
5. Resource requirement
6. Competition among rivals
7. Level of price competition
8. Rate of technological change
Rating scale: 1 = very unattractive

10 = very attractive

9.2 COMPETITIVE STRENGTH MEASURE
1. Relative market share

2. Costs relative to competitor’s cost
3. Ability to match or beat rivals on key products attributes
4. Ability to benefit from strategic fits with sister business
5. Bargaining leverage with suppliers/ buyers; caliber of alliances
6. Brand image and reputation
7. Competitively valuable capabilities
8. Profitability relative to competitors
Rating scale: 1 = very weak
10 = very strong
INDUSTRY ATTRACTIVE MEASURE WEIGHT SCORE TOTAL

Market size 0.1 7 0.7
Govt. rules & regulations 0.2 5 1
Entry barriers 0.15 5 0.75
Profitability 0.1 4 0.4
Resource requirement 0.1 5 0.5
Competition among rivals 0.15 6 0.9
Level of price competition 0.1 6 0.6
Rate of technological change 0.1 5 0.5
Total 1 5.35

JETAIR SPICE
COMPETITIVE KINGFISHER NACIL WAYS INDIGO JET

STRENGTH
MEASURE
weight rate value rate value rate value Rate value Rate value
Relative market
share 0.2 9 1.8 8 1.6 7 1.4 6 1.2 5 1
Costs relative to
competitor’s cost 0.1 7 0.7 6 0.6 6 0.6 5 0.5 4 0.4
Ability to match
or beat rivals on
key products
attributes 0.15 8 1.2 7 1.05 5 0.75 5 0.75 5 0.75
Ability to benefit
from strategic
fits with sister
business 0.1 7 0.7 6 0.6 6 0.6 5 0.5 6 0.6
Bargaining
leverage with
suppliers/
buyers; caliber of
alliances 0.05 7 0.35 6 0.3 5 0.25 5 0.25 5 0.25
Brand image and

reputation 0.15 9 1.35 5 0.75 6 0.9 5 0.75 5 0.75
Competitively
valuable
capabilities 0.15 7 1.05 6 0.9 7 1.05 6 0.9 5 0.75
Profitability
relative to
competitors 0.1 6 0.6 5 0.5 7 0.7 6 0.6 4 0.4
TOTAL 1 7.75 6.3 6.25 5.45 4.9

G E 9 CHART
10
KINGFISHER
HIGH NACIL
HIGH
1 1JETAIRWAYS
INDUSTRY ATTRACTIVENESS
6.7 2 INDIGO
5.35
MEDIUM SPICEJET
3.3
1 2
3
LOW 5.6
MEDIUM
STRONG 6.7 AVERAGE 3.3 WEAK
COMPETITIVE STRENGTH/ MARKET POSITION

Description of Model:
The General Electric Company, with the aid of the Boston Consulting Group and McKinsey
and Company, pioneered the nine cell strategic business screen model. The circle on the
matrix represents enterprise. Both axes are divided into three segments, yielding nine cells.
The nine cells are grouped into three zones:
→ The First Zone consists of the three cells in the upper left corner. If enterprise falls in
this zone that it is in a favorable position with relatively attractive growth
opportunities. This indicates to invest in this product/service.
→ The Second Zone consists of the three diagonal cells from the lower left to the upper
right. A position in this zone is viewed as having medium attractiveness. Management
must therefore exercise caution when making additional investments in this
product/service. The suggested strategy is to seek to maintain share rather than
growing or reducing share.
→ The Third Zone consists of the three cells in the lower right corner. A position in this
zone is not attractive. The suggested strategy is that management should begin to
make plans to exit the industry.
Industry attractiveness Measures:
Market size
There are nine companies working in aviation industry but only few companies have large
market share and others have very less market share in the industry. Also we can see that the
growth of the aviation industry is decreasing compared to last year. So industry attractiveness
is some what lower and on that basis we have given 7 point to this measure.
Govt. rules & regulations
The rules and regulation of government to enter into the aviation industry is very complex.
And also government has very strong rules & regulation to protect environment. So on the
basis of this industry attractiveness is moderate because of the high above regulatory it is
difficult for the new comers to enter. So we have given 5 points to this measure.

Entry barriers
The entry barriers into the aviation industry are very high because of govt. regulation and
very huge capital requirement into the industry. So, on that basis we have given 5 score to
this measure.
Profitability
Average 15% is the profitability of the industry over the period of time but in year 2009 the
return on equity is negative with -8.8% only because of the global recession. There is lots of
pressure on aviation companies for low cost services. so on that basis we have allocated 4
points to this measure.
Resource requirements
Resources for the aviation industry are raw materials, labors, and high capital investment.
Our industry’s main labor resources are pilots, airhostesses and they are very cruscious and
capital requirement is also high. So industry attractiveness is medium and on that basis we
have allocated 5 points to this measure.
Competition among rivals
There are only 9 players in the industry so competition is very high. So for that reason the
attractiveness is very low and so for that reason we have given 5 points.
Level of price competition
We can see here that the level of price competition is moderate in aviation industry. So
industry attractiveness is weak in aviation industry. So we have given 6 points to this
measure.
Rate of technological change
If we look at the technological side than rate of technological change in aviation industry is
moderate to high because once company has invested in aircraft than it is less chanceable to
change once again. So on that basis we have allocated 5 points to this measure.

Competitive strength measure:-
Relative market share
Company Market Share
King fisher 23.3%
NACIL 17.5%
Jet airways 15.8%
Indigo 14.3%
Spicejet 13.3%
(Source: DGCA)
From the above table we can see that the highest market share in Indian aviation industry is
23.3% with Grasim and spicejet falls on the fifth position with 13.3 % market share. So we
have allocated 9, 8, 7, 6, and 5 points to kingfisher, NACIL, Jetairways, Indigo, Spicejet
respectively.
Ability to match or beat rivals on key products attributes
If we look at the ability to match or rivals on key products attributes of each company than
kingfisher is better to beat rivals on its key attributes like luxurious facility and other players
capacity to beat is lower compared to it. So, we have allocated 8, 7, 5, 5, and 5 points to them
respectively.
Ability to benefit from strategic fits with sister business
Kingfisher has a very good benefit from its sister business. So, 7 is to be allotted to it. 6 point
is allotted to NACIL, Jetairways and Spicejet. Indigo has got 5 point. These points are
allotted as per their strategic fits with their sister business.
Bargaining leverage with suppliers/ buyers; Calibre of alliances

Bargaining power of suppliers would be high for kingfisher and it would be low for NACIL
compared to kingfisher. And it would be same for low all companies so we have allocated 5
points to jetairways, indigo, spicejet.
Brand image and reputation
In Indian aviation sector, kingfisher has a good brand image. So, 9 point is to be allocated to
it. A jet airway has low brand image reputation. So, 6 point is to be allotted. And NACIL,
Indigo, and Spice jet have same brand reputation. So, 5 is to be allotted to all three
companies.
Competitively valuable capabilities
Kingfisher is market leader in the sector so its competitively capabilities are very compared
to others. So, we have allotted 7 points. Jetairways has good compatible value. So, 7 point is
also allotted to it. NACIL and Indigo companies have not that much capabilities compared to
kingfisher and Jetairways. So, 6 point is allotted to them. And 5 point is allotted to spicejet.
Profitability relative to competitors
By looking at the profitability of different companies of last 2 years, we have allocated 6, 5,

7, 6 and 4 to Kingfisher, NACIL, jetairways, indigo and spicejet respectively.

CHAPTER – 10
FINANCIAL PERFORMANCE OF THE INDUSTRY
1) EBIT Margin
200
Description 9 2008 2007 2006 2005
EBIT
Margin(%) 4.62 8.90 -0.78 8.90 17.00
If we see the last five year EBIT margin from above graph than the performance of the
industry was very high into the year 2005 which has 17% than it decreased in 2006 and it was
8.90%.year 2007 was very bad for the industry because it has negative EBIT margin of
-0.78%. In year 2009, the industry EBIT margin is decreasing from 8.90% to 4.62%. during
the year 2009, the whole world is affected by global recession. Thats why the EBIT
margin is declined.

2) Return on equity
Description 2009 2008 2007 2006 2005

ROE(%) -8.80 19.17 -16.66 3.30 20.02
The return on equity of the industry was very unstable during the last five year. The ROI was
positive in the year 2005 and 2008 with having 20.02% and 18.17% respectively. The ROE in
the year 2007 was also negative with having -16.66%. There might be a reason of industry’s
expansion plans. The year 2009 has also shown negative ROE by -8.80%. In this year
recession has very deep impact.
3) Assets turnover ratio
200
Description 9 2008 2007 2006 2005
Asset
Turnover(x) 1.10 1.16 1.11 1.14 1.15

The industry assets turnover ratio was decreasing from year 2005 to 2007. It was 1.15 in 2005
and it decreased to 1.11 in 2007. There might be a reason of low passenger traffic. Whereas it
was 1.16 in 2008. In this year the growth of the industry was increased. So overall turnover of
the assets was increased. In 2009, with having deep impact of recession, the turnover ratio is
decreased from 1.16 to 1.1.
4) Debt equity ratio
Description 2009 2008 2007 2006 2005

Total
Debt/Equity(%
) 5.84 2.45 2.83 2.56 1.97
The debt equity ratio was increasing from 2005 to 2007. It was
increased from 1.97 to 2.83 in 2008. In 2009, the debt equity ratio is also
increased with 5.84. There is reason of heavy impact of recession and that’s why
for sustain the industry, industry has to depend on debt capital only.
5) Current ratio
200
Description 9 2008 2007 2006 2005
Current
Ratio(x) 1.06 1.04 1.65 2.86 2.40

Current ratio is the relationship of current assets to current liabilities. If we see the graph than
in 2006 the ratio was very high among all five year. In 2009, current ratio is increased from
1.04 to 1.06. It means that current assets are excess to current liabilities.
CHAPTER:- 11
Key Success Factors

1) Technology-related KSFs:
Intense competition in Indian Aviation Industry has made the role of technology very
important for domestic airline companies. Technology can help in making travel comfortable,
allow easy access to tickets and reduce time to check-in. A considerable amount of money is
also saved by automation. Following points highlight the increasing use of technology by
different Airlines:
Vijay Mallya promoted Kingfisher Airlines is planning to install a landscape camera at the
bottom of the aircraft that will enable passengers get a view of the take-off and landing of
their airplane. They are also going to allow GSM phones to be used on board. They are
already providing live TV as part of high-end In-Flight Entertainment initiatives.
Jet Airways has launched an Interactive Voice Response (IVR)-based payment and ticketing
services. The service will allow passengers to complete their reservation with credit cards
through a secure gateway and instantly receive their e-tickets via e-mail.
2) Distribution-related KSFs:
In Airlines, they utilize more than one method of distribution. For e.g. they sell tickets
through travel agents and sell seats on flights to tour operators, whilst also operating direct
marketing. Whichever distribution strategy is selected, channel management plays a key role.
For channels to be effective they need reliable updated information. For these reason, I.T has
been widely adopted such as on-line booking system.
3) Marketing-related KSFs:
Services:
The airline industry has many players they had brand name like ‘Kingfisher’, ‘Jet airways’,
‘Go airways’ etc. All of them use to give different types of services to attract customers like

connecting flights, through check-in, food on board, and complementary gifts etc. For e.g.
Kingfisher offers food and bottle of water on without taking any extra charges.
Cheap Value Pricing:
The objective is here to undercut the competition and price is used to trigger the purchase
immediately. Unit profits are low but overall profits are achieved. Airlines usually practice
differential pricing. There are three classes: The First Class, The Executive Class, and The
Economy Class. Fares for each class are different since the facilities provided and the
comfort and luxury level is different in each class. Seasonal fares are also fixed, fares rise
during the peak holiday times.
Low-cost Pricing:
With the advent of the low-cost airlines in the Indian aviation industry, a different low-cost
flying concept has come up. In low-pricing strategies, the airlines provide very low prices for
the flight tickets. Also, they prices are made cheaper by booking the tickets long before the
flight date.
APEX Fares:
In this scheme, people are given cheap rates only if tickets are booked at least before the
specified time period. But the draw-back here is that if the booking is that if the booking is
cancelled, a substantial amount of money is not returned.
CHAPTER:- 12
DRIVING FORCES OF AVIATION INDUSTRY

1) Increasing in passenger traffic
Indian tourism industry is vibrant and has started flourishing, true to its potential, with record
inbound tourist arrivals in calendar 2008 Tourist arrivals to India, going by the strong 25%
growth in the first eight months of 2009 to 3.0 million travelers is expected to be around 4.5o
4.7 million this year, up from 2.8 million in 2007 With increasing participants both foreign
tourists and domestic tourists, the industry players (hotel, travel agents, transports) are upbeat
and reaping the benefits of these upswing.
2) Increasing competition
Domestic air transport sector has now three major players- King fisher, NACIL & Jet etc. the
intense competition among them has forced the airlines to offer various kinds of discounted
fares and packages. The competition has also forced the public carrier, Indian Airlines to
respond to market condition in a business like manner rather that like a PSU, and come up
with an aggressive pricing strategy and new products. As a result the consumer has emerged
as a gainer. As Indian Airlines is facing a problem of old and ageing fleet, major fleet
acquisition is being planned for it that would partly replace and augment existing capacity.
This may further enhance the profile of IA in terms of the service they offer. The private
players are implementing excessive marketing strategies. They try to cover maximum market
share. The entry of Air Deccan as a niche player covering small towns at low fares has
opened a now vista in the domestic air transport scene which is popularly being described as
‘low cost’ airlines.
The civil aviation sector is likely to see more and more players connecting smaller station
with aircraft of appropriate capacity at affordable prices. One aim of any worthwhile civil
aviation policy would be to achieve increased regional connectivity at affordable process and
make air transport accessible to more and more People.
3) Internet & E-commerce.
In India almost 90% of the tickets sold on LCC’s and domestic carriers are reserved on the
web.

Almost all the scheduled operators are having their websites at present. They provide most of
the information required for the customers on their site. Customers can know that flight
schedules, seats availability, various promotional schemes and lot of other information from
the companies website. Because of that, the work range of trip choices without going to
agents or the authorized distributors. Customers monetary cost, time cost, psychic cost, and
overall search cost is reduced using internet facilities.
Also the industry can increase its sales by increasing one channel of distribution. Air Deccan
mentioned that its 18% of booking is being done through Internet.
4) Growing economy
India’s raising economy status as well as its rich heritage has facilitated significant rise in
tourism interest in the last couple of years. Also the outbound as well as domestic travel had
increased significantly partly due to rise in disposable income and partly due to the fact that
even a small percentage increases from amongst over 1 billion populations will translate into
a Hugh outbound tourism market in absolute numbers.
As economy is rising and India is now becoming the hub for many multinational companies
business process outsourcing and labour and material are cheaper. Hence, production or
service provided is cheaper. Therefore to take the benefit of that many companies have
started outsourcing their work to India and many others are coming to India. Hence, frequent
fliers (company’s executives) are increasing. The business travel segment constitutes 30% of
the outbound tourism and hence is one of the major businesses for the ravel related services
providers. Due to rising economy disposable income has also increased and therefore tourism
industry is growing. Leisure travellers are also increasing.
5) Entry of new player
After the entry of India’s first no frill airlines, Air Deccan, Indian civil aviation industry has
taken a rise. It has introduced itself as ‘Low Cost’ airlines. They have mentioned clearly in
their mission statement that their objective is to go for continuous reduction in price and
offering services, which can be afforded by middle class person. The existing players have
given push to the marketing efforts to retain their market position.
6) Changes in long term growth rate
Indian aviation sector is potential market to tap. Due to monopoly of government owner
airlines it was duly untapped and there was wide scope to grow for many company. Because
of large number of prospects customers are there in the country those are willing to travel at

affordable rates. The competition amongst players in duly capturing the potential growth
opportunity in terms of passenger flying with them.
7) Changes in the airline service usage
Previously flying through air was limited mostly to premium class people and that too when
required to go aboard. But nowadays the scenario is changing. A business executive, who
wants to go form Ahmedabad to Mumbai, travel by air. It is also used as a leisure trip and
also to reduce the time in travelling. Thus, the definition of using air service is changing,
which can be said a driving force for Indian civil aviation industry. The outbound tourism out
of India is set to grow high with aggressive promotion undertaken by leading destination like
Singapore, Malaysia, and Switzerland etc. as Indians are seen as high spenders on travel, the
Asian countries are very aggressive in luring the Indian travellers and this augurs well for the
travel related service industry.
8) Service innovation
Air services were perceived as a premium service and use of such services were indeed
costlier but with the introduction of low cost airlines, the scenario has changed. Air Deccan
has started offering air services at cheaper rates than the existing ones. They are providing
their services for lower fares that can be afforded by middle class people. The mission of Air
Deccan is “to demystify air travel in India by providing reliable, low cost air travel to the
common man by constantly driving down the air fares as an ongoing mission”.
9) Technological changes
New upcoming technology is one of contributing factor for the growth of the aviation sector
in India. Due to ease in operation more and more people can use it and also the price factor
also decreases that means more productively per capital invested hence more benefit over the
same investment in the past that is making market mores lucrative and more players are
willing to enter so ultimately growth of industry. Innovations is it makes it possible to see all
the seats together filled up and also enables to utilizes resources to maximum possible level.
This has also enable distribution redefined and ease to everyone’s reach.
CHAPTER: - 13
OT ANALYSIS

13.1 Opportunities:
1) HIKE IN FDI
Allowing foreign investment in Indian aviation was in controversy in past. Government

disallowed foreign investment in the past in order to protect interest of national carriers.
Foreign investment is vital and strategically important for the underdeveloped India vicil
aviation sector. As the governing UPA government has extended the limits of foreign direct
investment (FDI) from 40% to 49%, it would provide more additional capital, encourage
more efficient performance, market driven network and opportunities for private airlines
(mainly Jet Airways, Air Sahara & Air Deccan).
Due to the additional capital to Indian aviation players, they would be able to promote
themselves by making investment after better services, marketing and advertising expenses
and basic infrastructure facilities. Ultimately, this will result into better customer satisfaction
and overall growth of the Indian civil aviation industry. as the limit of FDI is up to
49%only , ultimate decision power lies in the hands of domestic airline players only. Hence,
it is favorable for the Indian civil aviation. Moreover, the FDI may help new players to enter
in to the market. They can get financial support by strengthening their capital structure. This
will encourage the competition, which in turn help to grow the industry.
2) Market Growth:
Despite the rapid expansion of recent years, India has only just scratched the surface of the
potential for the aviation sector. Trips per capita remain low even by the standards of other
developing countries. China's domestic market is more than four times the size of India's 40
million passengers. Even, Australia, a country with a population of just 21 million, compared
with India's 1.1 billion, has a market 25% larger. Similarly on the international front, less
than 1% of Indians travel overseas each year. Inbound visitor numbers at 5.4 million in 2008
for the entire country, were less than for Dubai or Singapore. It is not difficult to see the
expansion potential from such a low base as economic growth continues apace.
3) Geographic Location:
India is ideally positioned as a major aviation hub at the crossroads between Europe, the
Middle East and Asia Pacific. The fact that aviation was a neglected sector for so long has

allowed airports such as Dubai and Singapore to effectively establish themselves as offshore
hubs for Indian passengers, and they now have a significant head start. However, as India's
airports improve, and its airlines receive international awards for their service, there may be
an opportunity to leverage its huge home market to compete with these longer established
hubs.
4) Lower Costs, Higher Quality:
India has already managed to develop a dynamic aviation sector despite, and not because of,
its environment. The improvements in airport and airspace infrastructure, the development of
indigenous training and maintenance facilities and the potential for fiscal reform, all point to
the potential for Indian aviation to increasingly operate in a lower cost, higher quality and
more efficient manner. This could in due course lead to an opportunity for India to develop as
a global outsourcing hub in areas such as aerospace manufacturing, MRO and training.
13.2 THREATS:

1) HIGH AVIATION TURBINE FUEL (ATF) PRICES
ATF prices now form around 35-40% of the total operating costs of Airline Industry. The
industry across the world continues to be plagued with high ATF prices which have
demonstrated the inverse relationship between airline stock prices and fuel prices. ATF prices
have almost doubled over the last year. Almost all Indian carriers are also feeling the heat and
are desperately resorting to measures like cutting routes, increasing fuel surcharge, promoting
the use of e-tickets and charging for food items to reduce their losses. Skyrocketing ATF
prices, depreciating rupee coupled with global recession has directly impacted the Indian
Airline Industry. The industry reported a $10.4 billion loss in the last year. Increasing air
fares have worked against the logic of increasing profits, as it has resulted in decreased air
traffic. Besides focusing on designing fuel efficient engines, aircraft manufacturers like
Boeing and Airbus, along with OEMs are developing sustainable bio-fuels which will give
them some relief from the vulnerability of profits due to consistently rising fuel prices.
2) EXCESS CAPACITY
Driven by the drastically increasing passenger traffic over the last 3 years, almost all Indian
airlines build their capacity assuming the growth would continue over the next few years.
Several new aircrafts were bought within a short span of time which resulted in excess
capacity of around 15% to 20%. Aircrafts ordered during good times are being delivered
during recession. According to industry experts, around 17% of the current fleet (around
4,000 aircraft) are scheduled for delivery during the next 3 years. Even though the industry
grew above 40%, almost half of the growth was primarily stimulated due to low fares.
Maintaining such low levels of fares will be difficult due to excess capacity, especially during
the ongoing global slowdown. Consolidation therefore seems to be the next logical step to get
rid of this excess capacity problem.
3) Middle East Aviation:
The carriers of the Gulf are aggressively expanding in India, with high frequencies from
multiple destinations to their hubs, from where passengers can access extensive global

networks. The ability for a passenger for example to travel one-stop from Ahmedabad to
Hamburg, or multiple daily frequencies from Mumbai to London, connecting at an attractive
hub, is a strength which Indian carriers simply cannot match at present. It will take time and
the question is how far ahead will the Middle East carriers be by that stage.
4) Terrorism:
India has seen frequent terrorist activity in recent years. The country has shown great
resilience in bouncing back after each attack; however inbound international traffic in
particular is sensitive to such events. Similarly the potential for India to develop as a global
traffic and services hub is contingent upon it being seen as a safe and attractive destination.
5) Shortage of trained Pilots:
There is a shortage of trained pilots, co-pilots and ground staff which is severely limiting
growth prospects.
 Air India has about 800 pilots and of these 117 is foreign.
 Jet Airways which has ambitious expansion plans both in India and overseas, said 100
of its 700 pilots are foreign and 15 of them are retired pilots from the US.
(SOURCE - http://www.rediff.com/money/2007/dec/18pilot.htm )

ANNEXURE




Bibilography
www.google.com
http://dgca.nic.in
www.airportsindia.org.in
www.flykingfisher.com
www.jetairways.com
www.airindia.com
www.wikipedia.com
http://indianaviationnews.net

NEWS PAPERS
www.businessstandard.com
www.economictimes.com

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IN DEPTH STUDY OF INDIAN CIVIL AVIATION INDUSTRY

S.V.INSTITUTE OF MANAGEMENT, KADI. 1

The study has following objectives:

o An In depth Study of Indian civil aviation industry

o To study the major players and their Market Share

 Data collection & sources :

S.V.INSTITUTE OF MANAGEMENT, KADI. 2

S.V.INSTITUTE OF MANAGEMENT, KADI. 3

SERVICE MARKET DESCRIPTION:-

2.1 AVIATION SERVICE:-

2.2 TYPES OF AIR SERVICES:-

S.V.INSTITUTE OF MANAGEMENT, KADI. 4

S.V.INSTITUTE OF MANAGEMENT, KADI. 5

2.4 INTRODUCTION OF MAJOR PLAYERS:-

1. Air India : India’s Legacy Carrier:

S.V.INSTITUTE OF MANAGEMENT, KADI. 6

10. Spice jet:

S.V.INSTITUTE OF MANAGEMENT, KADI. 7

S.V.INSTITUTE OF MANAGEMENT, KADI. 8

3.1 GLOBAL AVIATION INDUSTRY:

S.V.INSTITUTE OF MANAGEMENT, KADI. 9

Middle East Aviation Sector

S.V.INSTITUTE OF MANAGEMENT, KADI. 10

S.V.INSTITUTE OF MANAGEMENT, KADI. 11

FOREIGN OWNERSHIP IN INDUSTRY IN VARIOUS COUNTRY

S.V.INSTITUTE OF MANAGEMENT, KADI. 12

3.2 MAJOR GLOBAL PLAYERS IN TO THE INDUSTRY

S.V.INSTITUTE OF MANAGEMENT, KADI. 13

On 16 October 2008, Emirates moved all operations at Dubai International Airport to

S.V.INSTITUTE OF MANAGEMENT, KADI. 14

S.V.INSTITUTE OF MANAGEMENT, KADI. 15

COMPREHENSIVE STUDY OF INDIAN MARKET:

4.1 COMPREHENSIVE STUDY OF INDIAN AVIATION INDUSTRY

Domestic Indian Carriers

S.V.INSTITUTE OF MANAGEMENT, KADI. 16

Carriers engaged in Domestic Operations

S.V.INSTITUTE OF MANAGEMENT, KADI. 17

Non -Scheduled Traffic

S.V.INSTITUTE OF MANAGEMENT, KADI. 18

VALUE CHAIN OF AVIATION INDUSTRY:-

5.1 VALUE CHAIN ANALYSIS:-

S.V.INSTITUTE OF MANAGEMENT, KADI. 19

S.V.INSTITUTE OF MANAGEMENT, KADI. 20

Technology development: The use of technology to obtain a competitive advantage within

S.V.INSTITUTE OF MANAGEMENT, KADI. 21

1) TICKET COUNTER OPERATIONS

S.V.INSTITUTE OF MANAGEMENT, KADI. 22

A baggage-handling system has three main jobs:

• Move bags from the check-in area to the departure gate

5.1.3 OUTBOUND LOGISTICS:-

S.V.INSTITUTE OF MANAGEMENT, KADI. 23

Before approaching the check-in counters, you may be

• Lady's hand bag.

Children are entitled to the same cabin baggage allowances as adults.

S.V.INSTITUTE OF MANAGEMENT, KADI. 24

Due to security reasons / Government regulations, passengers travelling on flights originating

5.1.4 SALES & MARKETING:-

The significant steps taken by Indian Government on liberalization on Indian aviation

S.V.INSTITUTE OF MANAGEMENT, KADI. 25

• Lost Baggage Service

Loss of Baggage & Compensation

Delayed Delivery of Baggage