1.

Introduction
Aviation Industry in India is one of the fastest growing aviation industries in the world. Indian civil aviation industry was started in the year 1912 it was the year when the first air flight between Karachi and Delhi was started by the Indian State Air Services in association with the UK based Imperial Airways. JRD Tata founded the first Indian airline -Tata Airline in 1932. With the liberalization of the Indian aviation sector, aviation industry in India has undergone a rapid transformation. From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned full service airlines and low cost carriers. Private airlines account for around 75% share of the domestic aviation market. Earlier air travel was a privilege only a few could afford, but today air travel has become much cheaper and can be afforded by a large number of people. India's domestic aviation market expansion has been the strongest in the world - tripling in the past five years, according to the International Air Transport Associations (IATA) report. India is currently the ninth largest aviation market in the world. The Government's open sky policy has attracted many foreign players to enter the market and the industry is growing in terms of both players and the number of aircrafts. Given the strong market fundamentals, it is expected that the civil aviation market will register a compound annual growth rate (CAGR) of more than 16 per cent during 2010-2013. India's domestic air traffic grew at a rate, which is the second highest after Brazil, according to global figures for June 2011, compiled by IATA. The country's domestic traffic grew by 14 per cent in the same period as against Brazil's 15.1 per cent. With a surging demand and with the entry of a large number of domestic and international companies into the sector, India aviation Industry is sure to witness a phenomenal growth in the near future demonstrating a CAGR growth rate of more than 15% in the fourth coming years. It is also estimated that the Ministry of Civil Aviation in India will alone handle about 280 million passengers by the year 2020. Industry experts envisage about US$ 110 billion new investments in the Indian aviation sector with not less than US$ 80 billion exclusively targeted for the purchase of new aircraft and US$ 30 billion for developing the infrastructure at the airports. The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers. An unstable political environment causes uncertainty in the minds of the air travellers, regarding travelling to a particular country. Indian airlines reported a continuous growth trend and a strong domestic passenger growth rate of 22.3 per cent in July 2011. Passenger traffic has grown at 18 per cent year on year (y-o-y) basis and the year 2010 closed at 90 million passengers both domestic and international. India is the fastest growing aviation market and expected to be within 4-5 big aviation markets by 2020 and 3rd in terms of domestic market after US and China. Some of the notable players in the India aviation industry include Kingfisher Airlines and Kingfisher Red (previously Air Deccan), Jet Airways and Jet Lite (previously Air Sahara), Air India and Indian (previously Indian Airlines), IndiGo, Spice Jet, GoAir, Paramount Airways and MDLR Airlines. Page 1

2. Problem Identification
Airline industry in India is plagued with several problems. These include high aviation turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet expansion, and intense price competition among the players. But one of the major challenges facing Indian aviation industry is infrastructure constraint. Airport infrastructure needs to be upgraded rapidly if Indian aviation industry has to continue its success story. Some steps have been taken in this direction. Two of India's largest airports-Mumbai and New Delhi-were privatized recently. Two green field airports are coming up at Bangalore and Hyderabad in southern India. Investments are pouring into almost all aspects of the industry, including aircraft maintenance, pilot training and air cargo services. The future prospects of Indian aviation sector look bright. However, the major issue that poses a challenge for the airline industry in India is infrastructure limitation that requires to be rapidly upgraded. The severe challenges posed against aviation industry are that the industry has to deal with safety concerns, decline in returns, stiff competition, rise in fuel cost, regional connectivity, improper exploitation of trunk routes, soaring input costs and many more. India's air transport infrastructure is not good as it has to be. The infrastructure development has not kept pace with the growth in aviation services sector leading to a bottleneck. Huge investment requirement for physical infrastructure for airports. Airport and air traffic control (ATC) infrastructure is inadequate to support growth. While a start has been made to upgrade the infrastructure, the results will be visible only after 2 - 3 years. One of the biggest challenges facing the aviation sector in India is to be able to provide regional connectivity. What is hampering the growth of regional connectivity is the lack of airports. The trunk routes, at present, are not fully exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of genuine competition. The entry of new players would ensure that air fares are brought to realistic levels, as it will lead to better cost and revenue management, increased productivity and better services. This in turn would stimulate demand and lead to growth. Apart from the above-mentioned factors, the input costs are also high. Some of the reasons for high input costs are withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increasing manpower costs due to shortage of technical personnel.

The US airline industry has seemingly become a mass transit system frequently offering airfares less than it costs to drive your car between the same two airports. If airline customers want a return to the times when aircraft were new and operated with more empty seats, well rested and happy friendly employees and great customer service, it can only come at some financial cost. Airlines now compete simply to -stay alive-as they are forced to provide competing and unprofitable air fares offered by a continuous rotation of new entry low cost airlines that show a constant history of failure. Unfortunately, in order to survive, capturing low fare market share has become a higher priority for airlines than customer service and new modern aircraft.

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3. Need and Significance

The Indian aviation industry has witnessed remarkable growth in recent years, with key drivers being positive economic factors, including high GDP growth, good industrial performance, and corporate profitability and expansion. Other factors include higher disposable incomes, growth in consumer spending, and availability of low fares. Aviation industry has played a phenomenal role in the Gross Domestic Product (GDP) of India. The GDP of India has increased over 8% following the growth of the Indian economy. With large number of domestic and international airlines operating in India, the country has become one of the most sought after location for commercial and trade activities and with the rise in the economy of the country and followed by the liberalization in the aviation sector, the Aviation Industry in India went through a complete transformation in the recent period. There are certain roles of aviation industry like initializing privatization in the airport activities, modernization of the airlines fleet to handle the pressure of competition in the aviation industry, rapid expansion plans for the major airports for the increased flow of air traffic, immense development for the growing regional airports. All these are future needs to grow the GDP. The Reserve Bank of India (RBI) announced that foreign institutional investors might have shareholdings more than the limited 49% in the domestic sector. Up to 49% of foreign equity is allowed by the means of automatic approvals pertaining to the domestic air transport services .Up to 100% of NRI investment is allowed by the means of automatic approvals pertaining to the domestic air transport services. If this investment increases then it will definitely help to increase the economy of India because aviation industry is the major sector of the Indian economy. The boom in aviation sector will surely generate employment. This work shall help in building a long term strategic vision for Indian aviation industry. The study shall help in exploring various aspects encompassing Indian aviation industry as it not only includes not just passenger airlines but a whole gamut of industries including charter aviation, cargo airlines, cargo express logistics, aircraft manufacturing, ancillary industries, airport infrastructure, maintenance and repairs, and a host of other related industries. The study shall help in figuring out who is partially and in some cases largely responsible for the crisis the airlines are in today.

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4. Review of Literature
The Impact of International Air Service Liberalisation on India Inter VISTAS-EU Consulting Inc. July 2009
The focus of this study is on air passenger services; it does not consider the impact of liberalizing air cargo services. The 12 countries covered in this study are: Australia, Brazil, Chile, India, Mauritius, Morocco, Peru, Singapore, Turkey, United Arab Emirates, Uruguay and Vietnam. The aim of the studies was to investigate two forms of liberalisation: market access (i.e., liberalizing ASA arrangements) and foreign ownership and control. The 12 studies examined the following impacts of liberalisation on each of the countries: Impact on traffic volumes. Impact on passengers (consumer benefits). Impact on jobs in the air transport industry and the wider economy. Impact on tourism. Impact on Gross Domestic Product (GDP). Impact on national airlines. The focus of this study is on air passenger services; it does not consider the impact of liberalizing air cargo services.

Competition Issues in the Civil Aviation Sector Nancy Shah July 2007
Civil Aviation plays an integral role in development of an economy. It helps in realizing the socioeconomic objective of providing connectivity to foster travel & trade. As per International Civil Aviation Organizations estimates, every 100 $ spent on air travel produces benefits worth 325 $ to the Economy. Commission must look to see whether the alliance is likely to divide and allocate markets, or to produce high fares. Commission will place critical importance on are fully reviewing the actual terms of each alliance agreement. Incentive for each partner to market its own seats.

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Service Quality Perceptions of Domestic Airline Consumers in India: An Empirical Study Bhagyalakshmi Venkatesh R. Nargundkar April 2006 Pricing and service quality are the key variables that decide the brand equity of each player in the airline industry. Existing literature suggests that measurement and management of service quality is the key for survival of airline companies. This research paper examines the service quality delivered by four major airlines in India on the backdrop of stiff competition in the airline service sector. The process of traveling on a domestic airline was divided into pre-flight, in- flight and post-flight experiences. A survey was conducted to find out the perceived service quality of frequent fliers on each of the four airlines across a series of service performance variables. The airline brands were positioned in a perceptual space, where the perceived service attributes were also mapped. Clear differences emerged among the airlines, with two of them perceived as being similar to each other, and the other two differing in many respects. Customer Perceptions, expectations and Gaps in Service Quality: An Empirical Study of CIVIL AVIATION INDUSTRY IN INDIA DR. MOHAMMED NAVED KHAN VIPPAN RAJ DUTT Dr. S C BANSAL
In India, the domestic airline industry has entered into 2 phase of liberalization with the entry of LCCs. There is a growing competition amongst airlines to provide better quality services to passenger at economical air-fares. Technology is also being extensively used to improve customer satisfaction. Analysis of data revealed that items for perception and gap loaded on four factors each. The validity of the classical five-dimensions of SERVQUAL could not be resolved for service quality in case of domestic airlines. The reliability value for SERVQUAL as a one-dimensional instrument was high. In the context of customer service vis--vis Full Service Carrier Public Sector, Full Service Carrier Private Sector and Low Cost Carriers, expectations were significantly high for tangibility additional LCC support service, reliability and responsiveness. Service quality perceptions were low for tangibility flight and empathy, especially in case of Low Cost Carriers. Gap between perceptions and expectations were observed to be highest for Low Cost Carriers. Overall, reliability of service was an area of concern for passengers across all categories of airlines. There was no difference between customers expected service quality among different categories of airlines. However, there was difference between customers perceived service quality. As a result, gap was also observed between customers perceived and expected service quality among different categories of airlines. Dimensions of Tangibility (Legacy Support Service, Additional LCC Support Service and Flight) and Reliability were significant drivers of customer service. Passengers 42 expected airlines to ensure safe journey, offer support to mitigate problems due to critical incidents and particularly meet time commitments.
nd

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A Comparative Study between Indian Public And Private (Low Cost) Airlines With Respect To Their Passenger Service Dipa Mitra December 2010
In today's competitive market scenario, organizations increasingly understand the importance of building and effectively managing the relationship with its passengers. For building and maintaining a healthy relationship with the passenger, organizations need to understand and meet the expectations of its passenger. The organizations today should aim not only at delivery of the service to the passengers, but should also focus on satisfying the passengers with the service. Thus it has become imperative for organizations to identify factors that cause passenger satisfaction or dissatisfaction and consciously measure them so as to try and bring about the necessary changes on the basis of passenger perceptions. In this regard, the present study has been undertaken to find the passengers perception regarding the service quality in public and private (low cost) Airlines in India for which 100 passengers from different regions of India have been taken as respondents. This study focuses on the following objectives: to identify the most important factors in passenger service both in public as well as in private low cost airlines, to compare and contrast the services on the basis of collected data and to suggest some adequate measures to improve their passenger services. The significantly and positively influencing factors related to passengers satisfaction and image of both the airlines are identified with the help of factor analysis. Recommendations have been made so that both types of airlines are enabled to retain their existing clients as well as attract new passengers.

India-ASEAN Cooperation in Aviation Sector Yogendra Singh 2008 Taking into account, factors such as the open skies policy, foreign direct investment and bourgeoning air transport and tourists markets, the areas of convergence between India and ASEAN in the field of civil aviation have been identified. However, there are still some obstacles that limit more wide-ranging civil aviation cooperation. Analyzing the challenges in the way of India-ASEAN civil aviation cooperation, the paper conclude with the observation that while some of these challenges are genuine, they not insurmountable, if efforts are made in the right direction.

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Structuring PPPs in Aviation Sector: Case of Delhi and Mumbai Airport Privatization Ajay Pandey Sebastian Morris G. Raghuram November 2010 The concession agreement for the modernization and operation of Indira Gandhi International airport in Delhi and Chhatrapati Shivaji International airport at Mumbai respectively is referred to as Operation Management and Development Agreement (OMDA). The OMDA was a part of a set of transaction documents along with the request for proposal provided to potential bidders. The OMDA laid out the contractual terms for structuring the PPP. This paper discusses the evolution of the draft OMDA from when it was first released in April 2005 to the bidders till it was released as a final OMDA in August 2005 before an extended bidding date. During this period, some of the critical issues addressed were: limits to commercial development of airport land, nature of tariff regulatory regime, contingent liabilities including performance bonds and termination payments, and potential contractual and strategic conflicts. It brings out the intragovernmental issues and processes, and the significant learning that formed part of these PPP concessions, which could well be among the largest in the world. An Analytical Study of Customers Preference and Satisfaction in Indian Domestic Aviation Sector Neeraj Kaushik V. K. Kaushik Girish Taneja 2008
The primary objective of the study is to cogitate empirically customers preference and satisfaction towards various airlines on the basis of the components of marketing mix. The choice of airlines variable was cross-tabulated with variables like income, preference for the class, factors considered before choosing a particular airline, the preferred mode of purchasing tickets, their satisfaction with the services provided in case of delay of flights as well as luggage services, etc. Perceptual mapping obtained from MDS yields an in-depth analysis of various components of marketing mix. Jet Airways and Kingfisher are perceived to be in the same cluster, indicating superior offerings with high returns and are hence perceived to be the best. Indian and Spice Jet are considered to be providing average offerings with low returns, while Air Deccan is perceived as to be providing inferior product offerings but giving high returns. Perceptual mapping of pricing indicates Air Deccan and Spice Jet as yielding low price and low returns i.e., these are the first preference of the people who are the first time air travelers. Jet Airways provides high returns at high prices and is the first choice of the executives all over India. Indian, providing average returns at high prices, is preferred by government officials and business executives traveling at companys expenses; it is preferred on routes where no other airline operates. Kingfisher provides high returns at low price and emerges as the best airline. Kingfisher is working on the Best fit strategy, providing the best of the services at competitive rates. Promotion perceptual mapping demonstrates three clusters. Jet Airways and Kingfisher are getting high yield with high promotion. Whereas Indian and Spice Jet are getting average yield with low promotion, and Air Deccan is getting low yield with average promotion. The main attraction of Air Deccan so far was the lowest price, but Page 7

with the entry of other airlines like Go Air, Spice Jet, Jet Lite, etc., Air Deccan has to work hard for its promotional activities. Perceptual mapping shows Kingfisher staff to be more attractive with high appeal and Spice Jet with more attractive but low appeal. Kingfishers promotion of staff as a USP created the difference. Jet Airways staff with average attractiveness is perceived to be of high appeal. Indian staff was found to be least attractive, but its appeal was perceived as high. Air Deccans staff is perceived to be less attractive with low appeal. Both the segments are flourishing at the moment. LCCs should not be viewed as competitors to FSC, rather they are complementary. These LCCs have in fact expanded the market size. Industry estimates forecast that LCCs will have a market share of 70% by 2010, which could be the highest in the world. With the amalgamation of Indian Airlines and Air India into National Aviation Company of India Limited (NACIL) as well as the mega merger of Jet Airways and Air Sahara (Sahara renamed as Jet Lite now), the competition will be even more intense. Some players like Paramount are working in niche area (on selected routes only) and are performing well. Other airlines also need to develop their own USP. Customers in India are now more aware and have a wide variety of choices. As Centre for Asia Pacific Aviation (CAPA) projects, India is potentially a ten airline market, consisting of two-three FSC, two-three large national LCCs operating a fleet of more than 70 aircraft each, and three-four niche regional operators with aircraft less than 80 seats. The aviation market is mature now and India is ready to take off.

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5. Objectives of Study
To analyze the position of Indian aviation industry in global market. To figure out challenges faced by Indian aviation industry in order to emerge as a global player. To explore the plight of private airlines in Indian aviation industry.

6. Hypothesis
H1: The position of Indian aviation industry does not sound good although there is a great opportunity to exploit the untapped and inexhaustible global market. H2: Airline industry in India is plagued with several problems. These include high aviation turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet expansion, and intense price competition among the players etc. H3: The Indian aviation industry needs attention from the government at a systemic level. It has been trying to formulate a proper aviation policy for the last ten years, but nothing came of it.

7. Research Methodology
Research Design: Descriptive and Exploratory Data collection: Secondary Data Collection- most of the data for this study will be secondary in nature and researcher himself will collect through newspapers, business magazines, various reports and articles, websites and books referred. Steps / Statistical technique for data analysis: Various statistical tools and techniques will be used as per the demands and requirements of the analysis been conducted.

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8. Organization of the study

1. Introduction: The study is done in order to critically analyse the Indian aviation industry.

2. Conceptual framework of the work: The study has its two major objectives i.e.,

To analyse the position of Indian aviation industry in global market. To figure out challenges faced by Indian aviation industry in order to emerge as a global player.

To explore the plight of private airlines in Indian aviation industry.

These objectives can be further analyzed and achieved through the hypotheses: H1: The position of Indian aviation industry does not sound good although there is a great opportunity to exploit the untapped and inexhaustible global market. H2: Airline industry in India is plagued with several problems. These include high aviation turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet expansion, and intense price competition among the players etc. H3: The Indian aviation industry needs attention from the government at a systemic level. It has been trying to formulate a proper aviation policy for the last ten years, but nothing came of it.

3. Data analysis and Interpretation: Most of the data assembled here is secondary, collected from websites and books. The interpretation of the same will be done on the further study of the content.

4. Finding and Conclusion: The study is still in process, thus no conclusion or interpretation can be made at this time of the study.

5. Suggestion and Recommendation: No suggestion and recommendation can be done prior to the completion of the study.

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Bibliography
Articles and reports published in: The Economic Times, The Times of India, The Hindu etc.

www.wikipedia.org/ http://www.iata.org/SiteCollectionDocuments/Documents/IndiaReport.pdf http://www.ximb.ac.in/ximb_journal/Publications/Article-07.pdf http://www.ipcs.org/pdf_file/issue/807440892SR58-Yogi-Aviation.pdf http://www.bizresearchpapers.com/4.%20Dipa-FINAL.pdf www.cci.gov.in/images/media/ResearchReports/F1_NancyShah_20080411102237.pdf http://sites.google.com/site/icbmbangkok2/06.Vippan.Dutt.PAR.pdf?attredirects=0

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