AIRLINE INDUSTRY

TEAM MEMBERS MAHALAXMI SONAL JINDAL NIKITA TODI ABHIJIT SEN

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AVIATION INDUSTRY IN INDIA

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Came into being on Feb 18, 1911 In 1932, JRD Tata launched TATA Airlines. In 1948, Air India International came into being between

Indian Government and AIR India (TATA Airlines).

In 1953, Nationalization of Aircraft Industry took place.. In 1986, Private sector players were permitted as Air taxi

operators.
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In 1994, Private carriers permitted to operate scheduled

services.
In 2003 -2006 Entry of more low cost carriers took place

which included Air Deccan, Spice Jet, Go Air, Indigo. This helped aviation to become more affordable

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FOUNDED 2004 COMMENCED OPERATIONS - 24 May 2005

DESTINATION - 37 Indian and 4 international

PARENT COMPANY SUN GROUP KEY PEOPLE ,Chairman Kalanidhi Maran Neil Mills, CEO
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COMPETITORS
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INDIGO

JET KONNECT

GO AIR

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Porters 5 Forces
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1. THREAT OF NEW ENTRANTS Huge capital requirement: Capitalization of minimum Rs.30Cr without which it is not allowed to takeoff Expected retaliation: market is concentrated in the hands of a few players thus any new player will have to face stiff competition Infrastructure: difficult for the existing airlines to function smoothly and thus deters new ones Shortage of pilots and high fuel costs Exit barriers

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Porters 5 Forces (contd)

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2. POWER OF BUYERS General Indian traveler is extremely value conscious. Growing awareness has increased expectations for punctuality, safety and service. Minimal switching cost and alternatives available. No differentiation among the players in the same segment e.g. the differences between Air Deccan and Spice Jet is minimal. Transparent Web based comparisons in fare structures are available which increases the power of the customer to choose the best deal. Role of intermediaries like travel agents diminishing.
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Porters 5 Forces (contd)

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3. POWER OF SUPPLIERS
Only two major critical suppliers: aircraft suppliers enjoy

in a duopoly and fiercely control their market shares Acute shortage of pilots which makes the industry dependent on them 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 Airbus and Boeing have two radically diverse views on the future needs of civil aviation and this is reflected in their new product developments.
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Porters 5 Forces (contd)

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4. AVAILABILITY OF SUBSTITUTES
Product for product substitution- Consumers have

various options in terms of airlines to choose from. They may also switch to other modes of transport such as road and rail. Substitution for need- With the advent of technology options such as video conferencing and conference calls reduces the need to travel

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Porters 5 Forces (contd)

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5. POWER 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. Mergers and acquisitions take place here too which increases competitive rivalry between airlines Low level of differentiation between the services offered by the different airlines increases the risk of switching High fixed costs and input constraints also add to the competitive pressures in the industry
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SWOT ANALYSIS
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STRENGTHS

1. Strong backing by the Promoters

2. LCC segment is ever growing in the country

3. One of the largest low cost carriers in India 4. Has a reach to around 35 Indian destinations

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Contd..
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5. Good presence in the market due to its branding and

advertising
WEAKNESS

1. Low market share due to presence of significant competition 2. Has limited destinations and no international presence

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SWOT ANALYSIS
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OPPORTUNITIES

1. Middle Class taking to the skies

2. More opportunities to grow on popular routes and destinations

3. International tie-ups would boost brand image and reach

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THREATS

1. Strong competition in LCC segment

2. Rising Fuel Costs

3. Changing government policies

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FINANCIAL ANALYSIS
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DuPONT Analysis
2012
23.09% -142.07 -0.15 -5.78 4.64 4.02

DuPont Analysis
Current Ratio (Current Assets / Current Liabilities) Working Capital [Net Current Assets] ROS (Net Profit / Sales) A/E [Avg. Total Assets / Avg. Equity] S / A [Sales to Assets Ratio] ROE (%) [R/E] (Net Profit / Avg. Total Shareholder Equity)

2011
7.17% -291.32 0.04 2.17 4.12 0.36
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The Firms Future Plans

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It has two fold strategy :1. 2.

Boeing 737 domestic

International Operation

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Technological Investments
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SpiceJet will utilize state of the art technology to ensure

its fleet reliability and safety monitoring are second to none.

It will be making a very significant investment in

systems and technology to ensure that it can deliver a dependable operation and deliver quality customer service.
System, Star Navigation will introduce other modern features for seamless communication and information transfer.

With the installation of the In-flight Safety Monitoring

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Star Navigation has also agreed to launch the world's

first WiFi system on-board a SpiceJet aircraft, allowing the aircraft to communicate with the airline's corporate LAN, and enable high speed data downloads and uploads while in the air.

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FINANCIAL PERFORMANCE
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2012 Operating Profit Gross Profit -518.36 -497.22

2011 115.69 141.91

SpiceJets total revenues increased by 35.6% in FY 2011-12 . Revenue from operations increased by 37% . This increase was driven by better capacity utilization. Other Income during FY 2011-12 decreased by 13% due to lower income from sale and lease back transactions and a reduction in interest income.
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OBSERVATION
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Growth Enough expansion scope is there in Indian

Aviation Market .

Competition - As Kingfisher is losing its market share so

SpiceJet will face a huge competition to acquire that share .

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SUSTAINABILITY
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From the current results it can said that SpiceJet can

sustain in this industry .

Able to post a profit after 5 successive quarters. SpiceJet improved its market share from 17.1% to 18.6%.

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IMPROVEMENT TO MAKE THE FIRM PROFITABLE

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SpiceJet should take a decision to expand its operation to Tier II and Tier III cities to provide better connectivity to domestic passengers.

There are many airports which are limited by infrastructure , constraints to accommodate jets but they can be served by Turbo-propeller aircraft type.
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THANK YOU
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