SECTOR STUDY

Aviation Industry

Team Flying Aces

 • India has 464 airports and airstrips, of which 125 airports are owned by Airport Authority of India (AAI).
• These 125 AAI airports manage close to 78% of domestic passenger traffic and 22% of international passenger traffic.
• India has connectivity with 59 countries through 344 routes.

11.0% 15.90% 3.60 MMT 14.40%

Indian
Domestic Aircraft
Passenger Traffic Growth Foreign Tourist Arrival Growth Total Freight Traffic
Movement Growth

316.51 Mn

Aviation Total Passenger Traffic Apr

‘18 – Feb ‘19
252.92Mn Domestic , 63.59
$1.2Bn
MRO Industry Growth by
68.5%
Internal Freight Traffic
94.5%
Foreign Carriers for
International Flights
International 2020 from 950Mn

Industry Policy Initiatives:

49% 100% 100%

FDI in both Greenfield
100%
FDI allowed via Tax Exemption for Airports
FDI in Ground Staff &
automatic route & Brownfield Airports Open Sky Policy for 10 Years
Maintenance
for domestic and
Organizations
regional airlines
Major
Players
Airline Revenue ($Bn) Net Income ($Mn) Employees Fleet Size
IndiGo 3.5 330 14,604 167
Jet Airways 3.7 92 16,015 121
Air India 3.2 840 20956 118
Spice Jet 1.2 81 6902 58
*FY 2017 - FY 2018
 SAFETY
Number of Flights
FLIGHT OPS FINANCIALS
Fatality Operating margin
Number of PAX
Key Available Flying Time
Reportable Dangerous
Occurrence
Revenue per
available seat
Performan Spills / Releases / Reportable Occupational

ce Discharges to Land Illness / Disease

Indicators
 Increasing Investments
Growing Demand

Policy Support
• AAI driving large
• Expanding middle • Greater modernization,
income group and government focus development
projects; expansion

Growth
working population on infrastructure and upgradation of
existing airports;
• Rising domestic and • Increasing development of
low-cost airports

Drivers
foreign tourists and liberalisation, Open
• Increasing private
travelers Sky Policy sector participation,
increasing
• Strong growth in • Policy sops, FDI
greenfield projects
external trade encouragement • Strong projected
demand making
returns attractive
 Fuel Costs
Infrastructure Bottlenecks Pilot Shortages
Crude oil price has seen a rise
“Crisis in the cockpit: Indian
Capacity overload during peak travel
Various Indian states charge very times i.e, morning and evening
carriers stare at pilot
high taxes on aviation turbine fuel shortage”
Greenfield airports at Bangalore and While airlines are training and
Taxes on ATF estimated to be 35-60%

Issues
Hyderabad provide good upgrading first officers to become
higher in India as compared to other infrastructure, but the high airport captains, many haven’t hired
Jet Fuel Price
countries charges levied in the new and the enough to meet the demand for
200
older-upgraded have been adding to commanders in the coming years,
the costs of the airlines and to the raising the prospect of
150
passenger fares overworked pilots. 
Rupees/Gallon

100 Lack of good airports in tier II and III

cities and towns affects the aircraft A limited pool of homegrown
50 utilisation commanders and the government
discouraging the hiring of
0
expatriates is posing problems
Ju M No Ju M No Ju M No Ju M No Ju M No
l-0 ar v l-1 ar v l-1 ar v l-1 ar v l-1 ar v for the carriers 
9 -10 -10 1 -12 -12 3 -14 -14 5 -16 -16 7 -18 -18

 The political environment of the airline industry is
highly regulated .
 Aviation industry gives importance to passenger safety
and so they have resorted to higher regulations for the
operation of the airline
Industr  Due to the global economic slowdown the airlines are
struggling
y  The main reasons being, competition from low cost
carriers , fuel prices being higher , labor demands and
high costs of maintenance and operating costs.
Analysi  Social changes of a generation has led to more
demanding customers in terms of services
s
 Mobile technologies need to be adapted for
ticketing ,distribution and customer service.
 Need of the social media to be leveraged by the airline
industry.
 The number of lawsuits against airlines from workers
as well as the customers has gone up.
Bargaining power of Buyers
Large amount of buyers compared to the number of firms
Low switching costs between firms because many people choose the
flight based on where they are going and the cost at the time.
Loyalty to firms but not enough for high switching costs
Bargaining Power of Suppliers
Top two manufacturers in the world currently are Boeing and Airbus
Industry the inputs are extremely standardized. Airline companies only
seem to differentiate with amenities
Airline companies cannot easily switch suppliers. Most firms have long
term contracts with their suppliers
It is difficult to enter into the plane manufacturing industry because of the
capital needed to enter
Threat of New Entrants
Existing firms have a large cost advantage
Huge safety aspect involved and most consumers feel safer with firms that
have been around for a long period of time
Threat of Substitutes
Consumers can choose other form of transportation such as a car, bus,
train, or boat to get to their destination
Substitutes in the airline industry as well
Competition
Industry is currently very stagnant
Fixed costs are extremely high in this industry
Domestic
market
share
snapshot
 • Largest Asian Low Cost Carrier in
Two terms of Fleet size and passengers
carried and largest Airline in the
• Jet Airways was an Indian
International Airline and was second
biggest airline in India after Indigo.

cases: country.
• Largest Fleet in India with 238
• Catered to both Domestic and
International destinations.
• Jet Positioned itself as a premium
Indigo
aircraft.
• Caters to 66 destinations with major airline while its subsidiary Jet Lite
focus on Domestic destinations. was positioned as Low cost carrier.

and Jet • Avoids Long haul flights and focuses

on short duration flights
• Focused on providing good customer
experience and in flight services

Airways
• Does not provide complementary in • Strategy of offering both long and
flight meals to reduce operating short haul flights.
costs • More % of seats were sold in Highest
• Least % of seats sold in Highest Fare Fare bracket.
bucket
Compan
y
Analysi
s
 What
Works
in
Indian
Market?
 Future
Trends
• Use of facial, iris or fingerprint scans to identify passengers
• AI to improve operational efficiency, chatbots and virtual assistants
Digitization
• Robotics could also have a big role to play in the baggage handling sphere (Vistara’s
‘Rada’ robot, became the first robot to appear in an Indian Airport)
• Blockchain to simplify passenger identification processes, in part by reducing the need
for multiple ID checks
• “Motion sickness-free” VR inflight entertainment (IFE) solution VR headsets in airport
lounges
• IoT to redefine customer experience by revolutionising areas from baggage management
to in-flight entertainment
Sustainabilit
y in Aviation
Aviation sector currently accounts for around 2% of overall Green House Gas (GHG) Emissions.
Number of annual air passenger journeys is forecasted to increase to almost 520 million
journeys in 2037
• India expected to become the third largest air passenger market in the next ten years with
number of airports expected to grow to 200

National Green Aviation Policy drafted by Ministry of Aviation to promote green and sustainable
growth of air transportation in India by minimizing the adverse environmental impacts of civil
aviation activities

• Use of bio jet fuels, energy efficient infrastructure electric vehicle, green taxiing vehicle etc.
proper regulatory frameworks and favourable market conditions will help in Aviation GHG
reduction
Thank you