05 DOT CivilAviation Final Report

M& A
This report was prepared with financial assistance from the Department of Tourism and Culture,
Government of India. The views expressed herein are those of the Consulting Team,
and do not represent any official view or stance of the DOT.
Impact of Civil Aviation Policies on Tourism In India
M& A
IMPACT OF CIVIL AVIATION POLICIES
ON TOURISM IN INDIA
I N D E X
Section
Subject
Page Nos.
ABBREVIATIONS
GLOSSARY
1.
INTRODUCTION
Introduction
Background to the Study
Approach
Constraints
Layout Of The Report
2.
IMPACT OF CIVIL AVIATION ON THE ECONOMY
Economic Growth & GDP Growth - World
The Price Effect on Demand For Air Services
Indias GDP Vs Tourist Arrivals
Indian Air Transport Activity - Comparisons
Air Transport Driver of Economic Growth (World)
The Impact of Civil Aviation on Tourism
Aviation Industry Contribution to FDI
5
5
6
6
8
8
10
11
3.
CAPACITY & LOAD FACTORS
Indias Air Connectivity Flag Carrier & Other Airlines
Seat Capacity & Load Factors
Load Factors on Key Source & Destination Markets
Increases & Decreases in Seat Capacity
Ticket Prices to India A Comparison
What the Airlines & the Trade Say / Want
13
14
15
20
25
30
33
4.
DEMAND FOR AIR TRAVEL
Characteristics of Business / Leisure Travellers
India A Long Haul Destination
India Air Traffic Growth
Major Source Markets
Seasonality - Inbound
NRI Source Markets
Major Outbound Source Markets
Purpose of Travel
Overseas Foreign Workers
Seasonality - Outbound
Outbound Traffic by Airport
Growth Forecasts
35
35
36
37
38
38
40
41
42
44
46
47
48
5.
BILATERALS
Air Service Agreements & Bilaterals
Indias International Air Services Policy
Indias Need For A Clear Policy
Utilisation of Capacity Entitlements by Foreign Carriers
Charter Services
Inbound Charter Services
Outbound Charter Services
49
49
54
57
58
62
63
63
1
1
2
2
3
4
INDEX
M& A
I N D E X
Contd.
Section
Subject
Page Nos.
6.
ECONOMICS OF AIRLINES & THE CASE FOR AIR INDIA
The Airline Industry
The Case for Air India
Airports A Case for Privatisation
Model On Relaxation of Blockshare / Royalty Arrangements
Civil Aviation Vs Tourism Effect on the Indian Economy
65
65
69
71
72
75
7.
THE CASE FOR LIBERALISATION & RECOMMENDATIONS
Bilaterals & Seat Capacity
Charters
Airports / Ground Handling
Privatisation / Air India
80
81
86
86
87
APPENDICES
Appendix
No.
Particulars
Page
No.
Append. I
Correlation Between World GDP / RPKs & ASKs
Append. II
Load Factors on All City Pairs Reported by ICAO for CYs 2000
90 94
Append. III
95 98
Append. IV
99 100
Append. V
Passengers Carried by City Pair in FY 2002 (as reported by DGCA)
101 104
Append. VI
Flights Added / Discontinued by Key Markets Post 9/11 To Date.
105 107
Append. VII
Flights Added / Discontinued by Indian Airport Post 9/11 To Date
108 109
Append. VIII
Tourist Arrivals to India From Top 15 Source Markets By Quarter FY 2001
Append. IX
Details On Indias Air Services Agreements (2001)
Append. X
Air Indias Block Space Arrangements.
113
Append. XI
Recent Major Airport Privatisation / Potential Major Privatisations in 2002 / 2003.
114
Append. XII
Disparity In ATF Pricing For Air India / IAC On International Routes
BIBLIOGRAPHY
89
110
111 112
115 - 116
117
INDEX
M& A
ABBREVIATIONS
AAI ACI AEA AI APEC ASA ASEAN ASK ATAG

BA CAGR DGCA DOT EC EFTA EU FDI GATS GDP IA / IAC IATA ICAO IMF
JAL KLM MOU na OECD PATA RPK SIA
UAE
UK US WTO WTTC -
Airport Authorities of India

Airports Council International
Association of European Airlines
Air India
Asia-Pacific Economic Cooperation
Air Services Arrangements
Association of South-East Asian Nations
Available Seat Kilometer
Air Transport Action Group
British Airways
Compounded Annual Growth Rate
Directorate General of Civil Aviation
Department of Tourism, Government of India
European Commission
European Free Trade Association
European Union
Foreign Direct Investment
General Agreement on Trade in Services
Gross Domestic Product
Indian Airlines
International Air Transport Association
International Civil Aviation Organization
International Monetary Fund
Japan Airlines
KLM Royal Dutch Airlines
Memorandum of Understanding
Not applicable
Organization for Economic Co-operation and Development
Pacific Asia Travel Association
Revenue passenger-kilometer
Singapore Airlines
United Arab Emirates
United Kingdom
United States
World Trade Organization
World Travel and Tourism Council
Abbreviations
M& A
GLOSSARY OF TERMS
Air Services Agreement -
An agreement with formal treaty status between

governments regulating the conduct of trade in
international air services. It consists of a series of articles
(or provisions).
Alliance -
An agreement between airlines to cooperate in the

provision or operation of some of their services on a route,
or on a regional or global basis.
Available seat kilometers -
The total number of seats offered multiplied by the

distance flown, used as a measure of air transport
passenger capacity.
Blocked space agreement -
The purchase by one carrier of a block of seats from

another carrier for resale to passengers directly.
Cabotage -
Provision of commercial domestic air services within a

country. Cabotage rights are classified as either
consecutive cabotage the right of foreign-owned
airline(s) to fly a domestic flight stage within the host
country as a continuation of an international service (also
know as eighth freedom) or standalone cabotage the
unrestricted right of foreign-owned airline(s) to provide
domestic air services in the host country (also known as
ninth freedom).
Capacity allocation -
The allocation of rights to individual airlines to fly services

available under ASAs.
Charter services -
See non-scheduled services.
City pair -
An air route between two cities.
City designation -
The designation of air services to particular cities, or a

choice of cities specified under an ASA.
Codesharing -
The assignment of one airlines designator code (for

example, AI for Air India) to a flight operated by another
airline.
Double disapproval -
Arrangements in bilateral air service agreements whereby

proposed fares can be disallowed only if rejected by both
contracting countries.
Fourth freedom traffic right-
The right of a designated airline of one country to take on,

in the territory of another Country, passengers, freight and
mail for off-loading in the Country in which it is licensed.
Glossary Of Terms
M& A
Fifth freedom traffic right -
the right of designated airline of one country to carry

passengers, freight and mail between two countries other
than the country in which it is licensed.
Flag carrier -
A countrys national airline. Countries with only a

government-owned airline often identify the airline as the
national or flag carrier.
Freedoms of the air -
Types of international aviation rights established under

ASAs.
Hub and spoke network -
A network of routes operating through a central hub point.

Airlines may channel and increase traffic through hub
points, thereby creating economies of traffic density.
Intermediate rights -
The right of a carrier from one country to fly to another

country via a third country (a form of fifth freedom rights).
Landing and take-off slots -
A landing and/or take-off time at an airport.
Load factor -
The number of passengers carried as a percentage of the

number of seats available.
Memorandum of Understanding - An agreement between two parties. With regard to ASAs,

it is a less formal type of agreement that may be as
binding as a formal agreement and may cover scheduled
and/or non-scheduled international air services.
Multilateral (agreement) -
A trade agreement that encompasses a large number of

countries.
Dual / Multiple designation -
A countrys policy of permitting more than one airline to

operate scheduled international air services between it
and other destinations.
Non-scheduled airline -
Any air transport enterprise only offering air transport

services to the public that are not performed according to
a regular timetable.
Non-scheduled services -
Flights performed for remuneration on an irregular basis.

[Both scheduled and non-scheduled airlines provide nonscheduled services.] Usually referred to charter services
and can apply to either passengers or freight.
Open skies agreement -
An agreement to remove restrictions on the ability of

airlines to operate services between two countries.
Origin destination traffic -
A measure of airline (passenger) traffic between the

commencement point of an air passengers journey and
the end point of the journey, as distinguished from uplift
discharge traffic.
Glossary Of Terms
M& A
Plurilateral (agreement) -
A trade agreement, not necessarily confined to a

geographic region, between more than two countries, but
not so many as to make it multilateral.
Revenue passengers
A commercial passenger for whose transportation an air

carrier receives commercial remuneration.
Revenue passenger kilometres -
The number of paying passengers on an aircraft multiplied

by the number of kilometres flown, used as a measure of
air passenger travel services.
Route -
At its simplest level, an air service between two points or

cities.
Scheduled airline -
Any airline operating regular air services according to a

published timetable (Many also operate non-scheduled
services).
Scheduled services -
Flights listed in a published timetable (or that are so

regular and frequent as to constitute a recognizably
systematic series) and performed for remuneration.
Single designation -
A countrys policy of permitting only one airline to operate

scheduled international air services between it and other
destinations.
Stage length -
The distance flown between take-off and landing.
Stopover rights -
The right of a carrier from one country to carry its own

international passengers between two points within
another country.
Substantial ownership -
All or majority ownership of an airline by citizens in the

country of registration. There is no internationally agreed
standard, so each country can determine what it accepts
as substantial ownership.
Tariffs -
The prices to be paid for the carriage of passengers,

baggage or cargo (excluding mail) on scheduled air
services and the conditions, under which these prices
apply, including remuneration and conditions offered to
travel agencies and other auxiliary services.
Thin route -
Route over which traffic and frequency is low.
Third freedom traffic right -
The right of an Eligible Airline of one State Party to put

down, in the territory of another State Party, passengers,
freight and mail taken up in the State Party in which it is
licensed.
Yield -
Airline revenue per unit of traffic. Passenger yield is airline

revenue per passenger kilometer.
Glossary Of Terms
M& A
1.
INTRODUCTION
INTRODUCTION
1.1
This study seeks to provide aviation industry stakeholders and tourism authorities with
the necessary information regarding priority areas for the development of civil aviation in
India and identify appropriate actions that need to be taken going forward. The study
has been initiated by the Department of Tourism, Government of India and includes
CRISIL as the lead consultant supported by Mahajan & Aibara (M&A).
1.2
The objective of the study is to aid industry stakeholders in resolving issues presently
facing the aviation / tourism transport industry and guide in improving policies,
investment and business decision-making within and related to these sectors. This
document deals specifically with issues regarding air seat capacity and strategies for air
services negotiations. Related subjects under civil aviation - Airports & Infrastructure,
price related impediments are also covered in this report.
1.3
The overall aim of this report is to present a case to secure adequate seat additional
capacity with a focus on Indias key source and destination markets. The Consulting
Team defines adequate seat capacity to be the extent to which supply matches current
and anticipated demand and need in the most cost-effective way.
1.4
This report also presents and evaluates via an econometric model the direct, indirect
and induced impacts of Indias international aviation arrangements on the market for air
travel to and from India. Specifically, the consulting team has modelled the competitive
effects of incremental seat capacity on prices, employment and net tourism. Finally it
examines the issues surrounding the proposed liberalisation of Indias policy for civil
aviation, and provides a suggested policy option plan for the continued development of
the Indian civil aviation industry and including the pace and extent to which the policy
should be liberalized and the potential effect of that liberalisation on the Indian
economy, airline and tourism sectors.
1.5
This review does not cover policy issues for airfreight. Furthermore, it is not the intent of
this review to raise issues relating to aviation safety, security, technical aspects or
environmental concerns and therefore these areas are specifically not dealt with in this
report.
(1)
Introduction
M& A
BACKGROUND TO THE STUDY

Objective
1.6
The purpose of the study was to identify and analyse the effect of current civil aviation
policies and practices in India and to assess the economic impact, such barriers have
on :
The Tourism industry in India with a focus on the International tourist
The Civil Aviation industry in the country (International)
Air India and Indian Airlines (for international traffic)
The inbound and outbound tourist (consumer)
Airport facilities in the country
1.7
To make recommendations on suggested civil aviation policy, based on researched

economic data, to promote Tourism in India. Recommendations and suggestions on
changes that may be considered for implementation on :
o
o
o
o
Air Services Agreements (ASAs)

Tariff Structures and Pricing
Seat capacity augmentation
Tax impacts on air travel and ATF
1.8
It was originally intended that this study addresses both International and domestic civil
aviation issues. However, the DOT was of the opinion, with which the consulting team
concurs, that issues relating to Bilaterals be concentrated upon as domestic civil
aviation issues follow a different set of policies that have, post liberalisation been
pragmatic.
1.9
This study seeks to identify gaps in the current approach by policy makers to the civil
aviation sector. It does not seek to address detailed points of implementation. The
recommendations provided are the consulting teams views on what ought to be done to
improve air connectivity and access to India and are presented for consideration only.
1.10
The key findings and recommendations are provided in presentation and report form.
APPROACH
1.11
In order to accomplish the objectives the Consulting Team performed the following
tasks:
1.
Reviewed and compiled data on historical and current market trends of the global
commercial aviation and tourism industry. In an effort to put India's commercial
aviation and tourism sectors in context with those of peer countries, the consulting
team has conducted benchmarking exercises in several areas so as to identify
international best practices.
(2)
Introduction
M& A
2.
Collated data on air seat capacities and load factors by airline, by city pair from
several secondary sources such as DGCA, ICAO and airline timetables with a
view to identifying routes requiring additional seats / frequencies.
3.
Conducted detailed background and contextual research on key issues affecting

the civil aviation sector in India, including relevant statistics and trends,
identification of key regulatory issues and other barriers to growth including taxes
and airport charges.
4.
Reviewed the current regulatory / legislative framework in which international air

services operate, including multilateral as well as bilateral structures, and the
objectives of the framework.
5.
Analysed and assessed the benefits, disadvantages and overall effects of the
international aviation regulatory framework and the sectoral effects of India's
current stance to negotiating bilateral air services agreements for the tourism and
the aviation industry.
6.
Conducted interviews with key industry stakeholders in the aviation, tourism and
related industries to discuss their views on current impediments and barriers for
this sector so as to develop recommendations to meet the study objectives.
7.
Identified options for efficient and effective delivery of tourism-related infrastructure

and transport services.
CONSTRAINTS
1.12
We think it is important to re-emphasize the constraints, within which this study was
conducted, so as to ensure that its outputs are interpreted correctly and used
appropriately.
1.13
CRISIL / M&A have endeavored to present as extensive an analysis as possible, given

the limited scope and time frame allocated for the study. The report does, provide the
economic and regulatory background necessary for the DOT to assess the potential for
action against present impediments and hindrances. It is important, however to
emphasize that this study should be considered only as the first step en-route to
eliminating barriers that are identified and deemed to have a sufficiently significant effect
on the Indian tourism and civil aviation sectors.
1.14
The findings contained in the report reflect analysis of primary and secondary sources of
information including previously completed reports and analysis prepared by CRISIL /
M&A. Sources quoted or referred to in this report are deemed reliable; however, we do
not guarantee their accuracy.
1.15
It must be emphasized that in some instances the consultants were unable to procure
necessary data or / and were unable to get up-to-date data. They were informed that
certain data was confidential or not officially collected at all. In such instances,
qualitative assessments have, where appropriate, been made.
(3)
Introduction
M& A
1.16
Work on this project commenced in March 2003. Consequently, as many changes have
taken place since then, the circumstances of some of the barriers we speak of in this
report may have changed. The analysis in this report is an analysis of the initial
impediments that were identified, although we have tried to update the analysis as much
as possible within the changed economic and regulatory circumstances. It is therefore
recommended that should the DOT contemplate taking any issues related to regulatory
restrictions and / or bilateral agreements with the Ministry of Civil Aviation at a future
date, the up-to-date status on the relevant issues will need to be re-assessed.
LAYOUT OF THE REPORT

1.17
This report is structured as follows.

Section 2 :
Impact Of Civil Aviation On The Economy
Section 3 :
Capacity & Load Factors
Section 4 :
Demand For Air Travel
Section 5 :
Bilaterals
Section 6 :
Economics Of Airlines & The Case For Air India
Section 7 :
The Case for Liberalisation & Recommendations
Appendices
(4)
Introduction
M& A
2.
IMPACT OF CIVIL AVIATION ON THE ECONOMY
ECONOMIC GROWTH & GDP GROWTH - WORLD

2.1
The commercial aviation industry has grown rapidly, with worldwide scheduled domestic
and international air traffic increasing from 9 million passengers in 1945 to over 1.6
billion in 2002. On average, passenger traffic has grown at 10 per cent annually. Growth
rates vary significantly from exceeding 20 per cent annually in the first post-war decade,
to more moderate increases in recent decades as the air transport market has become
more mature. The only two exceptions when world air traffic recorded declined were in
1991 following the 1990 Gulf War and in 2001 in the aftermath of the events of 11
September in that year.
2.2
Although growth in world air traffic has been much greater than world economic growth,
there is a high correlation between the two. Statistical analyses show that historically for
every 1% growth in GDP, Revenue Passenger Kilometres (RPKs) and Available Seat
Kilometres (ASKs) {broadly the more scientific terms for passengers traveling and seat
capacity respectively that takes into account the distance of travel} grew at a little over
double that rate. Details are provided in Appendix I. The converse is that for every 2%
growth in RPKs / ASKs, GDP grew 1%. Travel reflects increasing commercial and
trade activity and increasing disposable personal income and propensity to travel.
Exhibit 2.1 below illustrates the correlation.
EXHIBIT 2.1
WORLD GDP GROWTH Vs TRAFFIC GROWTH
GDP, ASK and RPK 1972-2002
15
% change
10
GDP change
Change (ASK)
RPK change
0
-5
2000
2002E
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
-10
Source: IMF/IATA
(5)
Impact of Civil Aviation on Economy
M& A
2.3
World GDP is forecast to grow by 2.9% over the next 20 years. In mature economies,
GDP growth will average between 2% & 3% per year. By contrast, GDP growth in
developing regions may average over 4%. China is forecast to have the fastest growing
GDP at 5.9%, World air traffic measured in RPKs will grow 4.9% annually over the next
20 years, or two percentage points more than GDP. Southwest Asia (includes India)
and Africa GDP and traffic have historically lagged the world. Both regions are forecast
to grow above the world average over the next 20 years.
THE PRICE EFFECT ON DEMAND FOR AIR SERVICES

2.4
A steady fall in real prices of airfares has contributed substantially to increased air
travel. While GDP growth and falling prices (in real terms) alone may not be
representative of air traffic trends at the regional or country level, they do depict aviation
trends at the global level. The illustration that follows (Exhibit 2.2 below) shows the
downward trends in air fares world wide.
2.5
Over the past four decades there appears to have been a change in the balance of
importance between GDP and real price factors. During the period 1960-1990 some
80% of traffic growth was explained by GDP growth, with 20% due to price reduction, in
the 1990s this appears to be nearer 60% and 40% respectively. Since the 1990s, price
reduction has become more important as average world GDP growth rates have
softened. (Source: ATAG)
EXHIBIT 2.2
DECLINE IN AIR FARES (in Real Terms)
INDIAS GDP Vs TOURIST ARRIVALS

2.6
In India GDP growth in the period from 1996 to 2001 (the post Hindu rate of growth
period) has been on average 6.28% whereas the annual compounded increase in
inbound and outbound international traffic has been 4.8% and 2.4% for domestic traffic.
India is now on a roll with a visibly strengthening economy and expectations of
significantly higher rates of GDP growth. It is imperative that this not be
constrained by insufficient international seat capacity to and from the country.
This is the main thrust of this report.
(6)
M& A
2.7
The Indian economy will only achieve its economic potential if we are able to compete in
the industries of the future. We need to be strong in the areas with the potential to grow
rapidly and this includes the aviation industry itself. The demand for air transport has
risen strongly over the last 25 years, driven by falling real prices and rising incomes.
EXHIBIT 2.3
GDP & TRAFFIC GROWTH FY 96 TO FY 01
12.0%
GDP
Traffic
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
95-96
96-97
97-98
98-99
99-00
00-01
GDP
7.6%
7.8%
4.8%
6.5%
6.4%
4.4%
Traffic
9.7%
1.1%
-0.1%
5.0%
6.0%
3.7%
Source: DGCA, Ministry of Commerce & Industry
2.8
A comparison of GDP V/s International traffic growth for China and India, two of the
fastest growing economies worldwide, is provided in the exhibit that follows. As may be
noted, there is a significant disparity in growth of international traffic relative to GDP
growth for India. This gap may have negative implications for the Indian economy, as
there is a strong link between these two growth indicators, as explained earlier in this
section.
EXHIBIT 2.4
CHINA / INDIA GDP V/s INT TRAFFIC
5.0%
4.5%
4.3%
4%
Percentage of World
4.0%
3.5%
3.0%
2.5%
2.0%
1.7%
1.5%
0.7%
1.0%
0.5%
0.0%
China
India
GDP
Intl Traffic
Source: IMF World Economic Outlook 2001, DGCA, General

Administration of Civil Aviation of China, China Statistical Bureau
(7)
M& A
INDIAN AIR TRANSPORT ACTIVITY COMPARISONS

2.9
Countries with developed economies exhibit higher levels of air transport activity. In
these countries, the relatively higher disposable per capita income results in the
propensity of people to spend on air travel. An increase in airline activity can therefore
provide a useful indicator of the progress of a nations economy. As may be seen by the
illustration given below, India lags far behind not only the developed economies but
even in comparison to peer nations such as China and Pakistan.
EXHIBIT 2.5
AIR TRANSPORT & GNP
AIR TRANSPORT DRIVER OF ECONOMIC GROWTH (WORLD)

2.10
Air transport is a driver of economic development. The economic stimuli of airlines,

airports and their direct affiliates beyond their direct impact, can be expressed using
output and employment multipliers. Every $100 of output produced and every 100 jobs
generated by air transport trigger additional demand of $325 and 610 jobs in other
industries throughout the global economy. More than four and a half per cent of world
economic output may be attributed to civil aviation (Source: ICAO). Expert studies from
WTO show that for every job saved by protectionist air transport policies, up to four can
be lost in the economy through reduced tourism spending.
2.11
Based on a study conducted by ICAO the total economic activity related to airline
services was estimated at $973 Billion of which provision of services accounted for $318
Billion, use of services $529 Billion and activity related to manufacturing of goods $126
Billion.
(8)
M& A
2.12
Airlines are also labour intensive. Each major airline employs a virtual army of pilots,
flight attendants, mechanics, baggage handlers, reservation agents, gate agents,
security personnel, cooks, cleaners, managers, accountants, lawyers, etc. Computers
have enabled airlines to automate many tasks, but there is no changing the fact that
they are a service business, where customers require personal attention. In the year
2000, more than 30.5 million jobs can be attributed to civil aviation (Source: IATA) this is
broken up as follows :
Directly
4.3 millions
Indirectly
9.3 millions
Induced
16.9 millions
2.13
Recent studies suggest that the drawbacks to national economies from protectionist
aviation regimes dramatically outweigh the benefits, when measured in terms of GDP,
tax revenues and jobs. WTTC's report The Way Forward makes a strong economic
case for liberalisation, focusing on: the elimination of market controls; privatization;
cross border ownership; an end to subsidies; and fair competitive opportunities.
2.14
Due to its role as a facilitator of international trade in goods and services, particularly
tourism, civil aviation holds important significance for developing nations like India and
has the potential to significantly improve, both directly and indirectly, the economic
prospects of the nation.
(9)
M& A
THE IMPACT OF CIVIL AVIATION ON TOURISM
2.15
The term Tourism is often associated with Leisure / Holiday visitors. It therefore needs
to be clarified that in the context of this report and the tourism industry the term tourist
includes several segments of visitor arrivals as explained below. The definition of
tourism is - Activities related to persons traveling to and staying in places outside their
usual environment for not more than one consecutive year for leisure, business and
other purposes. (Source UN / WTO 1993). This would therefore include :
Domestic tourism, involving residents of the given country traveling only within the
country; on business or leisure.
Inbound tourism, involving non-residents traveling in the given country on
business, leisure or Visiting Friends & Relatives (the VFR segment that includes
NRIs).
Outbound tourism, involving Indian residents traveling to another country on
business, pleasure or for employment (Overseas Foreign Workers -OFW).
2.16
It thus needs to be borne in mind that tourists do not include only leisure travellers and
as such all data on international visitors contained in this report includes all segments of
travellers as mentioned above.
2.17
Travel & Tourism is the world's biggest industry, accounting for nearly 200 million jobs,
and over 10 per cent of world GDP, more than US$ 3,500 billion. It is a "high-multipliereffect" industry - it employs large numbers of people, and requires large amounts of
local inputs for ongoing operations. WTOs Tourism 2020 Vision forecasts that
international arrivals are expected to reach over 1.56 billion by the year 2020 of which
1.18 billion will be intra-regional and 377 million will be long-haul travellers. It is
expected that, that long-haul travel worldwide will grow faster, at 5.4 per cent per year
over the period 1995-2020, than intra-regional travel, at 3.8 per cent. Details on
forecasts by WTTC (Tourism Satellite Accounting Research) for Indias Travel &
Tourism Industry are provided below.
2.18
In 2003, India's Travel & Tourism Industry is expected to generate Rs. 529.4 billion
(US$ 10.5 billion) - 2.0 per cent of Gross Domestic Product and 11,093,100 jobs representing 2.7 per cent of total Employment.
2.19
The Travel & Tourism Economy (direct & indirect impacts) is expected to generate Rs. 1,274.6 billion (US$ 25.3 billion) - 4.8 per cent of Gross Domestic Product,
23,839,800 jobs - 5.8 per cent of total Employment,
Rs. 234.5 billion (US$ 4.6 billion) of Exports, services & merchandise - 5.9 per cent
of total Exports,
Rs. 412.9 billion (US$ 8.2 billion) of Capital Investment - 7.0 per cent of total
investment,
Rs. 32.5 billion (US$ 0.6 billion) of Government Expenditures - 1.0 per cent share.
2.20
The forecast for Travel & Tourism demand is expected to total 7.4 per cent real growth
in 2003, and 8.8 percent real growth per annum between 2004 and 2013. This
assumes no constraints in airline seat capacity.
( 10 )
M& A
AVIATION INDUSTRY - CONTRIBUTION TO FDI
2.21
The growth of both inward and outward foreign direct investment has been an integral
part of the globalization of the world economy. Inward investment brings with it important
benefits to the recipient country, the more obvious ones being in terms of increased
employment and output, but also in the transfer of technology and new management
techniques from overseas.
2.22
The development of the software industry, call centers, back office processing and the
plethora of other services that have been unleashed by the availability of advanced
telecom infrastructure coupled with the availability of educated, English speaking
workforce makes the Information Technology Enabled Services (ITES) a future driver of
growth in the Indian service sector, which like exports is dependant on transport links.
2.23
A wide range of factors play a part in determining the scale and distribution of foreign
direct investment. These would include labor costs in the recipient country, market
access; political stability; tax and other incentives; and trade policy. But the trend
towards globalization is making good international communications and transport links
an increasingly important component of firms investment decisions.
2.24
Good transport links, flight frequencies and choice of destination are essential if India is
to attract investment in high technology sectors such as electronics, as well as in
industries such as the car industry, which depend increasingly on just-in-time deliveries.
Though not an overriding consideration, air connectivity does play an important role in
encouraging and facilitating FDI to a nation. The illustration below provides details on
the inflow of FDI into India over a 10 yr period.
EXHIBIT 2.6
FOREIGN DIRECT INVESTMENT ANNUAL INFLOW
6.00
US$ Billions
4.8
4.0
4.00
3.4
3.0
3.00
2.2
2.00
1.00
4.7
4.6
5.00
1.0
0.1
0.3
0.6
0.00
1991
1992
1993
1994 1995
1996
1997 1998
1999 2000- 200101

02
Cumulative FDI Approval 1991-2002(August): US$ 76.15 billion / Inflow 1991-2002 (August): US$ 30.98 billion
( 11 )
M& A
2.25
The ratio of FDI inflow in percentage terms to Indias GDP has ranged from 0.6% in
1995 to 0.5% in 2000. In comparison FDI inflows have contributed 5.1% in 1995 to 3.8%
in 2000 to Chinas GDP. Improved air connectivity would be one factor to increase FDI
inflows into India especially ensuring links with the key sources of FDI like the United
States, UK, and Continental Europe.
2.26
Exhibit 2.7 provides details on growth in weekly international seat capacity for select
countries between 1989 & 2000. Seat capacity on all international routes to India
registered a growth of 40% between 1989 and 2000: In comparison, China saw a
growth of 485% and even countries like U.K. the U.S. with a relatively higher base than
India, recorded a higher growth rate at 101% and 61% respectively.
EXHIBIT 2.7
GROWTH IN AIR SEAT CAPACITY
(PER WEEK / EACH DIRECTION)
Country
China
Spain
Germany
Turkey
Portugal
Ireland
Italy
Sweden
UK
France
Japan
Canada
USA
India
Yr 1989
Yr 2000
279,404
656,596
1,367,185
175,869
143,063
200,998
602,903
212,870
1,493,371
887,427
631,507
481,182
1,989,339
155,693
47,725
189,390
479,208
68,679
61,123
88,375
269,287
95,975
743,460
489,027
370,134
289,111
1,238,904
111,277
% change
485%
247%
185%
156%
134%
127%
124%
122%
101%
81%
71%
66%
61%
40%
Source : OAG, 2000
( 12 )
M& A
3.
CAPACITY & LOAD FACTORS
3.1
This section of the report establishes the context and rationale for the development of
objectives and initiatives for change in Indias current approach to the international air
services market. It examines the current provision of seat capacity to India at an
aggregate level as well as on a city pair basis. The Consulting Team has attempted to
present a case for and assist government and industry stakeholders to address capacity
shortfalls or excesses in a timely and proactive manner.
3.2
GOI needs to achieve significant growth in Indias international tourism arrivals and
receipts. Air services, air seat capacity and pricing are proving to be critical barriers to
Indias ability to become competitive in the global tourism market. The Ministry of Civil
Aviation, as regulator of the aviation sector, needs to take a stance on key issues so as
to:
3.3
Ensure adequate frequencies / capacity to core markets for tourism & investment,
Ensure that India has strong flag carrier/s who are investing in increasing capacity
to meet future demand and growth,
Ensure a competitive regulatory framework so as to safeguard consumer interests
including pricing & service levels.
Exhibit 3.1 below benchmarks international airlines operating to Indian cities against
peer cities in S.East Asia. It may be inferred from this exhibit that while Delhi and
Mumbai are served by 37 & 34 airlines respectively, 79 airlines operate to Bangkok;
more than double of either of Indias two gateway cities.
EXHIBIT 3.1
AIRLINES OPERATING PEER COMPARISON
Number of Airlines Operating
Bangkok
79
67
Hongkong
Singapore
64
49
Tokyo
Sydney
43
37
Delhi
Mumbai
34
13
Chennai
Kolkatta
10
8
Trivandrum
0
10
20
30
40
50
60
70
80
90
Source: CRISIL / M & A survey
( 13 )
M& A
3.4
Similarly Exhibit 3.2 brings out the marked discrepancy in air connectivity from Mumbai
compared with Hong Kong relative to their respective key source markets.
EXHIBIT 3.2
HONG KONG Vs MUMBAI CONNECTIVITY COMPARISON
From Hong Kong
From Mumbai
c
Destination
Flights/Week
Bangkok
Taipei
Singapore
Tokyo
London
115
233
157
92
75
Destination
Dubai
Muscat
Singapore
Paris
London
Flights/Week
30
24
19
13
12
Source: CRISIL / M & A survey
INDIAS AIR CONNECTIVITY FLAG CARRIER & OTHER AIRLINES

3.5
Exhibit 3.3 depicts the availability of direct services from Indias key and emerging
source markets in approximate order of Importance. Three of Indias key source /
emerging markets currently have no direct air services and nearly half of our key source
markets are currently not served by an Indian flag carrier on a direct service.
EXHIBIT 3.3
AIR SERVICIES FROM KEY / EMERGING SOURCE MARKETS
Direct Services
AI/ IA
Foreign Carrier
US
UK
Sri Lanka
France
Germany
Canada
Japan
Australia
Malaysia
Italy
Singapore
Netherlands
Israel
Switzerland
Spain
Korea
South Africa
( 14 )
M& A
SEAT CAPACITY & LOAD FACTORS

3.6
In assessing the situation with regard to seat capacity in the country, the most important
indicator is load factor for each city pair (routing from origin to destination). Obtaining
authentic data for in-bound and out-bound passenger traffic and seat capacity, so as to
arrive at average load factors has been an extremely difficult and arduous task. The
Consulting Team has tapped various data sources and the information contained in this
report, even though it does not address 100% of the market, is considered to be from
reliable sources and thus representative.
3.7
For the calendar years 2000, 2001 and 2002 seat capacity and revenue passenger
traffic has been obtained from the International Civil Aviation Organization (ICAO), a UN
agency that is responsible for establishing international standards, recommended
practices and procedures covering the technical, economic and legal fields of
international civil aviation operations. The data for these years has been obtained from
the ICAO Statistics Programme on payment of fees and has been recompiled by the
Consulting Team. ICAO obtains this data directly from airlines; under Article 67 of the
Convention on International Civil Aviation, each State undertakes that its international
airlines shall file traffic reports, cost statistics and financial statements with ICAO.
3.8
The Consulting Team has also independently carried out compilations of seat capacity
from airline time tables. However these are point in time compilations where frequent
changes in flight pattern, type of aircraft used and frequencies lead to inaccuracies. It
was therefore felt more appropriate to utilise ICAO data even though this only addresses
approximately 60% of the total flights to & from India in 2001 and a lesser proportion in
2002.
3.9
Unfortunately the data provided does not include figures for certain key carriers
(especially 2002 where even Air Indias data is not available) who have not submitted
returns to ICAO and are therefore excluded from the compilation. The more important
airlines that are omitted from this analysis include Emirates (present capacity approx.
10,300 seats per week), Gulf Air (10,600 seats per week), Saudia (8,500 seats per
week) Syrian Arab Airlines, Yemenia Yemen Airlines and a few others.
3.10
For the purposes of this exercise, the origin of all city pairs is the last port of call before
India. It therefore follows that long haul destinations such as the USA where there are
no direct flights to India, will not figure as passengers from the USA for example,
traveling to India, would normally travel through the UK or Europe or from the West
Coast via the Far East.
3.11
The current trend in civil aviation is for point to point flights. The earlier concept of
hopping flights (that are still popular with Air India) are now outdated. Most recognised
airlines concentrate on efficient point to point services. Where hoppers still operate, the
last port of call outside India is taken as the origin. Similarly where a flight touches more
than one port of call in India on its way overseas, the last port of call is used in the city
pair analysis provided.
( 15 )
M& A
3.12
In aviation parlance it is normally accepted that where average load factors year round
exceed 70%, especially in geographic areas / locations where there is high seasonal
variation, there is a case for increasing capacity. Taking into account seasonality, load
factors in excess of 70%, would normally result in unavailability of seats, as we witness
in India during the peak season. Based on discussions with airline officials the 70%
norm needs to be seen in the light of several factors which include the distance flown,
type of aircraft used, operating costs (fuel), royalties paid and ticket pricing. Therefore
low yielding routes would need higher average load factors to ensure airline profitability
and induce them to increase seat capacity.
3.13
In addition if an airline is already flying to a particular location, they incur a level of fixed
costs, which would only increase marginally with an increase in frequencies / capacity.
During the survey conducted all airlines flying less than daily frequencies to a particular
location, expressed interest in increasing to daily frequencies.
3.14
Based on the information provided by ICAO, load factors by the top 20 city pairs to India
for the calendar years 2000, 2001 and 2002 are provided in Exhibit 3.4 overleaf. These
20 city pairs alone account for over 55% of the total reported international passenger
traffic. A comprehensive listings are provided in Appendices II to IV.
3.15
It should be noted that the city pairs listed in this exhibit do not include the important
Gulf carriers (or Gulf routes), had this data been available then some of Gulf routes
would have figured prominently on the list of the top 20 city pairs. In order to put traffic
patterns in perspective Exhibit 3.5 that follows provides details of passengers carried,
by city pair in FY 2002 as reported by the DGCA. As may be noted 6 of the top 20 are
Gulf routes. Mumbai Dubai tops the list. Comprehensive data by city pair is provided
in Appendix V.
3.16
It needs to be borne that India was severely affected during the peak season in CY
2001 due to the post September 11 aftermath. This is reflected in the lower load factors
when compared with CY 2000. For the calendar year 2000, the top 20 city pairs had a
load factor of 81.5%, in 2001 73.4%, and in 2002 - 75.9%. Had the Gulf carriers been
included the load factors in all these years would have been higher.
3.17
It needs to be noted that the purpose of the data provided in Exhibit 3.4 and the country
wise analyses provided in Exhibits 3.6 to 3.13 is to highlight load factors and not
passengers carried or capacity. As has been explained earlier, the data reported by
ICAO is not complete as all airlines have not provided information. In order to gauge the
importance of the important city pairs based on actual passengers carried, information
provided by DGCA for FY 2002 is provided in Exhibit 3.5.
( 16 )
M& A
EXHIBIT 3.4
LOAD FACTORS TOP 20 CITY PAIRS CY 2002, 2001 & 2000
SORTED BY PAX VOLUME ON CY 2001
City Pair
Sr.
No
CY 2002
Traffic
Load
(revenue pax)
Factors
CY 2001
Traffic
Load
(revenue pax)
Factors
CY 2000
Traffic
Load
(revenue pax)
Factors
Chennai
Singapore
231,762
83.6%
485,276
77.4%
523,278
84.1%
Delhi
London
236,783
74.1%
467,219
70.0%
414,948
81.6%
Mumbai
London
177,055
76.1%
408,434
76.9%
439,544
79.4%
Mumbai
Singapore
245,126
84.1%
315,651
70.5%
211,898
87.2%
77.7%
Chennai
Colombo
230,255
65.6%
314,542
76.6%
281,962
Mumbai
Frankfurt
206,494
77.7%
254,544
75.4%
273,777
80.0%
Delhi
Bangkok
195,926
85.3%
240,478
69.6%
237,422
83.3%
Delhi
Amsterdam
n.a
n.a
237,233
78.3%
86,225
80.7%
Chennai
Kuala Lumpur
169,721
75.2%
232,765
77.0%
232,691
84.9%
10
Mumbai
Amsterdam
n.a
n.a
229,004
77.2%
113,284
86.0%
11
Delhi
Paris
n.a
n.a
204,310
74.1%
216,955
78.2%
12
Delhi
Frankfurt
222,849
78.6%
200,244
72.6%
216,644
78.4%
13
Delhi
Singapore
173,041
80.8%
189,883
75.1%
210,554
85.6%
14
Delhi
Hong Kong
15
Mumbai
Bangkok
16
Mumbai
Paris
17
Trivandrum
Colombo
94,008
72.1%
169,865
54.3%
87,562
84.8%
201,772
80.5%
138,523
81.2%
143,222
87.8%
n.a
115,699
77.2%
102,187
80.7%
52%
101,375
79.5%
88,931
76.2%
n.a
93,649
18
Delhi
Kathmandu
n.a
n.a
89,280
61.6%
72,146
68.8%
19
Bangalore
Singapore
n.a
n.a
72,579
68.6%
75,702
77.5%
20
Kolkata
London
36,193
71%
72,398
73%
11,042
76.6%
Total
2,514,634
75.9%
4,539,302
73.4%
4,039,974
81.5%
Others
1,151,089
67.5%
3,674,041
65.5%
3,973,100
67.9%
Grand Total
3,665,723
71.7%
8,213,343
69.5%
8,013,074
74.7%
Source: ICAO; CRISIL / M&A compilation
3.18
The load factors on most city pairs are significantly high over these 20 city pairs (which
exclude the Gulf routes). This is an overall approach, analysis of load factors by
source markets is considered to be a more logical and necessary approach. Load
factors achieved, by city pair, with Indias key source / destination markets are provided
later in this Section.
( 17 )
M& A
3.19
Exhibit 3.5 below provides details of passenger traffic for the top 25 city pairs including
the Gulf routes as reported by the DGCA for FY 2002. Based on this data the top 25
routes account for over 50% of traffic to and from India. Based on the DGCA data
analysed there are about 150 city pairs connected with India.
EXHIBIT 3.5
PASSENGER VOLUMES FOR TOP 25 CITY PAIRS FY 2001/02
Sr. No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Total
City Pair
Mumbai
Chennai
Mumbai
Mumbai
Chennai
Delhi
Mumbai
Mumbai
Mumbai
Delhi
Chennai
Mumbai
Mumbai
Delhi
Delhi
Delhi
Delhi
Delhi
Mumbai
Delhi
Calcutta
Thiruvananthapuram
Mumbai
Mumbai
Calcutta
Dubai
Singapore
Riyadh
London
Colombo
London
Singapore
Muscat
Frankfurt
Bangkok
Kualalumpur
Jeddah
Amsterdam
Dubai
Frankfurt
Kathmandu
Singapore
Amsterdam
Kuwait *
Paris
Dhaka
Muscat
New York
Paris
Bangkok
Share (%)
658,253
436,203
337,189
308,239
300,846
286,611
281,584
271,063
239,452
234,254
227,575
218,245
214,951
212,837
197,031
192,963
192,637
186,419
173,133
167,974
151,342
143,179
142,985
142,106
140,280
5.5%
3.7%
2.8%
2.6%
2.5%
2.4%
2.4%
2.3%
2.0%
2.0%
1.9%
1.8%
1.8%
1.8%
1.7%
1.6%
1.6%
1.6%
1.5%
1.4%
1.3%
1.2%
1.2%
1.2%
1.2%
Total
6,057,351
50.9%
Others
5,850,422
49.1%
11,907,773
100.0%
Grand Total
Source: DGCA
Note: * Outbound traffic figures for Kuwait have been assumed at 2002 /03
levels as 2002/01 figures were unavailable
( 18 )
M& A
3.20
Exhibit 3.6 below provides an analyses of ICAO data (sorted on load factors achieved in
2001) to highlight routes with high load factors. For the purpose of this exercise routes
with less than 20,000 pax in the year have been excluded.
EXHIBIT 3.6
LOAD FACTORS TOP 20 CITY PAIRS CY 2001 & 2000
SORTED BY HIGHEST AVERAGE LOAD FACTOR IN CY 2001
City Pair
Sr.
No
Traffic
(revenue pax)
CY 2001
Load Factors
Inbound
Outbound
CY 2000
Traffic
Load
Average
(revenue pax)
Calicut
Abu Dhabi
44,960
82.2%
86.2%
84.2%
35,453
Bangalore
Frankfurt
21,621
81.9%
84.7%
83.3%
n.a
Factors
87.5%
n.a
Chennai
Frankfurt
99,332
80.6%
85.0%
82.8%
101,076
82.8%
Trivandrum
Male
69,383
82.9%
81.5%
82.2%
70,666
71.4%
Trivandrum
Dubai
54,226
71.8%
91.7%
81.8%
53,690
77.0%
Chennai
London
65,958
81.7%
81.1%
81.4%
68,877
81.7%
Mumbai
Bangkok
138,523
81.1%
81.0%
81.2%
143,222
87.8%
Abu Dhabi
Delhi
22,880
81.1%
80.9%
81.0%
18,195
83.9%
10
Tiruchirapally
Colombo
40,833
85.2%
76.1%
80.7%
36,174
82.0%
11
Delhi
Riyadh
33,209
67.5%
93.4%
80.5%
35,391
81.4%
12
Trivandrum
Colombo
101,375
79.0%
79.9%
79.5%
88,931
76.2%
13
Delhi
Dubai
80,634
70.0%
88.7%
79.4%
84,868
76.7%
14
Delhi
Amsterdam
237,233
73.6%
83.1%
78.3%
86,225
80.7%
15
Chennai
Singapore
485,276
78.9%
76.0%
77.4%
523,278
84.1%
16
Mumbai
Amsterdam
229,004
74.8%
79.5%
77.2%
113,284
86.0%
17
Mumbai
Paris
115,699
72.3%
82.0%
77.2%
102,187
80.7%
18
Chennai
Kuala Lumpur
232,765
75.4%
78.7%
77.0%
232,691
84.9%
19
Mumbai
London
408,434
75.2%
78.7%
76.9%
439,544
79.4%
20
Chennai
Colombo
314,542
77.0%
76.3%
76.6%
281,962
77.7%
2,795,887
77.5%
82.3%
79.9%
2,515,714
81.2%
Total
( 19 )
M& A
LOAD FACTORS ON KEY SOURCE & DESTINATION MARKETS
3.21
The key source and destination markets covered in the exhibits that follow include the
United Kingdom, France, Germany, Malaysia, Netherlands, Singapore and Thailand.
Unfortunately as mentioned earlier, U.A.E. & Gulf traffic data was not available; should
ICAO have reported statistics, these markets would have figured prominently on this list.
3.22
The load factors depicted in the following exhibits relate to averages for the entire year.
It needs to be recognised that due to the seasonality factor, there is, as is well known,
serious bunching of traffic in the peak periods which for source markets are from
October to March and for Indian residents traveling overseas is between April and July.
The UK
3.23
UK is by far the single most important source market for India covering a wide segment
of traffic which includes traffic originating in North America and covers all segments of
U.K. visitors that includes business, leisure and VFR.
3.24
Load factors by airline to all Indian cities connected by direct flights to the U.K. are
provided in Exhibit 3.7 below. As may be noted, load factors in CY 2000 which is
considered more representative than 2001, to Mumbai, Delhi and Chennai are either in
the late 70s or early 80s. The average load factor in 2002 which was still partially
affected by 9/11 was 75.4%.
EXHIBIT 3.7
LOAD FACTORS FOR KEY MARKETS
UNITED KINGDOM
Carrier
CY 2001
CY 2002
Traffic
(revenue pax)
Load
Factor
Traffic
(revenue pax)
CY 2000
Load
Factor
Traffic
(revenue pax)
Load
Factor
Mumbai
British Airways
Air India
177,055
76.1%
215,714
192,357
78.2%
75.6%
220,656
218,888
79.3%
79.6%
177,055
76.1%
408,071
76.9%
439,544
79.4%
189,288
73.1%
not reported
service discontinued
70.3%
74.3%
62.4%
69.2%
242,292
147,877
83.8%
82.1%
Delhi
British Airways
Air India
United
Virgin Atlantic
47,495
77.7%
201,386
140,222
71,763
53,848
24,413
63.2%
236,783
74.1%
467,219
70.0%
414,582
81.6%
58,787
79.5%
65,958
81.4%
68,877
81.7%
36,193
71.3%
72,398
73.0%
11,042
76.6%
508,818
75.4%
1,013,646
75.3%
934,045
79.8%
Chennai
British Airways
Kolkata
British Airways
Total
( 20 )
M& A
3.25
Discussions held with British Airways and Virgin Atlantic reveal that the U.K. airlines, are
extremely keen to increase seat capacities on any of these routes as they believe that
market demand is sufficient to support double present capacity. They also mentioned
their interest in Bangalore and Hyderabad as additional points of call.
3.26
Over the recent years Emirates and Gulf Air have been permitted significant additional
seat capacity. Unfortunately figures are not available but it is a well known fact in
aviation circles, that a lot of the European and US bound traffic is in fact transiting
through the Gulf / Emirates. Capacity to the UK is effectively therefore spread over
more than just the airlines mentioned in the exhibit above.
3.27
Favouring Gulf countries for political and other reasons has provided a safety valve in
terms of seat capacity, however it may be far more appropriate to allow UK airlines
higher seat capacity and for Air India to augment its own capacity to this market.
Germany
3.28
Details on load factors for Germany to the major metros in India are provided below.
Chennai and Bangalore have exceedingly high load factors and are obvious growth
markets for Lufthansa. The overall load factor for Lufthansa for all its India routes
combined in CY 2002 was 83.3%.
EXHIBIT 3.8
GERMANY
Carrier
CY 2002
Traffic
(revenue pax)
CY 2001
Load
Factor
Traffic
(revenue pax)
CY 2000
Load
Factor
Traffic
(revenue pax)
Load
Factor
Mumbai
Lufthansa
Delta
206,494
via Paris
77.7%
152,687
101,216
75.4%
75.3%
160,738
113,039
78.7%
81.9%
206,494
77.7%
253,903
75.4%
273,777
80.0%
222,849
78.6%
199,975
72.6%
216,547
78.4%
222,849
78.6%
199,975
72.6%
216,547
78.4%
105,505
87.1%
99,332
82.8%
101,076
82.8%
68,616
89.9%
21,621
83.3%
603,464
83.3%
574,831
78.5%
591,400
80.4%
Delhi
Lufthansa
Chennai
Lufthansa
Bangalore
Lufthansa
Total
3.29
Germany and other European countries, apart from traffic originating from those
countries, carry a lot of through traffic from the US and other parts. As gateway cities
for our North American source markets, they thus gain in importance.
( 21 )
M& A
Netherlands / France
3.30
Netherlands and France while important markets also serve as gateway cities for the
North American traffic .The alliance between two major American airlines with the flag
carriers of these European countries (Delta / Air France and North West / KLM) are
partially responsible for high load factors achieved on these routes. .
EXHIBIT 3.9
NETHERLANDS
Carrier
CY 2001
Traffic
Load
(revenue pax)
Factor
CY 2000
Traffic
Load
(revenue pax)
Factor
Mumbai
Northwest
KLM
Delhi
KLM
Northwest
Total
170,060
58,944
78.8%
72.9%
112,901
86.0%
229,004
77.2%
112,901
86.0%
133,726
103,507
81.0%
75.1%
86,225
80.7%
237,233
78.3%
86,225
80.7%
466,237
77.7%
199,126
83.3%
Note: CY 2002 data not reported by KLM / Northwest

EXHIBIT 3.10
FRANCE
Carrier
CY 2001
Traffic
(revenue pax)
CY 2000
Load
Factor
Traffic
(revenue pax)
Load
Factor
Mumbai
Air France
114,152
77.1%
107,412
80.7%
133,108
71,202
78.1%
67.7%
137,022
79,933
81.4%
73.2%
204,310
74.1%
216,955
78.2%
318,462
75.6%
318,814
79.4%
Delhi
Air France
Air India
Total
Note: CY 2002 data not reported by Air France

( 22 )
M& A
3.31
Air France even in 2001, had load factors in excess of 77%. KLM / Northwest have
historically had high load factors (83.3% in 2000). 2002 load factors are unfortunately
not available.
Malaysia
3.32
Malaysia is both a key source and destination market for India. This market is very
skewed to Chennai due to cultural and other links. Load factors on the Chennai sector
are therefore significant, here again representatives of Malaysian Airlines stated that
they are seeking considerable increases in capacity on Chennai and other routes.
3.33
Malaysia is also gaining popularity with Indian holiday makers, partially due to
aggressive marketing by its tourism board combined with competitive costs associated
with holidaying at this destination. Based on discussions with personnel at Malaysian
Airlines, load factors over the last 12 month period have been in excess of 75% across
all destinations and above 80% for Chennai.
EXHIBIT 3.11
MALAYSIA
Carrier
CY 2002
Traffic
Load
(revenue pax)
Factor
CY 2001
Traffic
Load
(revenue pax)
Factor
CY 2000
Traffic
Load
(revenue pax)
Factor
Mumbai
Malaysian Airlines
81,234
44.2%
35,785
45.5%
88,463
71.3%
64,356
59.2%
45,304
80.2%
80,306
71.0%
157,930
48,842
25,993
77.5%
71.1%
80.5%
165,524
49,485
28,134
85.3%
81.6%
84.6%
80,306
71.0%
232,765
77.0%
243,143
84.4%
49,281
80.2%
23,688
59.2%
23,253
75.3%
11,078
53.8%
322,537
68.4%
367,672
66.8%
288,447
82.3%
Delhi
Malaysian Airlines
Chennai
Malaysian Airlines
Indian Airlines
Air India
Bangalore
Malaysian Airlines
Hyderabad
Malaysian Airlines
Total
Note: CY 2002 data not reported by Air India / Indian Airlines

( 23 )
M& A
Singapore
3.34
Singapore even though a key source market, is a more important destination market for
Indian traffic. It is the probably the most important South-East Asian destination and
has habitually seen exceedingly high load factors as may be noted from Exhibit 3.12
below, especially for CY 2000. Overall load factors in CY 2002 were in excess of 77%
and for Singapore Airlines well in excess of 80%.
EXHIBIT 3.12
SINGAPORE
Carrier
CY 2002
Traffic
(revenue pax)
CY 2001
Load
Factor
Traffic
(revenue pax)
CY 2000
Load
Factor
Traffic
(revenue pax)
Load
Factor
Mumbai
SIA
Qantas
Air India
220,473
24,653
89.7%
46.5%
195,595
117,488
2,568
79.9%
60.5%
29.4%
211,643
87.5%
245,126
83.1%
315,651
70.5%
211,643
87.5%
173,041
80.8%
162,938
26,945
76.8%
66.7%
177,400
33,154
86.8%
79.3%
173,041
80.8%
189,883
75.1%
210,554
85.6%
231,762
83.6%
224,081
136,957
123,906
80.6%
81.5%
68.4%
246,833
142,978
133,467
90.4%
84.7%
73.9%
231,762
83.6%
484,944
77.4%
523,278
84.1%
49,321
25,275
78.9%
44.3%
43,979
25,715
74.3%
60.1%
48,215
81.7%
74,596
62.4%
69,694
68.3%
48,215
81.7%
35,147
37,432
68.0%
68.8%
42,828
32,874
82.7%
71.6%
72,579
68.6%
75,702
77.5%
30,266
68.3%
29,949
67.6%
31,974
75.6%
36,640
86.8%
1,194,991
72.0%
1,135,981
81.5%
Delhi
SIA
Air India
Chennai
SIA
Air India
Indian Airlines
Kolkatta
SIA
Royal Brunei
Bangalore
Air India
Indian Airlines
Trivandrum
Silkair
Hyderabad
Air India
Total
724,525
77.5%

( 24 )
M& A
Thailand
3.35
Thailand is an important destination market for Indian travelers. Load factors have been
at significantly high levels, especially from Mumbai & Delhi, thus making a case for
additional capacity from these gateway cities. Thai Airways has recently been granted
an additional capacity of approximately 5,500 seats per week to five additional cities in
India Bangalore, Chennai, Gaya, Guwahati & Chennai. Air India too gains an equal
number of seats to Thailand. This decision, is a welcome move as it is hoped this would
alleviate the capacity shortage Mumbai & Delhi currently face .
EXHIBIT 3.13
THAILAND
Carrier
Mumbai
Cathay Pacific
Thai Airways
Delhi
Thai Airways
Air India
Indian Airlines
CY 2002
Traffic
Load
(revenue pax)
Factor
Total
CY 2000
Traffic
Load
(revenue pax)
Factor
124,750
77,022
81.9%
78.3%
125,029
12,820
81.9%
74.9%
139,266
3,768
89.1%
58.3%
201,772
80.0%
137,849
81.3%
143,034
87.8%
195,926
85.3%
165,500
50,465
24,128
72.9%
69.3%
52.5%
169,987
53,105
13,842
85.5%
83.1%
63.6%
195,926
85.3%
240,093
69.5%
236,934
83.3%
30,913
67.9%
26,365
69.4%
Chennai
Indian Airlines
Kolkata
Thai Airways
Indian Airlines
Air India
CY 2001
Traffic
Load
(revenue pax)
Factor
73,534
75.5%
74,631
64,456
74.9%
66.0%
81,047
73,780
6,566
81.0%
59.4%
86.6%
73,534
75.5%
139,087
70.4%
161,393
69.6%
471,232
80.3%
547,942
72.3%
567,726
77.5%

INCREASES & DECREASES IN SEAT CAPACITY

3.36
In the period from September 11, 2001 to date, there have been several increases &
decreases in seat capacity from Indias key source and destination markets. It needs to
be noted that a number of the reductions in seat capacity relate to problems faced by
the airline or economic / political conditions in the source / destination market and are
generally not reflective of demand and / or commercial reasons pertaining to the Indian
sector flown Exhibit 3.14 overleaf provides details of the increases & decreases in seat
capacity from September 11, 2001. Some of the increases relate to the forthcoming
winter / summer schedule and are not presently operative.
( 25 )
M& A
EXHIBIT 3.14
FLIGHTS ADDED / DISCONTINUED AFTER 9/11 BY SOURCE MARKET
Sector
Flights (per week)

Added
Discontinued
Added
China / S. E Asia
China
33,500
Korea (South)
29,300
Singapore
Taiwan
69,400
244,460
Thailand
10
Malaysia
Total
Approx Seats (Year)

Discontinued
Difference
33,500
29,300
59,200
10,200
21,200
223,260
41,300
41,300
157,064
33
157,064
575,024
80,400
494,624
10,200
15,300
(5,100)
37,600
(37,600)
Europe
Austria
Belgium
Denmark
67,900
(67,900)
England
39,000
(39,000)
France
Germany
3
8
Holland
Italy
7
7
Switzerland
Total
50,232
32
273,032
10,932
139,800
102,300
72,800
8
17
39,300
139,800
(102,300)
13,000
59,800
97,800
(97,800)
412,200
(139,168)
North America (USA / Canada)

U.S.A
126,300
(126,300)
Canada
7
5
102,700
79,400
23,300
Total
12
102,700
205,700
(103,000)
Indian Subcontinent
Afghanistan
52,100
Seychelles
5,800
5,800
Sri Lanka
11
81,000
81,000
Total
17
138,900
138,900
Iran
20,800
20,800
Jordan
10,700
10,700
Qatar
63,500
63,500
UAE
10
220,700
220,700
46,800
46,800
24
362,500
362,500
20,800
20,800
52,100
Middle East
Saudi Arabia
Total
CIS Countries
Total
Grand Total
100
51
1,472,956
698,300
774,656
Source CRISIL / M&A Compilation
( 26 )
M& A
3.37
Please refer Appendix IV & V for comprehensive information including frequencies and
seat capacities added / withdrawn by source market and by city pair respectively. The
appendices also contain information on the approximate time frame when this change
was effected and the airline involved. We would like to emphasize that the information
provided in Exhibit 3.15 and 3.16 (that follows - compiled by Indian Airport) is from
information gathered through interviews with industry players and other secondary
sources. Thus the data in these exhibits may not be relied upon for completeness and
does not mean that flights were not added / withdrawn on other city pairs.
3.38
The recent volatile economic and political climate world over, and the associated
uncertainty, has been the driver for many of the reasons as to why many European &
North American airlines have withdrawn or reduced operations to India. United Airlines,
Sabena, Canada 3000, Scandinavian Airlines System, All Nippon Airways, Swiss Air,
Royal Nepal Airlines, North-West Airlines, Air France were some of the airlines that
withdrew or reduced operations to India after September 11.
3.39
It is evident from these exhibits, that even though there has been an increase of over
774,00 seats since September 2001, capacity to Europe and America has in fact
reduced by 242,000 seats per annum in each direction. It is important to address this
considerable under capacity to these markets. The overall increase in seat capacity
may help alleviate demand, but unless a higher proportion of capacity is granted on the
European sectors, the benefits may not trickle down.
3.40
India risks losing business unless capacity is immediately increased. It could be argued
that lesser capacity on the west bound routes is not likely to impact greatly on overall
requirements as the incremental Gulf capacity satisfies a portion of this demand.
Granting of additional capacity to SE Asia, China and other new markets is about
generating incremental business, not a replacement of services withdrawn on European
sectors
3.41
The increases and decreases in seat capacity have also been compiled by city, to
provide an indication of how the Indian International Airports have gained or lost. From
Exhibit 3.15 overleaf, it may be noted that Delhi and Mumbai have been subjected to
significant reductions in seat capacity, whereas Cochin, Bangalore, Hyderabad and
Chennai, as would be expected, have gained substantially.
( 27 )
M& A
EXHIBIT 3.15
FLIGHTS ADDED / DISCONTINUED AFTER 9/11 BY INDIAN AIRPORT
Sector
Flights (per week)

Added
Amristar
Approx Seats (Per Year)
Discontinued
Added
Bangalore
16
Chennai
Delhi
Discontinued
Difference
10,400
10,400
203,980
203,980
173,380
37,600
135,780
31
32
402,632
444,600
(41,968)
Gaya
30,700
30,700
Guwahati
30,700
30,700
81,100
81,100
19
311,800
311,800
Kolkata
56,564
56,564
Mumbai
Thiruvanthampurum
15,000
15,000
Trichy
7,800
7,800
30,700
30,700
Hyderabad
Kochi
16
118,200
Varanasi
Grand Total
l
100
51
1,442,256
216,100
698,300
(97,900)
743,956
Source CRISIL / M&A Compilation
3.42
The clear intention of the Ministry of Civil Aviation to promote the smaller more recent
developing international airports is laudable, however the strategic importance of
Mumbai and Delhi as political / financial centers also needs to be taken into account.
Discussions held with airline representatives and industry stakeholders corroborated by
figures contained in this report, support the premise that even though considerable seat
capacity has been granted to the smaller international airports, Mumbai and Delhi will
continue to enjoy high load factors. This subject is discussed in more detail in Section 7
on Policy Recommendations.
3.43
To highlight the air seat capacity shortage in India during peak season, Express Travel
& Tourism carried out a survey of seat availability in December 2002 from two gateway
cities New Delhi & Mumbai. The results of the survey were published in their cover
story: Space Jam The Case For Open Skies (Issue dated 01 - 15 January, 2003) and
are provided in Exhibit 3.16 below.
( 28 )
M& A
EXHIBIT 3.16
EXPRESS TRAVEL & TOURISM SURVEY
Seat availability EFF. 01 January 2003 as on 24th December 2002
Airline
Business Class
Economy Class
Ex Delhi
Air France
First available 07 Jan03
Australian Airlines
British Airways
KLM
Lufthansa
First available 13 Jan03 First available 17 Jan03

First available 14 Jan03 Cheapest Fare Class not
available till 18 March03.
Higher Fare Class First
available 31 Jan03
First available 14 Jan03 Not available till March end.
Ex Mumbai
Delta Airlines
NorthW est Airlines

Cheapest Fare Class not

available till March end.
Higher Fare Class First
available 01 Feb03
Not available till March end.
First available 04 Feb03.

Source: Express Travel & Tourism
3.44
Excerpts of opinions expressed by industry stakeholders from the same article were :
o
Praveen Chugh, Chairman, TAFI - North India - Non-availability of seats is definitely

jeopardizing tourism prospects of our country. Only adequate seat availability can ensure
free flow of traffic to a destination.
Rajeev Kohli, Marketing Director, Creative Travel - The lack of flights is most
certainly affecting tourism. This is especially true now. When the travel advisories got
lifted, there was a spurt in bookings for inbound travel to India towards the end of the
year. And as there was no capacity to bring in the passengers, India lost that business.
We ourselves saw a few group tours getting cancelled despite having ready clients. All
because the agent was unable to get air seats. It was not so much a fear of getting
stuck as it was a basic inability of getting the clients here. No self-respecting travel agent
will send their clients to India without confirming both sectors of the ticket.
Sanjeev Joshi, Director, TIME - The Austrian tour operator Raiffeisen Reiseburo, was
refused seats on Austrian Airlines in the last week of December 02 where they had 100
people wait listed. This means we lost 100 potential clients who could have travelled to
India. And they opted for some other destinations, most probably China as seats to
China is not a problem at any given time.
( 29 )
M& A
TICKET PRICES TO INDIA A COMPARISON

3.45
There is an established correlation between demand and air fares. Airfares for city pairs
with restrained capacity tend to be expensive, thus impeding growth of inbound
international tourist traffic. Leisure consumers can, and do, choose from a variety of
destinations, which have broadly comparable prices.
3.46
Foreign airline representatives believe that if allowed increase in frequencies and seat
capacities into India, airlines would achieve volumes of scale that would allow them to
decrease fare prices without it negatively impacting yields to the airline. The logic
propounded by the officials is that unit costs generally decline when airlines adds flights
or seats on existing routes. They also added that world wide higher route frequencies
especially on high volume business routes, due to the decrease in travellers time cost
increase demand (the Mohring effect).
3.47
In order to compare fares to India with other competitive leisure destinations, return
ticket prices for economy class seats were obtained from major foreign carriers. These
fares were then adjusted for distance variations and indexed on a per passenger
kilometer basis to ensure comparability. The following illustrations provided examples
of the current range of air fares for select destinations from four of Indias key source
markets. Looking at the spread of pricing, India (Mumbai) appears to be the most
expensive relative to competitive destinations with the exception of Beijing. It would thus
appear that South East Asian / Pacific destinations are well integrated as substitutes
for India with holiday makers.
EXHIBIT 3.17
INDEXED COST OF AIR TICKETS
FROM LONDON
140
119
120
100
Index
100
89
80
80
78
75
59
60
40
20
y
Sy
dn
e
Si
ng
ap
or
e
Du
ba
i
Ba
ng
ko
k
Ko
ng
ba
i
Ho
ng
um
M
Be
iji
ng
Source: British Airways
( 30 )
M& A
EXHIBIT 3.18
FROM PARIS
160
142
140
119
120
Index
100
100
82
79
77
80
71
60
40
20
an
ila
M
rt
a
Si
ng
ap
or
e
ka
Ja
Ba
ng
ko
k
ba
i
um
M
Ho
ng
Be
iji
ng
Ko
ng
Source: Air France
EXHIBIT 3.19
FROM FRANKFURT
160
140
135
120
100
100
Index
100
94
80
80
69
60
40
20
Beijing
Hong
Kong
Mumbai
Dubai
Bangkok
Manila
Source: Lufthansa
( 31 )
M& A
EXHIBIT 3.20
FROM SINGAPORE
120
100
100
96
76
Index
80
60
50
39
40
20
0
Bombay
Colombo
Dubai
Sydney
U.S (L.A)
Source: Singapore Airlines
3.48
3.49
The Pacific Asia Travel Association (PATA) conducted a similar simulation exercise
whereby a cross-section of Pacific Asia cities were selected as potential destinations for
a Los Angeles-based leisure travellers visit in late April 2001. These destinations
include Auckland, Bangkok, Beijing, Denpasar, Kota Kinabalu, Mumbai, Palau and
Singapore. Using the online booking agency Expedia, return air fares to these
destinations were then analysed. As a basis of comparison, two different measures
were used :
o
Average airfares The absolute U.S. dollar cost of visiting each destination.
Average E-fares per mile This measure took into account the variations in
distances from Los Angeles to the different destinations.
Based on the analysis of the average air fare measure, Singapore was the least
expensive destination from Los Angeles with an average return fare of US$ 731,
followed by Beijing (US$ 786) and Bangkok (US$ 893). On the other end of the e-fare
range were Palau (US$ 1,863) and Mumbai (US$ 1,911). According to the average air
fare per mile measure, Singapore was the least expensive destination with an average
return fare per mile of US Cents 4.17, followed by Bangkok (US Cents 5.41) and
Denpasar (US Cents 5.74). On the other extreme were Kota Kinabalu (US Cents 9.28),
Mumbai (US Cents 9.33) and Palau (US Cents 11.91).
( 32 )
M& A
WHAT THE AIRLINES & THE TRADE SAY / WANT
3.50
Based on the primary and secondary research conducted for this assignment,
interesting snippets are reproduced below.
o
Mr. Nabil Sultan, Emirates General Manager - India & Nepal.

Emirates currently has 42 flights out of India from five destinations Mumbai, Delhi,
Hyderabad, Chennai and Kochi, and the plane load factor is nearly 85 per cent annually.
(May 21st 2003 Deccan Herald)
Would like to have daily operations to Kochi. The airline also wants to start daily direct
flights to Kochi from Dubai , connect other cities like Bangalore and Kolkata, and wants
to double its frequency out of Delhi. (October 7th 2002 - The Financial Express &
Business Standard) -
Mr. Saeed Parkar, Qatar Airways Regional Manager India (July 2nd 2003, Business
Line The Hindu)
The airline's passenger load factor (PLF) is over 80 per cent for flights out of India. Our
operations are pretty viable out of India. Our PLF is around 70 per cent for all flights.
The airline plans to seek permission from the Government to operate daily flights out of
Bangalore and add six more destinations in India during the year. The airlines would also
be keen to start daily flights adding up to 1,500 seats per week out of Bangalore.
Mr. Sayed Aziz, Chief Executive Officer, Malaysian Airlines - (June 13th 2003, Crisil /
M&A survey)
Overall (excluding the SARS factor) Malayasian does a load factor of approximately
75% in India. On the Chennai sector, which is the most popular, around 85% would be
the average, whereas Delhi is the lowest at approx. 65%.
Would like to do 7 weekly flights to all the locations and would like to double the capacity
to Chennai.
th
Mr. Alok Sawhney, Commercial Manager, British Airways - (June 13 2003, Crisil /
M&A survey)
Load factors on the Bombay London route and from Bombay and Delhi to London are
in the region of 85% year round. Kolkata is the only under performer.
Would like to double capacity on all routes except Kolkata. Would also like to operate
services to Bangalore & Hyderabad.
Mr. Andrew Fyfe, General Manager, Virgin Atlantic, India "In January, the load factor was 83 per cent. In February, the airline registered a load
factor of 96 per cent on the London-Delhi sector and 75 per cent on the Delhi-London
sector. The advance bookings from now till the end of March are also encouraging at 68
per cent on the London-Delhi sector and 91 per cent on the Delhi-London sector."
(March 08th 2003, Business Line - The Hindu)
Would like to increase Delhi from 2 to 7 flights per week and add 7 flights to Mumbai.
(Crisil / M&A survey)
( 33 )
M& A
o
Mr. Peter M. Hill, CEO, Sri Lankan Airlines (July 29th, 2003, Business Standard)
The load factor on the India route has been around 90 per cent. India is a potential
market for us not only due to geographical reasons, but because Indians feel at home in
our country and there are no visa formalities.
Looking at daily flights to most of the existing destinations on the India sector.
Mr. Philip Vira Bunnag, GM - India & Bhutan, Thai Airways (September 18th 2002,
Business Line - The Hindu)
The average passenger load factor on Thai Airways flights out of India is 75-80 per
cent.
Air France officials (July 19th 2002, Business Line The Hindu)
At present, the airline is enjoying a passenger load factor of around 80 per cent.
Mr. Ong Boon Kim, GM, Singapore Airlines, Crisil / M&A survey
No immediate plans. However would like to increase seat capacity gradually.
Mr. John Andersen, Gulf Air, GM India (Crisil / M&A survey)

Expressed interest in Jaipur as a point of call, and would prefer to operate daily flights on
all routes currently serviced by the airline.
Mr. Tom Owen, Cathay Pacific Country Manager - India, Nepal and Bangladesh
(Exim India Aviation section, July 2003)
The airline aims for a double-digit growth in the next few years. We are at present small
in India, but are working on that aspect and have plans to expand in the coming months.
We would certainly like to fly daily from Mumbai and Delhi. Bangalore is next on our list."
Mr. Avihu Egozi, El Al, GM India & South Asia (Crisil / M&A survey)
Expressed interest in operating charters to Goa.
Austrian Airlines, Bilateral Air Services Negotiations, June 2001 (Lok Sabha
Unstarred Question No. 522)
Austria requested for Mumbai as a point of call for their designated airline, were offered
Hyderabad instead (still not flying to Mumbai).
Officials Sources of the Korean Government (Jan. 3rd 2003, Business Line The
Hindu)
The airlines of Korea are keen to operate daily flights to Delhi and Mumbai, (presently 3
times per week from Mumbai & Delhi).
Ashwini Kakkar , CEO & MD, Thomas Cook (India) Ltd (Crisil / M&A survey)
Seeks permission to operate outbound charter flights.
( 34 )
M& A
4.
DEMAND FOR AIR TRAVEL
CHARACTERISTICS OF BUSINESS / LEISURE TRAVELERS

4.1
When assessing demand for air seat capacity it is important to recognise some of the
key characteristics of the Indian market for Inbound and Outbound traffic that are
discussed below, these are :
Inbound and outbound traffic is almost entirely dependant on air travel to or from the
country.
The imbalance in inbound and outbound traffic. In FY 2002 there were 2.5 million
inbound visitors to the country and 4.2 million outbound Indian tourists.
A large proportion of the outbound traffic is related to the Middle Eastern labour
markets.
There is a distinct seasonality pattern, which varies by source market and
destination, overall April to September are the lean months.
4.2
Passengers demonstrate a range of demand characteristics, relating to time sensitivity,

complexity of itinerary, and product quality. Changes in the consumption of air travel are
also attributable to changes in airfares, although business travel is generally less
sensitive to changes in airfares than leisure travel. This is partly because business
travellers often need to fly at short notice to specific destinations, and usually at
company rather than personal expense.
EXHIBIT 4.1
DEMAND CHARACTERISTICS OF AIR TRAVEL
( 35 )
M& A
4.3
Leisure travel is more discretionary, usually at personal expense and is often planned
well ahead. Many leisure travellers are visiting friends or relatives, and so have a
specific destination, but others may choose between multiple destinations. Further,
expenditure on leisure travel is discretionary, so it competes with expenditure on many
other goods and services. Given the many possible substitutes, leisure travellers tend to
be sensitive to changes in the overall costs of travel.
4.4
It needs to be recognised that air access contributes directly to the growth of the
different sectors of the economy and that diminution of air seats to India has serious
detrimental effects on inbound leisure travel. An indicator of insufficient seat capacity is
load factors. It is a commonly accepted principle, in the airline industry, that once
average passenger load factors are in the region of 75 to 80% on a given route, there is
a capacity constraint and potential customers are being turned away.
INDIA - A LONG HAUL DESTINATION

4.5
Modes of transport vary for countries depending on their geographic location and
political / economic relations with their neighbors. India is a long haul destination for
many of her key source markets for trade & tourism. Air access is thus the basic
infrastructure required for the growth of international inbound tourism to India. In order to
give a relative sense of the importance of air transport to each of the world regions,
Exhibit 4.2 depicts the regional variations in the modes of transport utilised for travel
worldwide over the past decade.
EXHIBIT 4.2
MODES OF TRANSPORT FOR INTERNATIONAL TRAVEL
100
80
80%
58%
56%
50%
37%
60
Air
Sea
40
Rail
Road
20
South
Asia
4.6
Americas
East Asia /
Pacific
Middle
East
Europe
The exhibit above reveals that 80% of all international visitors to South Asia (includes
India) arrived by air. An analysis of the various modes of transport utilised for
international travel to India in FY 2001 (Exhibit 4.3 that follows) shows that this figure is
even higher with 97% of all visitors to the country arriving by air.
( 36 )
M& A
EXHIBIT 4.3
MODES OF TRANSPORT TO INDIA
97.2
% of
Visitors
Air
1.1
1.8
Sea
Land
Source: Tourist Statistics 2001, Department of Tourism, GOI

Note: Bangladesh & Pakistan not included.
INDIA AIR TRAFFIC GROWTH

4.7
Indian international passenger travel experienced a notable expansion from 1996 to

2001. In total, 6.6 million inbound and outbound trips were made between India and
other countries in 2001, a 21% increase from 1995. However, the number of Indian
residents traveling to overseas destinations has been greater than the number of
overseas visitors to India. The number of passengers carried to and from India grew at a
compounded annual growth rate of 4.8% between 1996 2001; however compounded
annual growth for inbound traffic averaged 3% while outbound traffic flows increased at
4.9%. The illustration that follows provides details on growth of air travel from / to India.
EXHIBIT 4.4
OUTBOUND Vs INBOUNT TRAFFIC FROM / TO INDIA
4.1
2001
2.5
4.0
2000
1999
1998
2.6
3.9
2.5
3.8
2.4
3.7
1997
2.4
1996
2.3
1995
3.5
3.1
2.1
Outbound (Mn)
Inbound (Mn)
Source: DGCA
( 37 )
M& A
MAJOR SOURCE MARKETS

4.8
An analysis of the Indias visitor arrivals data for 2002 reveals that inbound foreign
travellers originated mainly from the following source markets :
EXHIBIT 4.5
MAJOR SOURCE MARKETS FOR INDIA
CY 2002
U.K.
16.5%
USA
14.1%
Sri Lanka
4.6%
Canada
3.7%
France
3.5%
Germany
2.8%
Japan
2.5%
Malaysia
2.3%
Nepal
2.0%
Australia
1.9%
Singapore
1.8%
Italy
1.4%
Netherlands
1.4%
Korea (S)
UAE
1.3%
1.1%
Source: Highlights Ministry of Tourism & Culture, Govt. of India.
4.9
Indias top 15 source markets accounted for 61% of total inbound passenger traffic in
the year ended April 2002. Of the 2.4 million arrivals, the U.K. and U.S. markets alone
accounted for nearly 725,000 visitors. If visitors from Bangladesh, Nepal and Sri Lanka
were to be excluded (assuming 2001 levels as 2002 statistics are not available) then the
top 15 source markets would account over 80% of visitor arrivals.
SEASONALITY - INBOUND
4.10
Air transport to and from India has suffered from capacity shortages for some years,
mainly as a result of difficulties within Indias own aviation sector and the slow pace of
liberalization of the air transport market. The problem of restricted capacity is further
exacerbated during peak season:- October to March for inbound visitors and April to
June for outbound travelers. Exhibit 4.6 overleaf highlights month on month arrivals for
the past three financial years.
( 38 )
M& A
EXHIBIT 4.6
OVERALL SEASONALITY TRENDS OF VISITOR ARRIVALS
14%
% of Total Arriv
12%
10%
8%
6%
4%
2%
e
ce
D
e
ve
m
b
m
b
e
b
N
o
ct
o
O
S
e
te
m
b
st
r
CY 2001
A
u
Ju
Ju
Months
CY 2000
4.11
ly
e
n
y
M
a
ri
l
A
p
h
rc
M
a
b
e
F
Ja
ru
ry
ry
0%
CY 2002
As may be noted from the exhibit above, the seasonal pattern of overseas visitors to
India is pronounced and clearly associated with Indias climatic seasons coupled with
source market vacation patterns. The high season occurs between October to March
with a peak in December / January. The low season falls in the summer and monsoon
months with a trough in May / June comprising less than half of the visitor numbers of
the peak months..
Source Markets
4.12
The seasonal patterns for arrivals into India vary to some extent by geographic region.
For example, visitors from the U.S. & Europe are highly seasonal in their arrival pattern
with a high propensity to travel in the winter months and a low propensity in the summer
& monsoon period.
4.13
Visitors from Australia and S.East Asia follow similar patterns; however arrivals from
these source markets are higher during the October December period, which is in
contrast to arrivals from the U.S. & Europe where arrivals are higher in the Jan - March
period. Visitors from Nepal & Sri Lanka display relatively less distinct variations between
the high and low months.
4.14
During the course of this study several airline representatives and tour operators voiced
their concern of a lack of seasonal seat availability on a range of routes especially to the
U.K., U.S and Canada,. The exhibits that follow depict trends in visitor arrivals by
quarter for the North America & European markets in 2001. For a detailed overview of
seasonality of tourist arrivals for Indias top 15 source markets please refer Appendix
VIII.
( 39 )
M& A
EXHIBIT 4.7
REGIONAL SEASONALITY OF ARRIVALS
EUROPE UK & FRANCE
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
Ja n - M a r
A p r- Ju n
Ju l - S e p
O ct- D e c
2001
UK
F ra n ce
EXHIBIT 4.8
REGIONAL SEASONALITY OF ARRIVALS
NORTH AMERICA U.S.A.& CANADA
120,000
100,000
80,000
60,000
40,000
20,000
Ja n - M a r
Ap r- Ju n
Ju l - S e p
O ct- De c
2001
US A
Ca n a d a
Source : DOT, Government of India
NRI Source Markets

4.15
The NRI forms an important part of the VFR segment. Source markets are analysed in
the exhibit that follows. This is based on Indian Citizens residing in these countries. The
Indian community in the UK and US is believed to maintain stronger links than does the
Indian community in the Caribbean (Trinidad, Fiji etc).
( 40 )
M& A
EXHIBIT 4.9
INDIAN RESIDENT POPULATION OVERSEAS
Number of Indian citizens (Mn)
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
USA*
Saudi
Arabia
UK
South
Africa
UAE
Om an
Kuw ait
Canada Bahrain
Qatar
Top 15 Source Markets

Source: Ministry of External Affairs, GOI Yr 2001.
Note * Breakdown of Indian passport holders in proportion to total Indian population
not available; total estimated Indian population size taken into account
Key Source markets are reflective of Indian passport holders living abroad and
does not take into account people of Indian origin with foreign country passports.
MAJOR OUTBOUND SOURCE MARKETS

4.16
This section deals with overseas travel by Indians for reasons including for employment
purposes. Fueled by economic growth, growing affluence and higher discretionary
incomes, international overseas travel has expanded considerably.
4.17
The number of overseas trips taken by Indian residents has increased steadily over the
years to reach 4.1 million trips in 2001, up from 3.1 million trips in 1995. The average
annual growth rate between 1995 / 2001 for outbound travel was 4.9%; significantly
higher than the growth rate for inbound travel at 3%. In 2001, Indian nationals spent
approximately USD 2.6 billion overseas, which is a total of USD 645 per trip. The exhibit
that follows provides details on the key destination markets for outbound travels in FY
2001. It may be noted that data has been extrapolated from the Air Transport Statistics
Guide published by the DGCA as information on travel by destination market as
published by the DOT, GOI, was not comprehensive.
( 41 )
M& A
EXHIBIT 4.10
OUTBOUND TRAFFIC MARKETS
Yr 2001
Gulf
16%
Singapore
10%
Dubai
9%
Saudi Arabia
8%
U.K.
6%
Srilanka
5%
Germ any
5%
Thailand
4%
Kuw ait
4%
Netherlands
4%
Nepal
3%
Malaysia
3%
France
3%
U.S.A
Sw itzerland
2%
2%
Source : Air Transport Statistics 2000-01, Directorate General of Civil Aviation.
4.18
Of all the outbound trips undertaken 82% were to our top 15 destination markets. As
may be seen from the exhibit above, the Middle East accounts for the highest outbound
traffic flows from India. The Gulf was the top destination for Indian travellers in FY 2001,
accounting for 984,000 trips. Dubai, Kingdom of Saudi Arabia & Kuwait ranked 3rd, 4th
& 9th respectively, accounted for just over 1.3 million trips. Yemen, Syria & Oman
received just under 50,000 visitors. Combined, these destination markets accounted for
over 2.3. million trips or 56.3% of total outbound traffic outflows.
4.19
South East Asian countries (Singapore. Malaysia & Thailand) are also experiencing
increased visitation, prompted partly by the more active promotion of tourism by
government agencies in these countries, the expansion of the scope of Indian
international business activities and visits to friends and family by members of Indian
immigrants.
PURPOSE OF TRAVEL
4.20
A detailed breakdown of reasons for travel is not available, but it may be taken to
include travel by Indians on Government and private sector business, holidays, VFR
outbound, and other reasons such as education and medical purposes. The table that
follows provides details on purpose of travel for select source markets.
( 42 )
M& A
EXHIBIT 4.11
PURPOSE OF OUTBOUND TRAVEL
Percentage of Total Indian Arrivals
Purpose
Country
Year
U.S.A
2002*
U.K.
2001
Germany
2001**
Australia
2002
Singapore
2002
Thailand
2002
New Zealand
2002
Leisure
28%
27.0%
20.0%
32.0%
42.0%
83.4%
49.5%
Business
58%
31.0%
80.0%
26.0%
18.2%
10.6%
9.0%
Business & Lesiure
2.8%
VFR
58%
MICE
13%
Education
29.0%
21.0%
4.4%
2.0%
6.0%
Employment
24.7%
2.1%
0.6%
4.0%
Not Stated / Other
11.0%
11.0%
In Transit
Total
10.5%
17.0%
3.9%
17.0%
100%
100%
4.5%
157%
100%
100%
100%
100%
Source: International Passenger Surveys, Respective National Tourist Offices

Note: *Multiple responses
**Estimated figures; German National Tourist Office
4.21
From the table above it may be inferred that there were notable variation of travel
purpose by destination market. For example, the U.S., Germany & U.K. have a relatively
higher proportion of business and VFR segment travellers, while Thailand, Singapore &
New Zealand receive a greater proportion of visits for leisure / vacation purposes.
Southeast Asia (Thailand, Singapore and, increasingly Malaysia) are steadily gaining
popularity as leisure destinations, partially due to aggressive marketing by these
destinations and also due to the relatively cheap cost of holidaying - air fares and hotel
prices are only nominally higher than for much of domestic travel within India itself.
( 43 )
M& A
4.22
The exhibit below helps establish a picture of motivations of travel by Indian residents to
Europe from Indias two major airports Mumbai & New Delhi.
EXHIBIT 4.12
PASSENGER PROFILE OF TRAVELERS TO EUROPE FROM INDIA
FY 2000
Occupation / Travel Type
Departing from
Mumbai
(% of Total)
Multinational Employees
Software Industry Employees
Visiting Friends & Relatives
Diamond Trade
Emigrants
Unspecified
Attending Trade Fairs
Entertainment
Ship's Crew
Offshore Workers
Students
Total
33%
16%
15%
9%
6%
5%
4%
4%
3%
3%
2%
Occupation / Travel Type

Multinational Employees
Visiting Friends & Relatives
Exporters
Software Industry Employees
Students
Emigrants
Public Sector Employees
Unspecified
100% Total
Departing from
New Delhi
(% of Total)
25%
20%
15%
10%
10%
10%
5%
5%
1%
Source: A leading European Airline
OVERSEAS FOREIGN WORKERS

4.23
It is important to examine the Overseas Foreign Workers (OFW) segment, as there is a

clearly established link between labour outflows and the demand for outbound travel.
Overseas employment provides a significant proportion of job opportunities for Indians
and has thus been an important element in international travel for some years and has
been boosted by the export of highly skilled technicians such as those employed in
Indias information technology sector. 30% of NASA scientists, IBM and Microsoft
employees are Indians and 12% of doctors in USA are of Indian origin.
4.24
The table overleaf examines recent trends in labour outflows and changes between
1998 and 2002 in the number of Indian nationals obtaining employment abroad. These
figures should be read cumulatively when estimating OFW recurring traffic.
( 44 )
M& A
EXHIBIT 4.13
DISTRIBUTION OF ANNUAL LABOUR OUTFLOWS
FROM INDIA BY DESTINATION
('000)
Country
Saudi Arabia
United Arab Emirates
Oman
Singapore
Bahrain
Qatar
Malaysia
Kuwait
Libya
Others
Total
1998
105,239
134,740
20,774
21,298
16,997
1999
2000
2001
2002
27,160
79,269
16,101
19,468
14,905
58,722
55,099
25,155
18,399
15,909
99,453
95,034
41,209
24,399
20,807
12,596
10,512
4,859
1,339
13,765
367,663
33,654
62
19,149
1,129
22,309
4,615
31,082
1,198
32,003
78,048
53,673
30,985
27,886
16,382
13,829
6,131
39,751
334
11,645
355,164
199,552
243,182
278,664
22,462
Source : Annual Report 2002-03, Ministry of Labour, Govt. of India & Past Volume.
4.25
The table shows that in numerical terms the most important market for Indian nationals
working abroad is the Middle East. Currently, 1.2 million Indian nationals reside in the
Middle East of which a substantial amount are OFWs. The Kingdom of Saudi Arabia
tops the list of destinations, followed by the United Arab Emirates (UAE) and Oman.
Other important markets include Singapore & Malaysia in S. East Asia.
4.26
These Indians employed overseas may be regarded as potential passengers not only
for outbound travel to the destination but also for vacation trips to and from India itself.
In the past four years the requirement for outbound seat capacity from the overseas
foreign worker segment alone (without taking into account holiday visits or returning
workers) have been to the tune of 1.1 million seats of which 974,000 have been to the
Middle East.
4.27
If one were to assume that each of these workers is employed for a period of 4 years
and makes a trip to India to visit family and relatives once every 2 years then the
required seat capacity in FY 2002 would have been in the region of 1.2 million seats.
Based on an average of 240 seats per aircraft this segment alone at an 80% load factor
would utilise 8.6 flights per day. These are approximations as contracts of employment
are generally for different lengths of time. However for the purpose of this analysis,
these numbers are reflective of present and future demand levels of air travel for the
OFW segment.
4.28
The importance of the OFW / NRI segment to the Indian economy is illustrated by the
fact that remittances to India have increased from US$ 2.3 billion in 1982 to US$ 12.1
billion in 2002 (Source Ministry of Labour, GOI).
( 45 )
M& A
SEASONALITY - OUTBOUND
4.29
The seasonal pattern of travel abroad is relatively even throughout the year for all types
of travel combined, however leisure travel is predominantly during the summer months
of late April to July, late October / early November (Diwali), and Mid-December /
January (Christmas / New Year). The section that follows provide details on seasonal
variations of outbound Indian visitors for select markets.
EXHIBIT 4.14
INDIAN OUTBOUND TRAFFIC PATTERNS TO THE U.K.- YR 2001
70
Arrivals (000)
60
50
40
30
20
10
0
Jan-Mar
Apr-Jun
Jul-Sep
Quarter
Oct-Dec
Source - British National Tourist Office
EXHIBIT 4.15
INDIAN OUTBOUND TRAFFIC PATTERNS TO AUSTRALIA
Source: Australia Tourism Commission
( 46 )
M& A
EXHIBIT 4.16
INDIAN OUTBOUND TRAFFIC PATTERNS TO SINGAPORE- YR 2002
60
50
Arrivals (000)
40
30
20
10
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Months
Source: Singapore Tourism Board
OUTBOUND TRAFFIC BY AIRPORT

4.30
The development of new airports and trend for point to point flights, has led to some
amount of shift in traffic from gateway cities to the new international status airports. This
is borne out by the high traffic growth rates that have been registered for South Indian
cities such as Thiruvanathapuram & Chennai. The results of a study undertaken by the
AAI in 2000 revealed that 6% of Mumbais international outbound traffic originated from
Hyderabad, this is indicative of demand that exists at the smaller cities. The exhibit that
follows provides details on demand growth for outbound travel for six major international
airports in India.
EXHIBIT 4.17
NUMBER OF INDIAN NATIONALS GOING ABROAD BY AIRPORT
City
1999
2000
2001
% change
over 2000
Mumbai
Delhi
Chennai
Thiruvanathapuram
Kolkata
Kozhicode
Tiruchirappali
18,36,094
8,81,877
4,38,740
3,44,091
1,54,290
1,75,565
20,863
16,80,997
9,84,231
5,75,488
3,20,807
1,73,995
1,58,121
22,489
16,84,554
9,94,244
6,05,704
3,63,871
1,66,883
1,51,968
18,756
0.2%
1.0%
5.3%
13.4%
-4.1%
-3.9%
-16.6%
Total
38,82,876
39,82,069
40,66,837
2.1%
Source Airport Authority of India
( 47 )
M& A
4.31
The table reveals that Thiruvanathapuram recorded the highest rate of growth for
outbound travel at 13.5%. Chennai & Delhi also registered higher growth in outbound
international traffic flows than the other Indian gateways. Kozhikode, Kolkata &
Tiruchirapalli experienced a decline in outbound passenger numbers. The most
important origin cities for outbound travel in numerical terms are Mumbai and New
Delhi,. Together these two cities accounted for 66% of all international air travel from
India.
GROWTH FORECASTS
4.32
The key driver for this report in respect of change for Indias international air services
policy is not only the lack of adequate air seat capacity currently but also the shift or
change to be expected in the growth levels of future air traffic. There is a need to look at
the projected passenger growth forecast for India as a basis for the requirements of
sector. The table below examines expected passenger growth for air travel both
domestically and internationally forecasts for FY 2004-2017
EXHIBIT 4.18
INDIA PASSENGER GROWTH FORECAST
Year
Domestic
Pax (Mn)
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
CAGR
22.4
24.4
25.1
27.9
29.8
31.9
34.2
36.5
39.1
41.4
43.9
46.6
49.4
52.3
Increase
(%)
8.5
8.5
7.0
7.0
7.0
7.0
7.0
7.0
7.0
6.0
6.0
6.0
6.0
6.0
6.7%
International
Pax (Mn)
16.8
17.8
18.8
19.8
20.9
22.1
23.3
24.6
25.9
27.2
28.5
29.9
31.4
32.9
Increase
(%)
6.0
6.0
5.5
5.5
5.5
5.5
5.5
5.5
5.5
4.9
4.9
4.9
4.9
4.9
5.3%
Source AAI & Foundation for Aviation & Sustainable Tourism
4.33
It is the opinion of the consulting team that forecasted air traffic growth is projected to be
far too low when viewed in relation to expected GDP growth and the state of the Indian
economy.
( 48 )
M& A
5.
BILATERALS
AIR SERVICE AGREEMENTS & BILATERALS

5.1
The fundamental principle of the bilateral system is that of bilateral reciprocity whereby
countries exchange rights on the basis of equality of opportunity. This essentially
means that countries agree to exchange rights which enables them access to foreign
markets to the same extent as the other country is able to gain access to their markets.
5.2
International Air transport services between two countries are determined by Air
Service Agreements (ASA). International scheduled commercial air traffic is made
possible only by the Air Services Agreements (Bilaterals) in which governments typically
exchange air rights (Freedoms) for the benefit of their respective carriers. These
agreements specify the airlines of each country that can provide air services, the
frequency of these services, and the points (cities) that can be served in each country.
In addition, many bilateral air agreements contain provisions limiting the capacity that a
carrier or carriers may operate by imposing a cap on the size of aircraft that may be
employed or the weekly number of seats that may be offered. As a consequence,
Indias trade, tourism and foreign income earnings are intrinsically related to the Air
Service Agreements.
5.3
ASAs are negotiated bilaterally and generally comprise of the actual agreement which
is entered into by the Governments of both countries. In addition airlines of the two
countries enter into Memorandum of Understanding and / or an exchange of letters
between the carriers on the technical and commercial arrangements agreed upon. This
is sometimes accompanied by other less formal and less transparent understandings.
5.4
The commercial terms in the Indian context follow historical precedents, with countries
where India has old ASAs these continue and it is only when additional capacity or
rights are required by either country or with a new country, that capacity and commercial
terms are negotiated first at a Government level and then between the airlines
concerned. The commercial terms in the Indian and to some extent international
context, normally consist of royalties or block seat arrangements. This is discussed in
more detail later in this Section.
5.5
There exists a basic system of air service rights commonly referred to as freedoms of
the air. These freedoms provide the backbone for negotiating capacity rights between
countries under each ASA. Details follow overleaf.
( 49 )
Bilaterals
M& A
Air Freedoms Defined
5.6
The Air Freedoms as they are referred to are defined by the illustrations that follow :
EXHIBIT 5.1
( 50 )
Bilaterals
M& A
5.7
The regulatory landscape of international air transport is changing very quickly reflecting
the dynamic growth of this sector. These changes have been brought about
internationally so as to meet the increasing demand for air services around the world
through more flexible approaches to regulation. Governments throughout the world are
increasingly recognizing the need to adapt aviation policies, which have traditionally
been more concerned with protecting the interests of their national airlines rather than
the interests of the consumers or the broader interests of the economy.
( 51 )
Bilaterals
M& A
5.8
Over the past decade, many bilateral agreements have been re-negotiated to make
their provisions more flexible. Though there are degrees to which this has been done,
these arrangements generally are more flexible (or abolish) state control over
frequencies and seat capacity, reduce route restrictions, allow for multiple designation of
airlines, have less prohibitive tariff regimes and promote fair and competitive practices.
From January 1995 to December 2001, over 600 bilateral agreements were reportedly
concluded or amended. About 70 per cent of these agreements and amendments
contained some form of liberalized arrangements. (Source : ICAO). The definition and
distinctions between the terms open skies and liberalization are provided below
Open Skies -- the term is used to denote a declaration by a government of unlimited
access to international routes to and from its airports by all foreign carriers, with no
restraint on frequency or capacity, with or sometimes without reciprocal access for
the airlines of the guarantee state.
Liberalisation -- the term denotes the progressive relaxation of hitherto rigid
government controls on routes, frequency and capacity mounted by airlines, usually
on a reciprocal basis. Equivalent operating opportunities are granted to airlines from
both countries which are parties to an agreement, to mount capacity according to
their judgment of the state of the market and the airlines own priorities. (Source:
Association of Asia Pacific Airlines).
5.9
The United States was the first country to liberalise its international air transport policy in
the 1970s. Many other countries have since adopted a more liberal approach to
bilateral arrangements. In 1992 the United States decided to pursue the so-called open
skies arrangements on a bilateral basis. This Open Skies policy of the US reflected a
new approach to the international air services regulatory policy.
5.10
A number of countries have pursued liberalisation through so-called open skies

agreements. As of June 2002 some 85 open skies agreements had been concluded
involving approximately 70 countries of which two-thirds of them involved the United
States as one of the partners. However, exchange of broader or full market access
rights is still very country-specific and most countries which have concluded bilateral
open skies agreements did not as a general policy but did so on a case-by-case basis
(ICAO).
5.11
Countries in the European Union, APEC and ASEAN have also pursued liberalisation
on a pluri-lateral and regional basis to various degrees. Among developing countries,
significant liberalisation has taken place, for instance between Argentina and Chile,
Ethiopia and the United Arab Emirates, Bahrain and Malaysia, Nepal and Macau etc.
On a multi-lateral basis, the General Agreement on Trade in Services (GATS) has some
very limited application to air transport. The table shown overleaf summarizes the
changes in the open market bilaterals vis--vis - the traditional approach.
( 52 )
Bilaterals
M& A
EXHIBIT 5.2
TRADITIONAL Vs CURRENT APPROACH TO BILATERALS
TRADITIONAL
MARKET ACCESS
DESIGNATION
OPEN MARKET BILATERALS
Only to points specified
Increased number of points or

open access
Limited Fifth Freedoms

granted more in US
bilaterals
Generally more Fifth Freedoms,

especially in US bilaterals
Charter rights not

included
Charters included
Single some multiple in

US bilaterals
Multiple
Airlines substantially owned and effectively controlled by

own nationals
CAPACITY
Capacity agreed or shared

50:50
No frequency or capacity
controls
No capacity/frequency
controls in liberals, but
subject to review
TARIFFS
5.12
Double approval by both

governments
Double disapproval
To be agreed using IATA

procedures
IATA tariffs often flouted

(especially in Asia)
However most open skies do not permit :
Traffic rights : No 7th freedom, No domestic cabotage.
Nationality / Ownership : Still substantial ownership and effective control rule

exists; some states do not allow over 25% of foreign ownership (e.g. US, Canada).
Anti-competitive behaviour : No provision for dealing with this uniformly.
Protectionist measures continue : State subsidies, Government traffic limited to

national carriers (e.g. Fly America program); US does not permit US carriers to wet
lease from non-US.
(Source: Rigas Doganis, Flying Off Course: the Economics of International Airlines, Third
Edition, Routledge. 2002)
( 53 )
Bilaterals
M& A
INDIAS INTERNATIONL AIR SERVICES POLICY
5.13
India has air service agreements with 97 countries of which only 46 (47%) are being
utilised. Exhibit 5.3 & 5.4 provide further details on these agreements. A comprehensive
listing of active (in 2001) air service agreements by country is provided in Appendix IX.
EXHIBIT 5.3
INDIAS BILATERALS
5.14
Of the 97 ASAs, 51 are dormant and of the remaining 46, 44 are used by the foreign
countries, whereas AI & IAC only utilise 20 of these 46 ASAs.
EXHIBIT 5.4
INDIAS BILATERAL ACTIVITY
97
51
46
44
20
Total
Agreements
Active
ASAs
Unutilized
ASAs
AI/IAC
Utilization
Foreign country
Utilization
( 54 )
Bilaterals
M& A
Regulatory Constraints of Indias ASAs
5.15
The consulting team was unable to gain access to copies of Indias ASAs. A detailed
analysis of the characteristics of these ASAs is therefore not possible. The paragraphs
that follow provide a broad overview on the predominant features of Indias ASAs. This
information is based on information gained from industry participants, published &
private data sources and is supplemented by the teams knowledge of the market
situation. Comprehensive data on the ASAs that the team did access is considered to
be of minimal relevance as it is predated (1999) and is thus not repeated in this report.
5.16
Indias current international air transport policy can be characterized by :
Traffic Rights are controlled by the Government : India follows a dual

designation policy, which designates Air India as the primary Indian carrier and thus
the airline enjoys the first right of refusal for international operations to / from India.
Indian Airlines has also been allocated traffic rights on international routes; however
this is limited to Sri Lanka, CIS countries and the Gulf Air Owner States. As per
Indias policy on international air services, private carriers are not designated for air
traffic rights and hence cannot fly on international routes.
Restriction on Frequencies and Capacity : Capacity is used as negotiating coin

and is still restricted in most of Indias ASAs. The ASAs generally specify
restrictions on the frequency of flights that may be served on a given route. They
also stipulate the seat capacity that a countrys carriers may operate each week and
may also place restrictions on the aircraft equipment that may be flown.
Restriction on Routes to be served : A route is determined by the points (cities)

served by an airline and therefore effectively represents the market of that airline.
Typically, during negotiations, the governments of both countries mutually agree on
the routes on which traffic will be carried. Designated carriers are allowed to fly only
to these particular cities, or a choice of cities specified upon, under the ASA.
Countries may agree on having more than one designated point of call to which
traffic may be assigned, and large countries usually do. In negotiations, which are
conducted on the basis of a very rigid reciprocity approach, larger countries tend to
have greater bargaining power by virtue of the fact that they can offer more than one
point of call to partners. India tends to take a conservative stance on such issues as
seen by the answer to a parliamentary question by Shri. Sharad Yadav the ex-Civil
Aviation Minister.
Offer of an airport as a new point of call to any foreign airlines is decided during
bilateral air services consultations with the concerned country. These issues are
decided on the principle of reciprocity and benefits accruing to both sides. Since
Cochin is a commercially attractive point of call to foreign airlines and their
respective countries do not have a similar commercially attractive additional point of
call for the designated airline of India, it is balanced through a commercial
agreement between the designated airlines of the country concerned and India. The
exact nature of commercial arrangement varies from case to case and is worked out
at airline level. (Rajya Sabha Starred Question No. 408 08/2001).
( 55 )
Bilaterals
M& A
Fifth Freedom Rights : Fifth Freedom rights are generally exercised by those
airlines that operate from another country into India and carry traffic that emanates
from India to a third country. Allowing 5th Freedom to a foreign carrier out of India
would compete with our national carrier and the carrier of the third country. For
example, if Emirates were to fly to India and then on to Thailand, this would impact
AI, IAC and Thai Airlines. However, the permission to fly to Thailand would remain
with the Thai Government. Allowing flexibility to the foreign carrier therefore boils
down to the stance India wishes to take vis--vis its national carriers. Fifth Freedom
services are usually provided at lower fares recognizing the Fifth Freedom carriers
ability to take advantage of marginal pricing there is a real commercial incentive
for those airlines to maintain these services.
Codesharing : Refers to the ability of an airline to sell seats on a flight operated by

another airline. Provisions for codesharing are included in many of India's ASAs.
However, for an airline to codeshare, it must also have the underlying market access
and capacity rights under the relevant ASA. Codeshare arrangements can also
have a commercial bearing where the national carrier may impose special terms.
Double Approval Of Tariffs : A tariff is commonly defined as the price to be

charged for the carriage of passengers or cargo (excluding mail) and the general
terms and condition of carriage. Countries regulate international tariffs for a variety
of reasons, the main one being to promote the interests of their flag carriers while at
the same time promoting the interests of consumers (i.e. by prohibiting predatory
and abusive pricing strategies). However, in most cases comprehensive price
regulation is difficult and extremely resource intensive. The several different types of
approvals in the air tariff regime include:
a. Double approval, in which both states concerned must approve a tariff;
b. Country of origin, in which only the state in which the transportation originates
need approve the tariff; and
c. Double (or dual) disapproval, in which both states concerned must disapprove a
tariff to prevent it coming into effect.
In most cases, India follows the regime of double approval of tariffs, which entails
that prices filed by the airlines may only come into effect if both countries regulatory
authorities approve or single disapproval which is less restrictive since it does not
require approval in writing.
Royalty Payments : Where a foreign carrier seeks to obtain or enhance capacity to

India but this is not matched with the national carriers desire (or ability) to fly to that
country then Royalties are charged, ostensibly in lieu of the profits that the national
carrier may have made. This has pricing and therefore demand implications.
Discussed in more detail in Section 7 on recommendations.
( 56 )
Bilaterals
M& A
Ownership and Effective Control : Designated carriers are generally required to

be substantially owned and effectively controlled by the government or nationals of
the bilateral partner country so as to be able to utilise rights negotiated under the
ASAs. However, there is no internationally accepted classification of what
constitutes substantial ownership and effective control. Most countries thus define
parameters as per their interpretation and what constitutes as acceptable to them.
ASAs permit bilateral partners to refuse, revoke, suspend or impose conditions on
the authorization of air services by carriers owned and controlled by other countries
not party to the bilateral agreement. They prevent these carriers from using and
benefiting from the rights established under those arrangements. They also restrict
the ability for carriers from one country to provide services on behalf of another
country.
Most of Indias ASAs specify Substantial Ownership and Effective Control as a

precondition to commencement of services. However in some cases India also
accepts Principal Place of Business as the designation criteria.
INDIAS NEED FOR A CLEAR POLICY

5.17
India presently has a draft Civil Aviation Policy dated April 2000. The new Civil
Aviation Minister - The Hon. Rajiv Pratap Rudy has taken some bold steps on airport
privatisation and is in the process of finalising Indias Civil Aviation policy. It is hoped
that this report will provide useful inputs to this process.
5.18
The pace of air transport liberalisation world-wide has increased in recent years. Many
countries recognizing the benefits of efficient, internationally competitive air services are
now actively pursuing liberalised market access in their aviation agreements with
partner nations. If India does not respond rapidly to the changing regulatory
environment, she may be disadvantaged as air transport services and hence trade and
tourism between other countries may become relatively more efficient and competitive.
5.19
The international air services regulatory system as practiced by India presently remains
a bottleneck in the overall development of the air transport network. In practical terms,
the system has not served neither the interests of the consumer, nor that of the
international airlines nor has it helped strengthen the operations of the Indian flag
carriers.
5.20
It is imperative that the government in consultation with all industry stakeholders

develop a regulatory framework / policy for the sector which enunciates a clear longterm strategy for its development, including the potential role of the private sector in
financing, managing, or owning air transport assets. Without this it will be difficult to
attract investment in civil aviation, for new air transport providers, or for infrastructure.
5.21
An international air policy is required to serve the needs of a wide spectrum of Indian
stakeholders, including air carriers, airports, travellers, and the trade and tourism
sectors. For instance, it would be of benefit to the AAI to have the government grant
foreign carriers broad access to Indian cities. However, from the view point of the Indian
flag carriers it would be more beneficial if the Government were to limit foreign carrier
access to India in order to prevent revenue diversion.
( 57 )
Bilaterals
M& A
5.22
Hence our policy should provide guidelines or criteria to establish an appropriate

balance for resolving such conflicting interests and clarify how a balance between the
interests of all stakeholders may be achieved. The current approach does not take into
account market conditions or make provisions for rapid changes. In particular,
designated ports, the principal of reciprocity and negligible incremental increases all
constrain market changes. The protocols and processes involved in ASAs are not
market responsive.
5.23
An important aspect to consider in the context of this study is the consulting teams
claims of inadequate seat capacity on key routes. In the exhibit that follows, it may be
inferred that provision of seat capacity at an aggregate level is broadly adequate and
that there exists a substantial bank of available seat capacity for Indian and foreign
carriers compared with the amount of actual passenger traffic carried. However, it needs
to be pointed out that this capacity figure is an aggregate figure and does not indicate
the amount of capacity granted / utilized by Indian and foreign carriers on specific
routes.
EXHIBIT 5.5
INDIAS BILATERAL CAPACITY & TRAFFIC
Financial
Year
Capacity Granted
Operated
Traffic
Tourists
Load
(Mn seats)
seats (%)
(Mn pax)
Inbound Outbound
Factor
1995
1996
1997
1998
1999
2000
2001
26.9
28.0
30.9
31.8
32.7
35.6
37.5
CAGR (95/01)
Load Factor
5.7%
49.9%
52.2%
47.6%
49.2%
48.0%
45.0%
49.1%
5.4%
9.2
10.1
10.8
10.9
11.6
12.3
12.2
2.1
2.3
2.4
2.4
2.5
2.6
2.5
3.1
3.5
3.7
3.8
3.9
4.0
4.1
4.8%
3.0%
4.9%
68.7%
69.4%
73.2%
69.7%
73.7%
76.8%
66.4%
71.1%
Source: DGCA
5.24
From Exhibit 5.5 above, we can see that load factor over 7 years 1995 / 2002 has
averaged at approximately 71%. This figure in itself while reasonably high, does not
take into account traffic flows on key city pairs or the seasonal variations of demand. It
would hence be appropriate to state that this percentage would be substantially higher
for key source markets, were these factors taken into account.
UTILIZATION OF CAPACITY ENTITLEMENTS BY FOREIGN CARRIERS

5.25
The Indian air services market is characterized by demand on a limited number of city
pairs which comprise a high percentage of overall traffic. As mentioned in an earlier
section approximately 75% of inbound and 82% of outbound traffic flows occur on 20
key routes. Exhibit 5.6 that follows provides details on capacity entitlements granted
and utilized for major source / destination markets.
( 58 )
Bilaterals
M& A
EXHIBIT 5.6
ENTITLEMENTS GRANTED & USED BY SELECTED KEY COUNTRIES
S. No.
Country
Desinated Airlines
Entitlement (Seats Per Week)
Utilization
U. K.
(a) British Airways

(b) Virgin Atlantic
17 frequencies
2 Services (Against Unutilised Entitlement
of Air India )
100% (17 frequencies)

USA
(a) Delta Airlines

(b) Northwest
No Restriction on Capacity Entitlement

No Restriction on Capacity Entitlement
7 frequencies / 1,365 seats

7 frequencies / 2,821 seats
France
Air France
7 frequencies to Delhi and 6 to Mumbai
Germany
Lufthansa
16 frequencies *
Holland
KLM
7 Frequencies to Delhi with one Freq.

Coterminating at Kolkata
UAE (Dubai)
Emirates
10,400 Seats / week
99% (10, 315 seats)
Jordan
Royal Jordanian
1,800 Seats / week
78% (1,400 seats)
Saudi Arabia
Saudia
8,500 Seats / Week
100% (8,485 seats)
Oman
Oman Air
3, 700 Seats / Week (+2% Adjustment)
100% (3,750 seats)
10
Kuwait
Kuwait Airways
5,200 Seats / Week
95% (4,945 seats)
11
South Africa
South Africa Airways
900 Seats / Week
79% (712 seats)
12
Sri Lanka
Sri Lankan
6,570 Seats / Week
100% (6,563 seats)
13
Thailand
Thai Airways**
4,100 Seats / Week
99% (4,071 seats)
15
Malaysia
Malaysia Airlines
6,300 Seats / Week
83% (5,228 seats)
Source: DGCA, CRISIL/ M&A compilation

Note:
Lufthansa is allowed to operate more flights than that negotiated in the ASAs; however for each additional
**
Thai Airways has recently been granted an additional seat capacity of approximately 5,500 seats / week to
Frequency Unilaterally Operated by Lufthansa, the airline has to pay Air India USD 685,000 Per Annum.
Chennai, Bangalore, Varanasi, Gaya & Guwahati.
5.26
As may be inferred from the exhibit above, other than the U.S., utilization of seat
capacity entitlements for many of our major and upcoming markets exceeds 75% with
Jordan on the lower end at 78% and Germany, Sri Lanka, Saudi, Oman & Holland
utilizing 100% of granted capacity entitlements. Thailand, has however been recently
allowed an additional 5,800 seats / week. The present levels of capacity entitlements by
country appear inadequate given the current and anticipated levels of demand for seat
capacity on routes to key source & destination.
( 59 )
Bilaterals
M& A
5.27
India needs to streamline its policy on allocation of seat capacity. For example, India
has signed ASAs with 13 countries, which were constituents of the Former Soviet
Union. Current entitlements with the CIS countries are 2.5 million seats per annum for
both sides combined. The number of tourists who visited India from the CIS countries
during the year 2001 was 24,831. Arguments made in the past by the Ministry of Civil
Aviation that capacities granted far exceed present levels of demand need to be seen in
this light.
5.28
We would wish to stress that when we refer to the above example we are not
necessarily implying that seat capacity granted on other routes currently not utilized /
under-utilized, implies a waste or misallocation of capacity entitlements. On the contrary,
it allows the designated carriers of both countries the freedom to respond quickly to a
supply gap in the market and also encourages growth on routes. However it should be
taken into consideration that trade and tourism are vehicles for significant economic
growth and foreign income earning, thus it is of paramount importance that the needs of
these sectors be met and adequate capacity be granted to countries which form our
major markets.
5.29
In an effort to increase capacity entitlements, the Civil Aviation authorities, in the past &
current year to date have held ASA discussions with 14 countries. Details are provided
in Exhibit 5.7 that follows.
EXHIBIT 5.7
COUNTRIES IN ASA DISCUSSIONS
Year
Country
Yr 2002
Iran
Jordan
Afghanistan
Italy
Sri Lanka
Qatar
UK
Singapore
Yr 2003 (to date)
Republic of Korea
Malaysia
Turkey
Italy
Thailand
Gulf Air owner States (UAE, Oman
and Bahrain)
Source CRISIL / M&A Survey
5.30
Also recognizing the severe dearth of air seats during peak tourist season, in
September 2002, the government announced an open sky policy allowing operation of
extra flights by airlines outside the bilateral entitlements, from 1st December 2002 to
31st March 2003, subject to commercial agreement with Air India. This to some degree
did help alleviate demand as foreign carriers were able to mount extra flights on high
traffic routes.
( 60 )
Bilaterals
M& A
EXHIBIT 5.8
WINTER 2002 OPEN SKY POLICY DETAILS
Winter 2002 - Scheduled
AI / IA deployed additional 4,461 seats compared to 2001

Foreign carriers deployed 773 additional seats
In total 5,234 additional seats were deployed as compared to 2001
Open Sky Policy
Foreign carriers deployed an additional 20,215 seats
Airlines which availed of "open skies"
5.31
5.32
Lufthansa
Frankfurt - Bombay
Virgin Atlantic
London - Delhi
Others
Singapore Airlines
Malayasia Airlines
Emirates
Sri Lankan Airlines
South African Airways
However, many industry stakeholders contacted by CRISIL / M&A while appreciative of

the governments responsiveness to initiate change, were of the opinion that there were
still gaps which need to be addressed with the open skies policy. They were
particularly keen to make the following points :
Interviewees were of the opinion that by announcing the policy at the 11th hour,
Indian policy makers did not give the airlines sufficient lead-time to plan
appropriately. Most airlines plan their schedules well in advance thus making it
difficult for them to respond to such a scheme at a short notice period. According to
officials of a major European airline it normally takes a minimum of six weeks from
permission being given to get an aircraft & crew in place to operate an additional
flight.
Industry players also mentioned that a vast majority of leisure travellers plan their
vacations months in advance and generally buy holiday packages via airline
owned retail travel centers or travel distributors who sell tickets and package it with
other holiday products (hotel stay, guided tours etc). Announcing the policy at a
time, when peak season had already commenced resulted in airlines / tour operators
not having enough time to sell India as a destination to these leisure travellers and
ensure sufficient traffic flows on inbound flights.
Under open skies it was mandatory to enter into commercial arrangements with AI,
many stakeholders believed that mounting extra flights was not a commercially
attractive option.
Excerpts of opinions of industry stakeholders from the Express Travel & Tourism article
(Space Jam The Case For Open Skies, Issue dated 01 - 15 January, 2003) have been
provided below.
Rajeev Kohli, Marketing Director, Creative Travel - This policy when announced
was already very late. Hence, no airline has brought or is bringing any flight in
addition to their scheduled operation. Austrian Airlines, we definitely know, is
running in minus from November 02 till February 03. However, they have no plans
to get charter flights because on one hand, time given to act was too short and on
the other, they are all afraid that any policy in India can be reversed very soon on
one pretext or the other.
( 61 )
Bilaterals
M& A
Nabil Sultan, Emirates General Manager - India & Nepal - It puts tremendous
financial pressure on any airline to pull out aircraft from one route & deploy it to
another, and after that if part of the revenue goes to Air India, why should one go for
it.?
Praveen Chugh, Chairman, TAFI - North India - The insistence to have a

commercial agreement with Air India is acting as an impediment to the introduction
of additional flights as it would make such operations more expensive. The
government in this scenario should not insist for commercial agreements.
Akbar Al Bakar, CEO, Qatar Airways - Indias current bilateral system not only
stifles the growth of efficient airlines, but hurts passenger interest and adversely
affects economy. With deregulation in Qatar, we witnessed large traffic inflow and
immediate employment benefits.
CHARTER SERVICES
5.33
Non-scheduled services are air services, which are not listed, in published airline
timetables. The regulation of non-scheduled services is excluded from the bilateral
framework, which covers scheduled passenger and freight services only. Charter flights
are one form of non-scheduled services. Charter services are operated on an infrequent
basis; in some cases these may be one off or ad hoc flights, while others may involve an
extended program of flights often on a seasonal basis.
5.34
The air charter business operates in a highly competitive & price-sensitive market place.
Air charter services offer lower prices to passengers by operating with very slim profit
margins. Accordingly, charter flights are frequently scheduled to be part of "track
programs," flight schedules designed to ensure that airplanes spend as little time as
possible on the ground and carry passengers on both the departing and returning legs
of the trip.
5.35
Charter services in Europe and across the Atlantic account for a significant portion of
the overall market for leisure travel. They have developed partly as a response to
market circumstances, such as the high seasonality of passenger traffic, and partly as a
response to some regulatory constraints on scheduled services, including the high fares.
They have also enabled carriers to develop new markets, particularly to places not
served by scheduled international services.
5.36
The authorization of charter services remains at the discretion of individual countries.

Proposed charter services must satisfy the regulatory requirements of both countries
involved as a pre-requisite to commencement of operations. The regulatory policies and
approach to charter services vary among countries. Whilst many countries, particularly
tourist destinations, readily authorize incoming charter flights, others have adopted a
more restrictive approach.
( 62 )
Bilaterals
M& A
INBOUND CHARTER SERVICES
5.37
In India, the DGCA is responsible for approving the operation of charter services. India
has recently liberalized its air transport policy relating to international inbound tourist
charter operations. Operators can operate any number of international tourist charter
flights by any type of aircraft to the designated international airports. A tourist charter
flight can transport the tourists on domestic sectors also within India. The initial place of
arrival and the final place of departure from India, however, have to be a designated
international airport.
5.38
Foreign aircraft operators can market the charters through their computer reservation
system and direct sales through the Internet. Since free movement of cargo is permitted
under open sky policy, carriage of cargo is also permitted on tourist charter flights. The
operators can operate charter flights on a regular basis like scheduled flights, and the
slots are also cleared well in advance. A number of participants acknowledged that
these changes had alleviated many of the constraints on the operation of charter
services to and from India.
5.39
Even though policy on inbound charters is suitably relaxed operators do face practical
problems with Airports, slots and delays in obtaining permissions. These impediments
need to be addressed.
OUTBOUND CHARTER SERVICES

5.40
There is a very strong case for liberalising the Aviation Industry by permitting nonscheduled charter operators for overseas destinations. Currently, inbound charters are
permitted but outbound charters policy does not allow more than 6 flights in 90 days
(unless the aircraft operated have 9 or less seats). Given the high fixed costs of the
aviation business, this condition makes outbound charters unviable.
5.41
Liberalising outbound Charter Policy will lead to following benefits :

(a)
Outbound Charter operations may alleviate capacity constraints: Foreign

airlines may and do frequently resort to cutting capacity into / out of India to suit
their individual circumstances. This often creates capacity constraints along with
higher air fares leading to hardship for Indian travellers and inbound tourists The
situation can get quite extreme if such capacity cuts are undertaken during the
peak outbound travel season. Allowing charter operators, will provide much
needed capacity. Charters will lead to freeing-up of certain capacity that can be
used by business travellers and foreign tourists while stimulating lower airfares.
(b)
Multiplier effect on Indian Economy : Tourism industry is one of the largest

employers in the world. Furthermore, according to WTO studies every direct
employment in tourism industry creates 6 - 8 indirect employment in dependent
industries. Charter operation will provide the industry with the much-needed
boost and help us create a stronger economy.
( 63 )
Bilaterals
M& A
(c)
Foreign Exchange Savings for the Country : All airfares collected by various
international airlines is remitted back to their countries retaining only a part of the
fares for day to day operations. For example it is possible that British Airways
remits back to UK a sum of Rs.46,000/- equivalent to US$ 1,000/- per passenger
whereas the charter operator would remit minimal lease rentals of Rs.4,800
equivalent to US$ 100/- per passenger seat. The rest of the funds would be
used and retained in India. At macro level this could result in enormous foreign
exchange savings for the country.
(d)
Promote Incoming Tourism : If the charters policy was modified to allow a mix
of Indian and foreign tourists, an Indian aviation company could then enter this
segment and operate low-cost charter services year round. Additionally such
services would will allow for connectivity to new or developing markets for that
might not be large enough to sustain scheduled services. This will facilitate
incoming tourism across the year. Further, charter services of an Indian
company is less likely to be impacted by recurrent negative publicity that the
western media generates, for example, plague in Gujarat, riots, cross-border
disputes, etc.
(e)
Costs Savings to Indian Travellers : The airfare charged by charter flights are
invariably less than half of the airfare that schedule carriers charge, resulting in
huge savings to the consumer.
(f)
Put Indian Traveller On Par with Global Customers : It is unfair that a British
citizen can travel to India for a 7 day holiday at an all inclusive package cost of
Rs.22,500/- equivalent to GBP 300 - when an Indian traveller cannot even avail
of just the cost of the air ticket at that price.
(g)
Non-Compete with Air India & Scheduled Airlines : The permission could be
provided so as to allow only Package Tour travellers through Charters. This will
ensure that charter operators do not compete with Air India and Indian Airlines.
In fact, a liberal outbound charter policy will result in increased business for
domestic airlines including Indian Airlines on hub-spoke basis i.e. domestic
airlines will carry the travellers from other cities to international gateways.
(h)
Generate Revenue for the Government: Besides, direct and indirect tax
contributions, charters will generate revenue via payments in the form of landing
fee, navigation fee, maintenance and ground handling contract with Air India.
(i)
Cargo Capacity: Exports from India on incoming charters can generate

economic activity by creating low cost cargo capacity.
( 64 )
Bilaterals
M& A
6.
ECONOMICS OF AIRLINES & THE CASE FOR AIR INDIA
THE AIRLINE INDUSTRY

6.1
This section details the context in which commercial arrangements by the flag carriers
should be considered. This section briefly outlines the global aviation environment with
respect to airline industry, the impact of changing market conditions, and the possible
implications of such commercial arrangements on the profitability of airlines flying into
India.
6.2
The aviation industry has faced and continues to face a period of unprecedented turmoil
and mounting pressure for restructuring and consolidation so as to maintain profitability.
Due to the capital intensive and fragmented nature of the industry, operating an airline
has traditionally been a high cost / low margin enterprise. This has resulted in extreme
vulnerability of the industry to sudden cost shocks or crisis leading to reduced demand
for services.
6.3
The economic slow down world wide combined with other calamities including war,
terrorism and the SARS epidemic and resultant travel advisories has left a number of
airlines in a vulnerable position. Steep decline in yields due to the decrease of corporate
sector travel and increased price sensitivity of the corporate and leisure sectors,
combined with generally increasing unit costs, has resulted in low profitability for the
industry.
EXHIBIT 6.1
( 65 )
Economics of Airlines & The Case for Air India
M& A
6.4
The events of 11 September 2001, which resulted in the US Government providing US$
billions in loans and grants to the US airline industry only exacerbated already existing
issues on the long-term profitability of the industry. The European airline industry has
experienced similar pressures. Sabena, Swissair, United Airlines and US Airways have
gone into bankruptcy or ceased operations entirely due to accelerated deterioration in
their financial situation. British Airways, Alitalia, SAS and KLM have also suffered large
losses. In South-East Asia, Malaysia Airlines has recently also been re-capitalized by
the Malaysian government. Many airlines have reacted to contain losses by reducing
frequency, capacity and staff. Non-profitable routes have been reduced or eliminated
altogether.
6.5
In 2001, member airlines of the International Air Transport Association (IATA) recorded
a collective loss of some US$ 18 billion. As per IATA estimates, it is also expected that
global airlines may lose in the net result, probably US$ 6.5 billion in 2003.
EXHIBIT 6.2
FINANCIAL RESULTS OF IATA AIRLINES
SCHEDULED INTERNATIONAL SERVICES
(US$ Billions)
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
-5
-10
-15
Source: IATA
6.6
Every airline has a break-even load factor which is the percentage of the seats the
airline has in service that it must sell at a given price level, to cover its costs. Airlines
typically operate very close to their break-even load factor. Since revenue and costs
vary from one airline to another, so does the break-even load factor. Escalating costs
push up the break-even load factor, while increasing prices have just the opposite
effect, pushing it lower. The sale of just one or two more seats on each flight can mean
the difference between profit and loss for an airline. IATA statistics comparing load
factors and revenue with break-even levels over the period from 1991 to 2001 are
provided in Exhibit 6.3 overleaf.
( 66 )
M& A
EXHIBIT 6.3
INTERNATIONAL OPERATING ECONOMICS
80
3000
70
2000
60
1000
50
40
Passenger operating profit

Load factor
Break even load factor
2001
2000
1999
0
1998
-4000
1997
10
1996
-3000
1995
20
1994
-2000
1993
30
1992
-1000
4000
1991
$m
Load factors and passenger profitability 1991-2001
Source: IATA
6.7
The volatility in demand for air transport services is a vital issue for airlines. The breakeven load factor for European airlines on the Far East Australasia route (includes India)
was 74.5% in 2001. Airlines are therefore very sensitive to costs and extraneous
charges (such as royalties) which would discourage capacity that might otherwise be
considered viable.
6.8
Future growth of air transport services will continue to depend primarily on world
economic and trade growth, airline costs, as well on the extent to which the industry can
resolve issues such as infrastructure requirements (airports), airspace congestion and
increasing capital investment needs. The air transport industry will also be affected by
government decisions and policies, notably those determining the type and extent of
economic regulation of airlines.
6.9
Given the current environment and reduced demand for services, for the airlines to
maintain a level of sustainable profitability, the airlines must focus on radically reducing
costs and achieving other efficiencies. In this light, prohibitive royalty payments / block
space arrangements with Air India might prove a serious deterrent for airlines looking to
fly / expand capacity in the Indian market. In the course of this study, the consulting
team was informed that royalty payments generally range from US$ 5 to US$ 50 per
seat.
( 67 )
M& A
6.10
Block space arrangements are agreements whereby Air India obtains a specified
number of seats from the operating carrier at an agreed cost / or no cost. The revenues
derived from such arrangements accrue wholly to Air India. These block space
arrangements present Air India with the ability to hold out services to various markets
without committing its own physical resources
6.11
The Indian carriers, Air-India (A-I) and Indian Airlines (IAC) are unable to utilise a large
portion of their capacity entitlements (their utilisation stands at 38.7 per cent). The main
reason for poor utilisation of the entitlements by the Indian carriers is their limited fleet
size and the inability to add more aircraft.
6.12
Details of Block Space arrangements gleaned from secondary sources are provided in
Exhibit 6.4. A listing of airlines with whom Air India has block seat arrangements (but
not specifying the number of seats) as at 2001 is provided in Appendix X.
EXHIBIT 6.4
AIR INDIAS BLOCK SPACE ARRANGEMENTS (YR 2001)
Airlines
Sector
Seats / Week
(in each directon)
Kuwait Airways
Kuwait / Chennai / Kuwait
140
Virgin Atlantic
London / Delhi / London
130
Emirates
Dubai / Chennai / Dubai
172
Malaysian Airlines*
Mumbai / Hyd'bad / Bangalore / Kuala Lumpur
350
Thai Airways**
Bangkok / Bombay / Bangkok
200
Aeroflot
Moscow / Delhi / Moscow
75
Total
1,067
Prior Arrangements
1,128
Total
2,195
Source : Parliamentary Report - 2001, CRISIL / M & A survey

Note : As on 31st March 2000, Air India had an entitlement of 1,128 seats in each direction, with
various airlines through Code Share / Block Space Arrangements.
* Figures have been updated by the consulting team to reflect current arrangements.
** Was to be finalised at that point in time
6.13
Based on primary and secondary data sources, the income earned by Air India from
Block Space, Royalty Arrangements and Revenue from Unutilized Bilaterals (Virgin)
grew from Rs.1,625 million in 1999 to Rs.2,404 million in 2001 and Rs.4,000 million in
FY 2002. This represents a CARG of 35% per annum.
( 68 )
M& A
THE CASE FOR AIR INDIA
6.14
As proud Indians we would like nothing more than for our Flag Carrier to be strong and
vibrant airline continually seeking to expand and grow at the pace required to fuel
tourism, economic growth and GDP growth.
6.15
Unfortunately Air India has not been in a position to capitalize on the rights it has, and
protectionist policies, consciously or unconsciously, have hindered growth in traffic. A
pragmatic approach to rectification of these problems needs to be addressed (see
Section 7 on Recommendations).
6.16
It is not within the scope of this report to diagnose the ailments of our national carrier but
realisation of the constraints imposed, largely attributable to the Flag Carrier, are of
relevance and have therefore been elaborated upon in this report.
6.17
For the majority of destinations that have emerged in the last ten years, the airline has
been a key feature of their success. Flag carriers financial interests are largely based
on traffic into and out of a destination. This means a strong alignment of the airline
financial interest and the national tourism interest, thus creating the basic conditions for
strong common interest and alignment in strategy
6.18
Maintaining dedicated flag carriers with strong international networks which are
sustainable in the global markets and dedicated to advancing the nations tourism and
export industries is in Indias key interests. Were Air India a strong airline it would have
been able to :
Promote India as a destination and as hub into the Asian / South-East Asian Region
Invest in national tourism marketing campaigns and sell holiday packages and not
just air seats
Promote regional destinations in line with the tourism strategy
Create a strong brand image for India consistent with tourism objectives
6.19
Thailands Flag Carrier is a good example of growth led by passenger seat capacity
where growth in seat capacity by Thai Airways has been matched by significant
increases in passenger arrivals. Details for Thailand / Thai Airways compared with India
/ Air India are provided in Exhibit 6.5 below.
EXHIBIT 6.5
THAILAND
INDIA
ASKs (Mn.)
Arrivals (Mn)
10.0
18
9.0
2.6
17
8.0
2.5
17
2.5
17
2.4
17
2.4
17
2.3
16
2.3
16
2.2
16
1.0
16
2.2
1996
1997
1998
1999
Scale - Arrivals (Mn)
18
2.6
2000
50
7.0
40
6.0
30
5.0
4.0
20
3.0
2.0
10
1997
1998
1999
2000
Years
AI has been unable to match capacity

with demand growth
60
1996
Years
ASKs (Mn)
Scale - ASK's (Mn)
2.7
Scale - ASK's (Mn)
Scale - Arrivals (Mn)
Arrivals (Mn.)
Thai Airways has historically provided

capacity ahead of demand growth
( 69 )
M& A
6.20
Privatization with respect to airlines is a term that is often loosely applied. It tends to be
more of a process than a quantifiable objective or result. The process is one of
divestment, by various methods, of government-owned or -controlled equity and may be
carried out in a phased manner over time. Some governments may consider a minor
sale of shares as privatization. Subject to this use of the term, the privatization of
State-owned airlines has been one of the pre-eminent transformations in international
air transport, where airlines in all but a handful of States had been government owned
until recent times.
6.21
The motives for privatization have been highly diverse, ranging from purely economic
considerations, to improving operating efficiency and competitiveness, to a more
pragmatic desire to reduce the heavy financial burden on governments for financing
capital investment in new equipment. Whatever the reasons, the privatization of airlines
has accompanied a more commercially oriented outlook within an increasingly
competitive environment. Since 1985, about 130 governments announced privatization
plans or expressed their intentions of privatization for approximately 180 State-owned
airlines. During this period, 86 of these targeted carriers have achieved their
privatization goals.
6.22
It should be noted, however, that achievement of privatization has not been easy. Many
of the initial privatization plans had to be deferred or postponed because of the
complexities encountered in the process or the economic condition of the airlines
concerned, or local circumstances. But in most such cases the intention to privatize
remains. The uncertainties surrounding the privatization process are also illustrated by a
small counter trend of renewal, usually as a temporary measure, of government
ownership as a national interest response to the potential demise of a national airline.
EXHIBIT 6.6
( 70 )
M& A
AIRPORTS A CASE FOR PRIVATISATION

6.23
Increase in seat capacity alone will not be effective unless basic aviation infrastructure is
improved. Airports at our gateway locations Mumbai and Delhi need considerable
upgradation and expansion. The Airports Authority of India (AAI) is a profitable
Government owned enterprise that has significant cash reserves but expenditure has
been hampered by poor decision making. Privatisation has been proposed by the
Minister of Civil Aviation which will positively improve efficiency as has been the trend
world wide. A list of recent and planned airport privatisations is provided in Appendix XI.
6.24
Based on discussions with the AAI, they have plans for expansion and up-gradation of
Mumbai and Delhi, however even the present imbalance in capacity between the flag
carriers and other airlines operating from these airports is apparent. Details provided in
Exhibit 6.7 below.
EXHIBIT 6.7
AIRPORT CAPACITY & THROUGHPUT MUMBAI & DELHI
Terminal
MUMBAI
INTERNATIONAL AIRPORT
2-A
2-B
2-C
(others)
(AI)
Capacity
Passengers handled
Imbalance
2.5
3.0
2.5
Under Ren.
(0.5)
3.0
2.5
4.0
4.1
15.0
12.1
0.5
0.5
(0.1)
2.9
Terminal
4.7
3.8
Imbalance
0.8
Total
3.0
2.5
DELHI
INTERNATIONAL AIRPORT
Capacity
Passengers handled
DOMESTIC
1-A
1-B
(IAC)
(others)
DOMESTIC
1-A
1-B
(IAC)
(others)
Total
2.7
1.2
1.3
1.4
8.6
6.5
1.5
(0.1)
2.2
Source : M&A Survey, June 2003
( 71 )
M& A
MODEL ON RELAXATION OF BLOCKSHARE / ROYALTY ARRANGEMENTS
6.25
A financial model has been created taking one European airline as an example to
illustrate the impact that liberalisation would achieve. This model is based on reduction
in block share arrangements. The principal would be the same for airlines where
royalties are paid to the flag carrier. Using the figures provided in this model and
making a few broad assumptions the block share arrangement illustrated here would
be the equivalent of approximately US$ 70 per round trip or US$ 35 per seat in each
direction.
6.23
This model relates to a European airline that was, till recent times, operating three
frequencies per week to London using an aircraft with a capacity of 386 seats. Of this
capacity Air India was entitled to 64 seats per aircraft in each direction that was,
according to a Parliamentary question, expected to yield a net income to the flag carrier
of Rs.13.8 crores per annum. Using these figures a model has been created which then
assumes that this airline is granted seven daily flights per week (as they desire) and the
block space arrangement is decreased to 50% of its present level. The resultant impact
in terms of incremental seats to the country and the effects on Air India and the tourism
industry, are enumerated in the exhibits provided below.
EXHIBIT 6.8
EUROPEAN AIRLINE MODEL ON
LIBERALISATION OF BLOCKSHARE ARRANGEMENTS
Explanation
Unit
A European Airline presently uses AI's bilateral rights and operates 3

Jumbos (386 pax) per week between Delhi & London - Number of
seats used by AI is 64 per flight (therefore = 64x3x52)
Earning per return ticket from the Block allocations based on
estimated AI income of Rs. 13.8 crores is
To arrive at net selling price assume a load factor of say 75%
(this price is reasonable as commissions etc. will be additional.)
AI's allocation as a proportion of the Airlines capacity is 64/386
Number
Round trips Per Annum
9,984
Rs.
13,822
Rs.
18,429
AI Proportion
16.8%
If Civil Aviation were to decrease the allocation to 32 seats per flight (half present levels) and increase
the flights to 7 per week then the present level of earnings (Rs.3.8 crores) would increase to Rs. 24.2
crores
The benefit to the European Airline on seat capacity basis from the
present level would be
Assume the European Airline passed on 50% of this benefit to the
consumer
Assume a price elasticity of Demand at -1.4 (Note 1)
% benefit to Aitline
8.4%
% benefit to consumer
4.2%
Traffic Increase %
5.9%
Note 1 : Price elasticity of demand is assumed at 1.4. There are no studies on the Indian Tourism
industry that may be used however, based on studies done for OECD countries, the average price elasticity
of demand works out to 1.75 whereas in a similar study conducted for New Zealand, the average works out
to 1.2. For the purpose of this model, an average 1.4 has been assumed. It may also be noted that price
elasticity for inbound leisure (which we need more of) is significantly greater than for business visitors. The
assumption used is simple an average of the two segments and is therefore considered conservative.
( 72 )
M& A
EXHIBIT 6.9
EUROPEAN AIRLINE MODEL ON
LIBERALISATION OF BLOCKSHARE ARRANGEMENTS (Contd)
Explanation
Unit
Number
The Europeans Airlines present overall capacity per annum

(386x3x52)
Round trips per Annum
60,216
If the Airline were to be given 7 flights a week (the most operationally

viable formula for airlines on routes where there is sufficient load)
then the present capacity would increase to
140,504
Incremental Capacity
80,288
Incremental pax assuming a reduced load factor of 70%
56,202
Incremental load based on price elasticity (for the new capacity)
3,312
Incremental load based on price elasticity (for the original capacity)
2,484
Total Incremental Passengers
61,998
Incremental Pax
Assume 50% Inbound pax (Note 2)

Average Spend per Visit (Note 3)
30,999
US$
$1,300
Incremental spend in India
US$ Mill
Rs. Crores
$40
189.4
Fiscal Impact assuming 15% taxes paid in India (Note 4)
Rs. Crores
28.4
Note 2 : As the model is for the purposes of determining incremental passenger traffic to India, it is likely
that the in-bound out-bound imbalance will be redressed and that such incremental seat capacity will
result in a higher proportion of in-bound traffic. This is further supported by the argument that out-bound
traffic presently does find a way to travel. It is therefore been assumed that in-bound traffic will be 50% of
the total incremental traffic.
Note 3 : The average spend per visitor has been assumed at US$ 1,300 per visitor which is a historical
average that has been computed by tourism authorities.
Note 4 : Physical impact is the impact of direct taxes on various services, goods & commodities purchased
by visitors in the country, this would include hotels, F&B, transportation, etc. It has been assumed that the
direct physical impact would be 15%, that would be divided between the States and Central Government
and is, if anything, conservative. The cumulative impact of taxes to tourists to our country is significantly
greater.
6.26
On the basis of the above, granting the desired additional seat capacity to this European
airliner could yield 1.75 times the present level of income to Air India and at the same
time result in substantially greater impact to the Indian tourism industry (Rs.190 crores),
of which direct fiscal impacts to the Government would be in the region of Rs. 28 crores.
( 73 )
M& A
6.27
If one were to apply the same model to a cross section of airlines that are known to be
seeking incremental seat capacity, that have been covered under the survey conducted,
see Exhibit 6.10 below, a total in excess of 26,000 seats per week are required by these
airlines alone and translates to 1.36 million seats per annum. This is based on airlines
met in the course of this study, details presented in Exhibit 6.11. Total incremental
demand is likely to be significantly greater. It is realized that such additional capacity
cannot be added overnight but is feasible over a 1 to 3 year period.
EXHIBIT 6.10
AIRLINES SEEKING TO INCREASE SEAT CAPACITY
Airline
Present
Flights
per week
British Airways
Malaysian Airlines
Singapore Airlines
Virgin Atlantic
Austrian Airways
Gulf Air
Total
Round Trips per annum
Round Trips per annum
6.28
Additional
Flights
Wanted
per week
18
19
35
3
5
43
123
Seats
per flight
Total
Seats
per week
22
24
5
11
5
27
94
358
280
243
386
257
182
279
7,876
6,720
1,215
4,246
1,285
4,914
26,256
1,365,312
1,000,000
-- say
Even if the desired seat capacity were to be assumed at 1 million round trips per annum,
the overall impact calculated in a similar manner as has been done for the European
airline model, would result in an incremental spend in India of close to Rs.3,800 crores,
based on 620,000 additional visitors to the country that such capacity could generate
taking into account price elasticity.
EXHIBIT 6.11
EFFECT OF INCREASINGS SEAT CAPACITY ON TOURISM
Explanation
Unit
Number
Present Capacity (Non AI / IAC)

Incremental Capacity
Incremental pax assuming a reduced load
factor of 70%
Incremental load based on price elasticity (for
the new capacity)
Incremental load based on price elasticity (for
the original capacity)
Total Incremental Pax
8,500,000
1,000,000
700,000
41,256
500,972
1,242,228
Assume 50% Inbound pax (Note 3)

Average Spend per Visit (Note 4)
Incremental spend in India
Fiscal Impact assuming 15% taxes paid in
India (Note 5)
( 74 )
Incremental Pax
621,114
US$
1,300
US$ Millions
807
Rs. Crores
3,795
Rs. Crores
569
M& A
CIVIL AVIATION Vs TOURISM - EFFECT ON THE INDIAN ECONOMY

6.29
Using a model of an incremental 1 million visitors to the country, a comparative

evaluation has been made of the investments and returns that would be generated by
the flag carrier V/s the benefits to the tourism industry. If Air India were to be a vibrant
thriving airline and be capable of providing 50% of this incremental capacity so as to
fully utilise its bilaterals, it would need to purchase and operate additional aircraft.
However the airline has lost market share steadily over the years from 32.8% in 1980 to
19.4% level in 2002 (IAC has an additional 10% share).
6.30
Permitting additional seat capacity on the major traffic generating sectors would have a
significant beneficial impact on the industry. In order to numerically justify this
hypothesis, a model has been created and is presented overleaf.
6.31
From this model it is apparent that the benefits of additional seat capacity, whether
provided by Air India or any other international carriers, would have a significant more
beneficial impact on the Tourism industry, than it would on Civil Aviation. This would
apply even if Air India were to be one of the worlds stronger airlines. In the current
situation it strengthens the argument for allowing substantial increase in capacity with or
without Air Indias participation. A three year liberalization window, till Air India can get
its act together, would be appropriate.
6.32
The model constructed is based on an illustration where an increase of 1 million visitors

(which includes business & leisure visitors) per annum is sought, for which suitable
airline seat capacity and hotel and attendant tourism facilities need to be provided. The
key assumptions used in constructing this model and the model itself, are provided
below. The model compares the investment and benefits that accrue to the Tourism
Industry and to the National Carrier in order to cater to an incremental 1 million visitors.
6.33
The model numerically determines the capital investment required in the tourism and
aviation industries, the total revenue (net of imports) that each of these sectors will
generate on an annual basis and employment creation both by tourism and civil
aviation. Comparison of these factors substantiate the need to develop tourism even if
it is at the cost of Air India and Indian Airlines.
6.34
A summarisation of the conclusions arrived at in the model constructed are as follows :

1.
Capital Expenditure - In order to achieve a incremental level of 1 million visitors

per year, the Tourism Industry will need to make an investment of approximately
Rs. 6,000 crores in hotel & related facilities for the construction of a further 30,000
rooms needed to cater to these additional visitors; whereas the airline would need,
(assuming that Air India would like to retain close to a 50% share of this traffic) an
amount of over Rs. 11,000 crores for purchase of aircrafts.
( 75 )
M& A
6.35
2.
It should also be noted that the capital expenditure by the hotel & tourism
industry would have a import component that would be as low as 5% to 10%,
whereas capital expenditure required for the creation of additional airline
capacity, either by way of purchase or lease, would almost entirely flow to the
benefit of Airbus Industries in Europe or Boeing in Seattle.
3.
Revenue Earning - FX Revenue earnings of the tourism industry and Air India
has been calculated in the model, based on fairly conservative assumptions, it
may reasonably be assumed that an additional 1 million visitors would generate
a total revenue (excluding imports required to earn such revenues) of over
Rs.5,000 crores, whereas the airline, to service 50% of this business, would earn
just under Rs. 2,000 crores (net of imports).
4.
The model presented does not go to the level of Net profit as it addresses FX
Revenue which forms an important part of Indias GNP. However, even if one
were to assume a healthy and financially viable Air India, its net profits based on
a gross FX revenue of Rs.3,500 crores and revenue, net of imports leakage, of
Rs. 2,000 crores would be in the region of Rs. 200 crore (applying profitability
ratios to sales of the better managed airlines) pale into insignificance in relation
to profits generated by the creation of 30,000 additional hotel rooms and its
attendant spin offs to the tourism industry.
5.
A further point to note is that the tourism industry is an important contributor to

the Exchequer by way of Expenditure Tax, Income Tax (Central), Luxury Tax,
Sales Tax & Entertainment Tax (State), whereas Air India is subject to Income
Tax when it makes a profit.
6.
Employment - In the model constructed, based on fairly conservative estimates,

an additional 1 million visitors would create over 150,000 jobs in the tourism
industry and 6,300 jobs in Air India.
Based on the arguments provided in this report it is hoped that the interests of one
public sector company, Air India, will not be placed ahead of an entire Tourism Industry.
Despite the constraints, this industry generates over Rs.12,000 crores in foreign
exchange, employs (both directly and indirectly) 24 million people and the Travel &
Tourism economy accounts for 4.8% of GDP (under Satellite Accounting).
( 76 )
M& A
EXHIBIT 6.12
THE MODEL
HOTEL ROOMS REQUIRED FOR ADDITIONAL 1 MILLION TOURISTS

Note
Bed Nights
Additional Tourists
Average length of stay
Bed Nights per annum
1,000,000 Visitors
10 Nights
10,000,000 Bed Nights
Room Capacity
Average annual Occupancy
Guests per room
Annual bed nights available per room
65%
1.4
332
30,107
Additional Rooms Required

Average cost per room
Investment required
0.20 Rs. Crores

6,021 Rs. Crores
EMPLOYMENT GENERATED BY THESE HOTEL ROOMS

Direct Employment (2 persons per room)
60,214 Persons
Indirect employment (3 persons per room)
90,321 Persons
Total Employment generated
150,534 Persons
Note 1 The average length of stay has been assumed at 10 nights. There are no detailed studies that have been
conducted in this regard, however based on our experience in this industry sector, average length of stay for Resort
locations, like Goa are 12 nights per annum, for the Golden Triangle 8 nights per annum and for the southern
circuits 7 nights per annum. Government statistics put the average length of stay at 21 days. However, with the
pre-ponderance of business visitors and visitors from neighbouring countries who do not form part of the target
market an average length of stay of 10 nights has been assumed.
Note 2 The number of guests per room at resort locations is, as expected, as high as 1.9 persons per room,
however for city locations and business visitors, the average is in the region of 1.1 per room. Erring on the side of
caution we have made an assumption of 1.4 guests per room.
Note 3 The average cost per room has been assumed at Rs. 20 lakhs, this takes into account land, construction, fit
out and pre-opening expenses. Actual averages range from Rs. 70 lakhs per room for a 5 star deluxe property in
Mumbai, to as little as Rs. 12 lakhs per room for smaller budget hotels in secondary locations. Since budget hotels
are now a primary focus, an average of Rs. 20 lakhs per room is considered appropriate.
Note 4 In this model we have assumed that direct employment will be provided in the ratio of 2 persons per room
and indirect employment to the tourism industry will be a further 3 persons per room. The direct employment ratio
is in line with present industry norms within the country. However, based on studies carried out in the past,
estimates of indirect employment by the tourism industry range from 3 to 5 persons per room.
( 77 )
M& A
EXHIBIT 6.13
THE MODEL (Continued)
AIRCRAFT REQUIRED FOR ADDITIONAL 1 MILLION TOURISTS

Annual round trips per aircraft
Average distance from markets
Average round trip time
Annual aircraft utilisation
Annual round trips per aircraft
8,000
17
4,500
265
km
Hours
Hours
Round Trips
Aircraft Carrying Capacity

Seats per aircraft
Average load factor
Passengers per aircraft
Proportion of Foreign Visitors
5
6
7
say
5
Total investment or lease capital value

Assuming Air India retains just under 50% of Capacity
Seats / A'craft
Load
Pax / A'craft
Proportion
29.06
29 Aircraft
Aircraft Reqired
Investment per aircraft
400
65%
260
50%
805 Rs. Crores

23,345 Rs. Crores
11,270 Rs. Crores
14 747's
EMPLOYMENT GENERATED BY THESE AIRCRAFT

Air india average per aircraft
720 Persons
World average per aircraft (including outsourcing)
250 Persons
Average assumed for the purpose of this model
450 Persons
6,300 Persons
Total Employment generated
Note 5 Aircraft acquisition has been assumed by way of lease or purchase of 747 aircraft with an average seat
capacity of approximately 400 passengers. Such aircraft are presently said to be valued in the region of US$ 150
million (Rs. 805 crores).
Note 6 Average load factors for popular traffic routes range from 75% to 95%, however with a substantial
increase in airline capacity, as assumed by this model, it is reasonable to assume that load factors will drop - a
conservative 65%.has been assumed.
Note 7 At present based on total international traffic handled at all Indian airports, the ratio of foreign visitors is
37% with 63% of arrivals and departures being made up of Indian passengers. With this increase in capacity it has
been assumed that this ratio will alter to 50% foreign visitors and 50% Indian travelers for the incremental
capacity. If the present ratio were to be retained, the model would lean even more favorably towards tourism at the
cost of airlines expansion.
( 78 )
M& A
EXHIBIT 6.14
THE MODEL Continued
EARNINGS FROM TOURISM & AVIATION FROM ADDITIONAL 1 MILLION VISITORS
Visitor Spending
Number of additional visitors
Spend per visit (Presently $1,300)
Import Leakage
8
9
FX Earnings
FX Earnings
1,000,000 Visitors
1,300 US$
10% Proportion
1,170 US$ Millions
5,382 Rs. Crores
Air India Revenue

Number of additional visitors
Average Km per pax
Average Rate per Km
Import Leakage
10
9
FX Earnings
FX Earnings
500,000
16,000
0.10
45%
Visitors
Km per pax
US$
Proportion
440 US$ Millions

2,024 Rs. Crores
Ratio of Tourism FX Revenue Vs. Airline FX Revenue
2.66
Summarised Costs & Benefits

Tourism
Industry
Capital Expenditure
FX Revenue Net of Imports per annum
Ratio of annual FX Revenue to Capital
Employment
Air
India
6,021
5,382
89%
150,534
11,270 Rs. Crores

2,024 Rs. Crores
18% Ratio
6,300 Persons
Note 8 The present expenditure per visitor is in the region of US$ 1,300 per visit. Here again assuming higher
volumes, lower expenditures per visit of $ 1,100 have been assumed.
Note 9 Import Leakage - In measuring the benefit to the economy it is necessary to deduct the cost of imports.
Based on studies conducted worldwide and taking into account that India is a large relatively developed country
and not an island economy like the Maldives, Mauritius or Seychelles, it is estimated that no more than 10% of
visitors spending is in relation to imported items. In the case of airlines the proportion of import leakage is
considerably higher by way of loan repayments, purchase of spare parts and foreign exchange expenditure that
needs to be incurred. Estimates range from 40% to 50% on a worldwide basis we have assumed an import leakage
factor of 45%.
Note 10 The average rate per passenger kilometer has been assumed at $ 0.10 per passenger kilometer. The fares
between Mumbai and some of the major source markets have been compiled and this average comes to r11.28 per
passenger kilometer for the lowest excursion fares. The average including business and first class fares (even
though smaller volumes) would be higher. However, the passenger kilometer rates compiled which would lower the
average considerably. The international norm of r10 per passenger kilometer is therefore appropriate.
( 79 )
M& A
7.
THE CASE FOR LIBERALISATION &

RECOMMENDATIONS
As a long haul destination, the only convenient mode of transport to

India is by air. Choke up the skies and you choke up India itself to
tourism, to trade and to a host of other economic activity. Too often
policy makers in the Ministry of Civil Aviation have bowed to the dictates
of the national carriers, that lower seat availability means higher tariffs
chargeable. For the short term commercial gains of a national carrier the
country has been held ransom and there are either insufficient or no
connections to most tourism generating destinations. As a result, India
ranks 67th among the top tourism destinations in the world.
(Graham Wason, Vice President, Strategy & Development, World Travel & Tourism Council
commented on Indias international civil aviation policy (WTO/OMC Tourism Symposium, 22nd /
23rd February 2001).
7.1
An over-riding motivation of the history of regulation of air services in India has been the
desire to ensure the protection of the national flag carriers. The governments aviation
policies have been based more on the concern of protection of the interests of national
airlines rather than the interests of the overall economy or the consumers. This
approach has not served the interests of the economy or the consumer nor has it helped
our flag carriers; as a matter of fact some of the current problems faced by the national
carriers may be attributed to Indias overtly protectionist policy.
7.2
In the light of limitations and shortcomings of a restrictive bilateral system compounded

by the rapid growth of the Indian economy, there is a growing recognition of the limits of
the current bilateral framework as practiced presently and the need to launch initiatives
toward genuine liberalization of air services.
7.3
In India GDP growth in the period from 1996 to 2001 (the post Hindu rate of growth
period) has been on average 6.28% whereas the annual compounded increase in
inbound and outbound international traffic has been 4.8% and 2.4% for domestic traffic.
India is now on a roll with a visibly strengthening economy and expectations of
significantly higher rates of GDP growth. It is imperative that this not be
constrained by insufficient international seat capacity to and from the country.
This is the main thrust of this report.
7.4
The examples of the telecom, media / TV, and auto industries - where India has taken
bold steps and leapfrogged political, technology and economic barriers to arrive on the
world stage - needs to be repeated in the Civil Aviation arena. As has been elaborated
in this report, there is an inextricable link between passenger traffic movement and
economic growth, which must be encouraged.
( 80 )
M& A
7.5
The challenge that India faces is to be able to reconcile a number of potentially

conflicting objectives such as ensuring the participation of Indian carriers in air transport
while simultaneously ensuring that economic growth, trade and tourism to India do not
suffer. Thus, in considering liberalization India needs to decide on two basic issues:
The extent and pace of liberalization,
The approach (course of action) to be pursued.
7.6
In considering the issues that have been raised in this report, the following criteria were
taken into account for the recommendations being made :
Current and future needs of the Indian economy; including the trade & tourism
sectors.
The requirements of the foreign and Indian carriers.
Current and future needs of Indian consumers.
Pricing issues.
7.7
The consulting team has arrived at recommendations on the suggested future action. In
evaluating the policy options that may be considered, we have taken into account the
views of those we interviewed, analysis of data made available to us by primary and
other relevant sources supplemented by the teams knowledge of the market and
regulatory environment. As stated in the introduction of this study, this study seeks to
identify gaps in the current approach by policy makers to the civil aviation sector. It does
not seek to address detailed points of implementation.
7.8
The team recommends that this policy be followed for an interim period of 3 years so as
to introduce a transitional capacity building period into bilateral agreements. This would
be a safeguard to mitigate the wide disparity in the level of air transport development
between India and some partner nations. It would allow us to achieve the twin objectives
of liberalisation while at the same time gaining time for strengthening our flag carriers for
them to be able to effectively compete in the global markets. The measures to alleviate
the constraints are all proposed within the existing framework. While these can be lifted
in the short term, the long term goal should be a more thorough review of processes to
align the system with trade and tourism growth goals.
7.9
Recommendations made and brief explanations on each of these are provided in the
pages that follow.
BILATERALS & SEAT CAPACITY

India should continue to follow the Bilateral system and seek to maximize
benefits from partner nations. The attempt should be for an equal exchange of
rights. However, if India is not in a position to use such rights they should not
play dog in the manger. Such rights may be stockpiled for future use or
commercial terms agreed upon (see below). Important source and destination
markets need to be focused upon.
( 81 )
M& A
7.10
Liberalization of access on a global basis, which would include unrestricted granting of

beyond 3rd and 4th freedom traffic rights to trade partners, is not recommended. For the
present, the consulting team believes that the bilateral approach to air service
negotiations is a flexible and viable means to effect liberalization as it allows India to
retain control over the pace and direction of air traffic rights. At a later date, having
monitored the overall effect of liberal air service policies and its effect on competition
and the economy, India may consider to pursue regional, pluri-lateral and multi-lateral
arrangements, as deemed appropriate.
7.11
Another consideration for adopting this stance would be that if India were to grant liberal
access to foreign country carriers without receiving in exchange equal traffic rights for
the Indian national carriers, India will have no negotiating leverage that might otherwise
be used to secure additional rights in the future. Indias stance with countries not willing
to advance equal exchange of rights should be to maintain maximum leverage to
achieve procompetitive objectives.
7.12
The consulting team does not recommend a standard approach to bilateral negotiations
with partner nations. Adopting a standard approach without differentiating between the
larger and less significant source markets is ideal; however, it may not always be
possible or in Indias best interests. It is in Indias interest to be more liberal with the
more important source and destination markets.
Where Air India is not capable or does not wish to utilise reciprocal rights, it
charges Royalties (on a per seat basis or per additional flight basis) or obtains
Block Space (specified number of seats per flight). Such commercial
arrangements are common amongst lesser developed countries but it is strongly
recommended that demands by the Flag Carrier be reduced, if not eliminated.
This would encourage growth in capacity and result in lower prices to the
consumer. (See Model)
7.13
Royalties charged by Air India to selected foreign carriers (especially those where Air
India / Indian Airlines do not wish to use capacity that would otherwise be available to
them) range from $5 to $50 per seat and block share arrangements range from 15 to 65
seats per flight. In the case of a European airline used as an example in the model
presented in Section 6, the block space amounts to 16.8% of total capacity. The
financial model provided in Section 6 quantifies the benefits that could accrue if Air India
were to halve the block space taken and increase this airlines frequency from 2 to 7
frequencies per week. It goes on further to quantify the effect of relaxing capacity
constraints to the extent of 1 million seats in each direction.
7.14
As has been explained in this report operating margins in the industry are thin and
Airline operators met have stated that such charges act as serious deterrents to growth
in capacity.
( 82 )
M& A
7.15
Attempting to standardise commercial arrangements across airlines and routes is not

considered feasible as political, geographical, commercial and physical parameters will
vary. One mechanism that may be employed with designated carriers of our, say ten,
key source markets is to establish preferential royalties / commercial arrangements with
maximum limits being set where the flag carrier does not wish to or cannot use
reciprocal rights.. It is suggested that concerned stakeholders including the Ministry of
Tourism & Culture mutually prioritise top source markets for special consideration in
conjunction with the Ministry of Civil Aviation. The consulting team recommends that this
prioritised list include the following source markets - U.K., France, Germany, Holland,
Italy, Canada, Korea, Singapore, Spain, and Japan.
The Open Skies Winter relaxation in capacity is a useful interim measure in
addressing seasonal variations. However, this needs to be notified at least 6
months before commencement of peak season for a specified number of years
say 3 years.
7.16
Airline operators plan schedules well in advance and find it difficult to mobilize aircraft at
short notice; in addition they need to market their seats well in advance with their travel
trade partners. Allowing a 3 year window would encourage long term planning.
Commercial arrangements for these additional frequencies need to follow the
recommendation made above.
7.17
The late decision-making by Indian Authorities was a common refrain, voiced by airline
operators and other industry stakeholders.
Foreign Airlines operating in India need to be permitted greater Operational
Flexibility.
7.18
It is recommended that ASAs with key source markets allow capacities that the operator
is free to work within. The airline may therefore use full capacity with a larger aircraft in
season and not be penalised or have to obtain clearance for using smaller aircraft in the
slack periods.
Capacity needs to be enhanced ahead of demand let the foreign airlines sell
India.
7.19
Increasing air access facilitates an increase in tourist arrivals and trade expansion, as
has been the experience of many countries which have liberalised civil aviation policies.
Details have been provided in Section 2 of this report. The Indian civil aviation sector
needs to be driven through a policy shift. There is therefore a need to adopt a more
demand led approach.
7.20
There needs to be a commitment by the Government to expand market access

opportunities by negotiating capacity ahead of demand. Thus even if seat capacity with
our key markets capacity, may currently be adequate, the potential for rapid increases in
tourism & business demand will require further substantial increases in capacity ahead
of demand. In addition, monitoring of capacity should be done on a route or regional
basis with a bias towards Indias important source and destination markets, and not only
in terms of aggregate capacity to the country.
( 83 )
M& A
7.21
We recommend that the ASAs contain a trigger mechanism to enable capacity to be

increased automatically if load factors are above an agreed threshold level. Both
countries should also mutually decide on the incremental capacity increase on a given
city pair either in terms of number of flights or seats. For example on any given city pair,
it may be decided that the minimum capacity that may be allowed is the actual traffic
carried during the previous corresponding season (grossed up at say a 75% load
factor). This could be determined on the basis of mandatory filings required to be made
with the DGCA by all airlines operating air services in the country.
7.22
It should be borne in mind that for this mechanism to be employed effectively it is

imperative that the increase in capacity, if any, be granted by the Indian authorities for a
reasonable duration of time and granted well before the season so as to allow the airline
operators sufficient lead time to plan efficiently.
7.23
A point for consideration would be that foreign airlines, when they allocate resources to
a particular route, have a vested interest in marketing India as a destination so as to
ensure that they fill the seats. Harnessing this potential by allowing more capacity is
undoubtedly to Indias benefit. International airlines operating to India are willing to
assist India by capacity constraint in the short term and by an equitable division of
capacity and traffic in the longer term. At the same time, they are willing to take on the
burdens of prompting tourism to India and servicing the outbound market to high
demand destinations.
Tariff flexibility with safeguards.

7.24
The consulting team suggests that in the case of tariffs, the Indian Government take an
approach which allows for relatively permissive tariff provisions with its bilateral
partners. We recommend that the tariff regime followed by India be the "single
disapproval" arrangement. The rationale behind this is that, should an airline due to its
dominant position, propose a tariff deemed to be uncompetitive (extremely low or
excessively high), the DGCA should be able to intervene to stop the fare from being
implemented. Use of this convention is of course dependant on the partner nation
agreement. The double disapproval convention is the most liberal but does not have
the necessary safeguards that are desirable from the Indian point of view.
When foreign airlines reduce capacity under Code Shares / Route Restructuring
then let another airline take up the slack.
7.25
With the recent turmoil in the civil aviation industry, airlines have had to restructure
routes and operating arrangements in order to survive the drop in passenger traffic. In
such rationalization, routes of lesser priority to a foreign airline may include an important
route for India. For example Swiss International Airline intends to suspend its 6 flights a
week to Delhi this coming winter. It is not known as to the whether by coincidence or
intent, Alitalia and Thai have both recently been granted daily frequencies from Delhi,
this decision is lauded.
( 84 )
M& A
7.26
Capacity reduction could also be effected by alliances and code share agreements. For
example when KLM and North-West entered into a code share, North-West suspended
7 frequencies per week to Delhi. In such situations India must seek to reinstate capacity
by offering it to other carriers servicing the same markets / regions.
Regional hub characteristics can be enhanced by selective granting of 5th
Freedom Rights Air India could also benefit.
7.27
It has been cited by some stakeholders we have met in the course of this study, about
India's reluctance to grant beyond rights to foreign carriers. We recommend liberal
granting of 5th freedom rights as long as the foreign government is prepared to grant
India the same. Not granting 5th freedom rights may result in the loss of potential
economic benefits from additional tourism opportunities.
7.28
There are certain sectors / routes where, for economic reasons, neither the Indian
national carrier nor the foreign national carrier are servicing. The consulting team thus
recommends granting of unrestricted 5th freedom rights on such routes where there are
no 3rd or 4th freedom operators. If desired the Indian government could set a time limit
(say two years) for such rights. This would allow the government to re-evaluate the
scenario at a future date and re-allow only if, at that point in time, the national carriers
are not interested in plying the sector.
7.29
Granting of 5th freedom rights to foreign airlines operating through India would promote
hubbing in the country as it will provide the international traveler greater connectivity.
The Out-bound market have been favored over the In-bound markets the
balance needs to be redressed.
7.30
The Gulf and South East Asia have been the greatest beneficiaries of additional seat
capacity granted to and from India in recent years. These markets cater to a large
extent to the more substantial out-bound Indian OFW and leisure markets. This is a
need that needs to be met but not at the cost of the in-bound markets that would have a
substantial positive impact on the Indian economy.
Reduce cost of operations to bring down prices ATF / Taxes let the Consumer
benefit.
7.31
As has been shown in this report fares to India (on a per-seat-kilometer basis) are
amongst the highest in the region. Reduction in ATF prices, which account for a large
chunk of an airlines operating costs, would serve to reduce prices and stimulate
demand. A comparison of ATF prices paid by Air India in different parts of the world and
disparity in the tax structure are illustrated in Appendices XII and XIII.
7.32
There has been controversy in the past on foreign carriers paying Sales Tax on ATF
purchased in India. This has now been removed but this benefit has not been passed on
to the national carriers for overseas routes. This needs to be done to level the playing
field.
( 85 )
M& A
Foreign Airlines operating in India need to be permitted greater Administrative
Flexibility.
7.33
Airline officials met have complained of the red tape involved in dealings with the
authorities. An example was given of an operator having to physically remove seats
from the aircraft flown so as to comply with capacity restrictions placed.
If Air-India / Indian Airlines cannot utilize entitlements let other Indian carriers
do so.
7.34
The consulting team is aware and fully supportive of the need for a national flag carrier.
Air India, in the recent past has taken small steps towards building a stronger airline and
continues to do so. For Air India to regain its past glory it needs large doses of capital
and improvement in operational efficiency. Till such time as this comes to pass (most
likely with privatisation) there is an argument to allow other designated Indian carriers to
utilise bilateral rights for economic periods of time on a selective basis. The market is
large and growing. Growth and competition are desirable market factors in the future.
(Please see comments on privatisation that follow later in this section).
CHARTERS
Outbound Charters will save the country money and relieve pressure on
capacity. Can also be linked to Inbound.
7.35
High fluctuations in demand on key routes put airlines under pressure not to put
capacity, which is then under-utilised most of the year, thus putting pressure in peak
months. Facilitation of outbound charter services can provide opportunities for the
development of low cost leisure and major event markets. Allowing outbound Indian
charter operations would help alleviate peak season demand and also impact the
economy in a positive way through benefits as explained earlier in this report.
7.36
There are Indian charter operators who are seeking such capacity and are also willing to
provide a quid pro quo in the form of committing incremental inbound charter volume.
Commercial arrangements and royalties could also be entered into with charter
operators as done with the foreign carriers.
7.37
Indian charter operators would employ people in India, pay Indian taxes, save foreign
exchange and provide the Indian outbound leisure tourist / consumer with lower prices.
AIRPORTS / GROUND HANDLING

Encourage the newer International Airports but also take into account gateway
locations such as Mumbai & Delhi.
7.38
Governments proven intent to promote the newer international airports / regions is

commendable and needs to be encouraged. Using the Bilaterals to encourage traffic to
these locations is desirable. However, satisfying demand and encouraging growth to the
main gateway cities, Mumbai & Delhi, is of equal, if not greater importance. These
gateways handle a greater proportion of inbound traffic. (Exhibit 3.13 in Section 3
provides details on capacity lost in Mumbai and Delhi post 9/11).
( 86 )
M& A
Terminal capacity imbalance at Mumbai and Delhi favors the Flag Carriers, as it
should, but the imbalance is now reaching a point where Airlines are complaining
vociferously. This needs to be addressed.
7.39
Terminal capacity throughput figures indicate that AI & IAC terminal facilities are underutilized and other carriers over-utilised (See Section 6). This imbalance needs to be
addressed.
Our Gateway Airports need expansion and modernization. The AAI has the funds,
Our Civil Aviation Minister has made bold moves to re-initiate privatization This
needs to be done.
7.40
Airlines met in the course of this study have complained bitterly about the Airports and
arrangements. Where Air India is the ground handling agent they have access to finer
terminal facilities but have to put up with mediocre service standards. Where they use
other terminals facilities are poor. This has been said especially of Mumbai.
PRIVATISATION / AIR INDIA

Privatise Air-India and give them preferential treatment for a pre-defined transition
period.
7.41
It is not within the scope of this study to evaluate the feasibility of or comment on the
methodology to be followed in privatisation of our Flag Carriers. However, the future of
these airlines has a definite bearing on Bilaterals. A substantial part of the price that a
buyer would pay is likely to be attributable to the rights conferred upon the airline. Its
value would diminish substantially if these were to be impaired. Any investor would
therefore seek to protect these rights. It therefore follows that a equitable system be
devised by granting rights of first refusal, etc.
7.42
If Air India is to be privatised, this will need to be done in a phased manner that does not
allow the constraints to air traffic growth to continue at the cost of the economy.
( 87 )
M& A
APPENDICES
( 88 )
Appendices
M& A
APPENDIX I
CORRELATION BETWEEN WORLD GDP, RPKs & ASKs
Year
Change %
GDP
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Average
5.0
6.4
2.2
1.5
4.9
4.2
4.5
3.7
2.4
2.0
0.6
3.2
4.8
3.5
3.3
3.7
4.4
3.7
2.7
0.8
1.1
1.2
3.1
2.8
3.3
3.5
2.3
3.0
4.0
3.2
RPK
ASK
12.7
12.1
1.0
4.8
8.4
8.6
12.9
9.0
1.3
1.9
3.6
4.5
7.6
8.2
5.9
11.6
6.7
3.2
11.5
(3.0)
9.3
4.2
8.6
8.1
8.6
5.1
3.2
6.4
8.0
6.7
8.7
8.3
0.8
4.7
6.3
5.6
7.1
7.6
6.0
1.6
3.5
3.4
6.7
6.8
7.0
7.5
6.3
3.1
11.8
(1.4)
8.0
4.9
7.0
7.4
6.3
4.1
3.0
5.6
5.0
5.6
RPK/GDP
ASK/GDP
Factor
Factor
2.5
1.9
0.4
3.2
1.7
2.0
2.9
2.4
0.5
0.9
6.1
1.4
1.6
2.3
1.8
3.1
1.5
0.9
4.2
(3.7)
8.5
3.5
2.8
2.9
2.6
1.5
1.4
2.1
2.0
2.2
1.7
1.3
0.4
3.1
1.3
1.3
1.6
2.0
2.5
0.8
5.8
1.1
1.4
1.9
2.1
2.0
1.4
0.8
4.4
(1.7)
7.3
4.0
2.3
2.6
1.9
1.2
1.3
1.9
1.3
2.0
Source: IMF / IATA
( 89 )
Appendices
M& A
APPENDIX II
LOAD FACTORS ON ALL CITY PAIRS REPORTED BY ICAO CY 2000
City Pair
Carrier
SIA
Indian Airlines
Air India
136,550
90,356
89,646
136,550
90,356
78,792
120,835
61,942
78,242
125,998
71,525
64,736
316,552
305,698
261,019
262,259
82.5%
85.8%
Delhi
Delhi
Delhi
Delhi
London
London
London
London
144,778
88,740
19,310
144,429
91,208
19,310
405
118,827
71,109
13,381
123,465
76,768
11,032
366
82.1%
80.1%
69.3%
85.5%
84.2%
57.1%
90.4%
252,828
255,352
203,317
211,631
80.4%
82.9%
Mumbai
Mumbai
London
London
139,989
138,330
138,460
136,590
104,778
108,717
115,878
110,171
74.8%
78.6%
83.7%
80.7%
278,319
275,050
213,495
226,049
76.7%
82.2%
Mumbai
Mumbai
Mumbai
Mumbai
Dubai
Dubai
Dubai
Dubai
89,349
77,070
28,673
317
67,068
77,070
28,673
56,909
54,425
20,521
188
50,090
56,578
21,781
63.7%
70.6%
71.6%
59.3%
74.7%
73.4%
76.0%
195,409
172,811
132,043
128,449
67.6%
74.3%
Chennai
Chennai
Colombo
Colombo
94,703
87,146
94,235
87,001
79,009
64,795
76,184
61,974
83.4%
74.4%
80.8%
71.2%
181,849
181,236
143,804
138,158
79.1%
76.2%
Mumbai
Mumbai
Frankfurt
Frankfurt
102,258
69,381
101,869
68,771
77,689
52,404
83,049
60,635
76.0%
75.5%
81.5%
88.2%
171,639
170,640
130,093
143,684
75.8%
84.2%
Mumbai
Mumbai
Kuwait
Kuwait
95,842
53,480
95,610
62,057
74,503
35,967
72,388
44,726
77.7%
67.3%
75.7%
72.1%
149,322
157,667
110,470
117,114
74.0%
74.3%
99,841
32,225
10,875
99,048
31,697
10,875
100
81,753
26,237
6,151
88,234
26,868
7,691
98
81.9%
81.4%
56.6%
89.1%
84.8%
70.7%
98.0%
Total
Air India
Cathay Pacific
Bangladesh Biman
Thai Airways
Total
Srilankan Airlines
Indian Airlines
Total
Lufthansa
Delta
Total
Kuwait Airways
Air India
Total
Thai Airways
Air India
Indian Airlines
Air France
Swissair
SAS
Delhi
Delhi
Delhi
Delhi
Delhi
Delhi
Bangkok
Bangkok
Bangkok
Bangkok
Bangkok
Bangkok
Delhi
Delhi
Paris
Paris
Total
Air France
Air India
Total
Lufthansa
Delta
Total
Delhi
Delhi
Frankfurt
Frankfurt
Bangladesh Biman
Kolkata
Kolkata
Kolkata
Dhaka
Dhaka
Dhaka
Indian Airlines
British Airways
Load Factor
Inbound
Outbound
Singapore
Singapore
Singapore
Total
British Airways
Air India
Pax Revenue Traffic

Inbound
Outbound
Chennai
Chennai
Chennai
Total
British Airways
Air India
Virgin Atlantic
Thai Airways
Pax Seat Capacity

Inbound
Outbound
Total
241
188
218
172
88.5%
68.6%
87.3%
92.3%
79.2%
82.2%
90.5%
91.5%
143,370
141,720
114,531
122,891
79.9%
86.7%
84,319
55,191
83,953
54,019
66,070
41,173
70,952
38,760
78.4%
74.6%
84.5%
71.8%
139,510
137,972
107,243
109,712
76.9%
79.5%
137,902
190
138,092
138,291
112,474
112,474
75.5%
51.1%
75.4%
81.3%
138,291
104,073
97
104,170
84,970
33,930
7,122
84,970
33,785
7,670
59,014
20,051
1,974
62,994
19,935
2,630
69.5%
59.1%
27.7%
74.1%
59.0%
34.3%
126,022
126,425
81,039
85,559
64.3%
67.7%
( 90 )
81.3%
Appendices
M& A
APPENDIX II - (Contd.)
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Inbound
Outbound
Load Factor
Inbound
Outbound
Air India
Mumbai
Riyadh
115,215
115,215
81,955
93,393
71.1%
81.1%
SIA
Air India
Delhi
Delhi
Singapore
Singapore
102,148
20,703
102,148
21,105
86,867
16,882
90,533
16,272
85.0%
81.5%
88.6%
77.1%
122,851
123,253
103,749
106,805
84.5%
86.7%
Mumbai
Mumbai
Mumbai
Singapore
Singapore
Singapore
121,154
603
241
120,822
103,956
41
214
107,687
85.8%
6.8%
89.1%
121,998
120,822
104,211
107,687
85.2%
89.1%
Chennai
Chennai
Chennai
Kuala Lumpur
Kuala Lumpur
Kuala Lumpur
82,508
30,305
4,824
97,604
30,305
26,331
66,034
24,138
3,677
89,038
25,347
24,457
80.0%
79.7%
76.2%
91.2%
83.6%
92.9%
117,637
154,240
93,849
138,842
79.8%
90.0%
Kolkata
Kolkata
Kolkata
Kolkata
Kolkata
Bangkok
Bangkok
Bangkok
Bangkok
Bangkok / Utapao
50,045
62,196
390
4,101
49,740
62,007
40,114
36,307
352
3,360
40,680
37,473
80.2%
58.4%
90.3%
81.9%
81.8%
60.4%
116,732
115,568
80,133
81,612
68.6%
70.6%
Delhi
Delhi
Dhaka
Dhaka
86,110
28,496
87,313
28,496
34,228
18,807
27,295
16,725
39.7%
66.0%
31.3%
58.7%
114,606
115,809
53,035
44,020
46.3%
38.0%
Mumbai
Mumbai
Muscat
Muscat
56,070
43,989
56,070
50,266
44,117
19,163
44,553
27,849
78.7%
43.6%
79.5%
55.4%
100,059
106,336
63,280
72,402
63.2%
68.1%
Total
SIA
Air India
Swissair
Total
Malaysian Airlines
Indian Airlines
Air India
Total
Thai Airways
Indian Airlines
Lufthansa
Air India
Thai Airways
Total
British Airways
Bangladesh Biman
Total
Oman Air
Air India
Total
3,516
305
3,206
253
91.2%
83.0%
Uzbekistan Airways
Delhi
Tashkent
96,573
85,723
36,257
37,258
37.5%
43.5%
Swissair
Mumbai
Zurich
83,185
83,419
62,595
70,492
75.2%
84.5%
Cathay Pacific
Korean Air
Thai Airways
Mumbai
Mumbai
Mumbai
Bangkok
Bangkok
Bangkok
78,171
3,174
78,171
3,301
317
69,589
2,004
69,677
1,764
188
89.0%
63.1%
89.1%
53.4%
59.3%
81,345
81,789
71,593
71,629
88.0%
87.6%
Mumbai
Mumbai
Karachi
Karachi
64,391
15,080
64,306
15,080
47,382
9,432
50,034
9,449
73.6%
62.5%
77.8%
62.7%
79,723
79,386
57,027
59,483
71.5%
74.9%
Total
PIA
Indian Airlines
Total
Swissair
Delhi
Zurich
70,820
71,061
56,977
57,957
80.5%
81.6%
Air India
Northwest
Dubai
Delhi
Delhi
Dubai
67,480
44,665
271
47,759
36,843
266
70.8%
82.5%
98.2%
67,480
44,936
47,759
37,109
70.8%
82.6%
Delhi
Delhi
Kuwait
Kuwait
57,356
9,849
57,356
10,452
45,301
4,590
43,419
8,250
79.0%
46.6%
75.7%
78.9%
67,205
67,808
49,891
51,669
74.2%
76.2%
Mumbai
Mumbai
Amsterdam
Amsterdam
66,237
65,123
401
55,517
57,384
383
83.8%
88.1%
95.5%
66,237
65,524
55,517
57,767
83.8%
88.2%
Total
Kuwait Airways
Air India
Total
Northwest
British Airways
Total
Indian Airlines
Calicut
Sharjah
65,865
63,137
43,046
36,032
65.4%
57.1%
Air France
Air India
Mumbai
Mumbai
Paris
Paris
63,252
410
63,004
48,153
328
53,706
76.1%
80.0%
85.2%
63,662
63,004
48,481
53,706
76.2%
85.2%
Total
( 91 )
Appendices
M& A
Carrier
City Pair
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Inbound
Outbound
Load Factor
Inbound
Outbound
Indian Airlines
Cochin
Sharjah
62,271
63,179
52,012
53,522
83.5%
84.7%
Lufthansa
Chennai
Frankfurt
61,054
61,054
47,796
53,280
78.3%
87.3%
Oman Air
Air India
Trivandrum
Trivandrum
Muscat
Muscat
47,451
10,282
47,451
9,648
40,117
6,515
38,021
6,565
84.5%
63.4%
80.1%
68.0%
57,733
57,099
46,632
44,586
80.8%
78.1%
Delhi
Delhi
Tokyo
Tokyo
31,463
25,698
32,576
25,802
19,210
17,609
22,804
17,165
61.1%
68.5%
70.0%
66.5%
57,161
58,378
36,819
39,969
64.4%
68.5%
Air India
Mumbai
Damman
56,110
57,044
31,015
33,951
55.3%
59.5%
Air India
Indian Airlines
Bangalore
Bangalore
Singapore
Singapore
31,155
23,200
20,904
22,765
25,127
15,777
17,701
17,097
80.7%
68.0%
84.7%
75.1%
54,355
43,669
40,904
34,798
75.3%
79.7%
Northwest
Delhi
Amsterdam
54,003
52,909
42,830
43,395
79.3%
82.0%
Srilankan Airlines
Indian Airlines
Trivandrum
Trivandrum
Colombo
Colombo
38,668
15,080
48,543
15,080
31,727
11,967
33,691
11,546
82.0%
79.4%
69.4%
76.6%
53,748
63,623
43,694
45,237
81.3%
71.1%
Indian Airlines
Delhi
Kathmandu
52,080
52,824
37,543
34,603
72.1%
65.5%
Air India
Air France
Delhi
Delhi
Hong Kong
Hong Kong
51,255
100
51,858
42,405
81
45,076
82.7%
81.0%
86.9%
51,355
51,858
42,486
45,076
82.7%
86.9%
Total
Air India
JAL
Total
Total
Total
Total
Indian Airlines
Calicut
Doha
51,185
51,765
29,146
29,013
56.9%
56.0%
Indian Airlines
Trivandrum
Male
49,518
49,518
34,226
36,440
69.1%
73.6%
Air India
Mumbai
Abu Dhabi
45,780
47,472
33,835
31,401
73.9%
66.1%
SAS
SAS
Delhi
Delhi
Copenhagen
Helsinki
44,473
44,951
188
34,576
33,021
172
77.7%
73.5%
91.5%
44,473
45,139
34,576
33,193
77.7%
73.5%
Chennai
Chennai
Muscat
Muscat
43,830
33,885
293
25,820
17,884
131
58.9%
52.8%
44.7%
43,830
34,178
25,820
18,015
58.9%
52.7%
British Airways
Chennai
London
42,361
41,960
34,177
34,700
80.7%
82.7%
SIA
British Airways
Mumbai
Mumbai
Manchester
Manchester
40,530
40,530
376
27,461
30,140
372
67.8%
74.4%
98.9%
40,530
40,906
27,461
30,512
67.8%
74.6%
Trivandrum
Trivandrum
Kuwait
Kuwait
40,109
201
40,109
30,604
63
31,387
76.3%
31.3%
78.3%
40,310
40,109
30,667
31,387
76.1%
78.3%
Air India
Mumbai
Doha
36,556
34,311
16,372
17,773
44.8%
51.8%
Air India
Trivandrum
Dubai
32,479
36,982
23,477
30,213
72.3%
81.7%
Air India
Cochin
Dubai
32,012
25,944
27,322
22,454
85.3%
86.5%
PIA
Delhi
Karachi
31,650
31,606
27,463
28,118
86.8%
89.0%
Air India
Chennai
Dubai
30,751
50,933
18,192
33,348
59.2%
65.5%
SIA
British Airways
Kolkata
Kolkata
Singapore
Singapore
29,493
29,493
409
23,067
25,148
338
78.2%
85.3%
82.6%
29,493
29,902
23,067
25,486
78.2%
85.2%
Total
Oman Air
Air India
Total
Total
Kuwait Airways
Air India
Total
Total
( 92 )
Appendices
M& A
Carrier
City Pair
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Inbound
Outbound
Load Factor
Inbound
Outbound
Srilankan Airlines
Delhi
Colombo
29,117
29,089
19,362
19,646
66.5%
67.5%
Bangladesh Biman
Delhi
Brussels
28,496
28,496
18,778
20,056
65.9%
70.4%
Bangladesh Biman
Mumbai
Dhaka
28,399
28,673
10,143
18,331
35.7%
63.9%
Indian Airlines
Kolkata
Kathmandu
28,314
28,066
18,901
14,850
66.8%
52.9%
Asiana
Asiana
Delhi
Delhi
Seoul
Seoul / Jeju
27,376
260
27,756
19,189
167
20,252
70.1%
73.0%
27,636
27,756
19,356
20,252
69.4%
73.0%
Malaysian Airlines
Delhi
Kuala Lumpur
27,342
29,114
21,550
23,754
78.8%
81.6%
Korean Air
Mumbai
Seoul
27,001
28,015
20,346
22,970
75.4%
82.0%
Total
Indian Airlines
Ahmedabad
Sharjah
26,040
25,792
22,493
21,978
86.4%
85.2%
Air India
Cochin
Damman
24,221
23,989
17,835
16,677
73.6%
69.5%
PIA
Delhi
Lahore
24,129
24,021
17,772
18,560
73.7%
77.3%
Air India
Trivandrum
Abu Dhabi
23,942
12,002
20,681
7,495
86.4%
62.4%
Air India
Delhi
Jeddah
22,620
22,570
11,909
17,095
52.6%
75.7%
Silkair
Trivandrum
Singapore
22,150
22,150
14,793
15,156
66.8%
68.4%
Srilankan Airlines
Tiruchirapally Colombo
22,052
22,062
17,491
18,683
79.3%
84.7%
Air India
Riyadh
21,750
21,750
14,734
20,657
67.7%
95.0%
Delhi
Air India
Delhi
Damman
21,286
21,760
14,182
15,258
66.6%
70.1%
Indian Airlines
Varanasi
Kathmandu
21,170
21,170
9,627
15,746
45.5%
74.4%
Air India
Hyderabad
Singapore
21,105
21,105
18,235
18,405
86.4%
87.2%
Indian Airlines
Air India
Indian Airlines
Amritsar
Ahmedabad
Ahmedabad
Sharjah
Muscat
Muscat
21,315
10,613
13,182
12,263
47
14,838
49.8%
20,880
21,025
201
20,880
58.3%
23.4%
71.1%
20,880
21,081
13,182
14,885
63.1%
70.6%
20,904
200
15,089
13,987
159
72.2%
66.9%
79.5%
Total
Air India
Air France
63.1%
Mumbai
Mumbai
Nairobi
Nairobi
20,904
20,904
21,104
15,089
14,146
72.2%
67.0%
Air India
Calicut
Abu Dhabi
19,871
20,675
17,783
17,670
89.5%
85.5%
Air India
Indian Airlines
Cochin
Cochin
Muscat
Muscat
13,116
14,935
12,474
15,080
9,653
8,151
10,143
8,139
73.6%
54.6%
81.3%
54.0%
28,051
27,554
17,804
18,282
63.5%
66.3%
Total
Total
Indian Airlines
Bangalore
Sharjah
25,792
25,544
6,443
6,479
25.0%
25.4%
Indian Airlines
Chennai
Bangkok
18,953
19,056
12,257
14,108
64.7%
74.0%
Air India
Mumbai
Bahrain
16,698
34,102
6,110
16,336
36.6%
47.9%
Indian Airlines
Bangalore
Muscat
16,675
16,675
14,647
13,625
87.8%
81.7%
Air India
Delhi
Muscat
16,521
20,100
9,808
9,908
59.4%
49.3%
Srilankan Airlines
Mumbai
Colombo
15,516
15,518
12,908
12,302
83.2%
79.3%
Indian Airlines
Kuwait
Goa
15,225
15,080
9,237
9,122
60.7%
60.5%
Indian Airlines
Ahmedabad
Kuwait
14,935
15,225
10,404
11,448
69.7%
75.2%
Indian Airlines
Kolkata
Yangon
14,790
15,473
8,438
8,680
57.1%
56.1%
Egypt Air
Mumbai
Sharjah
13,265
13,265
5,265
6,125
39.7%
46.2%
( 93 )
Appendices
M& A
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Air India
Cochin
Abu Dhabi
13,062
Air India
Cochin
Bahrain
12,064
Indian Airlines
Lucknow
Sharjah
11,529
11,529
6,671
7,137
Air India
Bangalore
Dubai
10,862
10,669
7,567
Air India
Calicut
Dubai
10,625
207
8,941
Indian Airlines
Sharjah
Tiruchirapally
10,584
10,584
Air India
Cochin
Kuwait
10,452
Air India
Delhi
Abu Dhabi
10,424
Air India
Indian Airlines
Cochin
Cochin
Doha
Doha
Total
37,096
Pax Revenue Traffic

Inbound
Outbound
10,196
32,985
9,871
Load Factor
Inbound
Outbound
78.1%
88.9%
81.8%
57.9%
61.9%
7,608
69.7%
71.3%
199
84.2%
96.1%
7,382
7,998
69.7%
75.6%
10,452
7,249
8,926
69.4%
85.4%
11,244
8,512
9,683
81.7%
86.1%
2,320
8,352
2,175
1,048
7,314
361
87.6%
45.2%
16.6%
2,320
10,527
1,048
7,675
45.2%
3.4%
Air India
Chennai
Kuwait
10,050
Bangladesh Biman
Chittagong
Kolkata
8,075
8,075
5,647
5,613
69.9%
British Airways
Kolkata
London
7,531
6,868
5,883
5,159
78.1%
75.1%
Indian Airlines
Calicut
Ras Al Khaima
7,385
7,685
3,383
4,224
45.8%
55.0%
Indian Airlines
Calicut
Al-Fujairah
7,540
7,250
3,440
3,945
45.6%
54.4%
Air India
SAS
Delhi
Delhi
Moscow
Moscow
3,960
3,960
180
2,536
2,441
176
64.0%
61.6%
97.8%
3,960
4,140
2,536
2,617
64.0%
63.2%
Total
5,182
51.6%
781
69.5%
Egypt Air
Sholapur
Jeddah
1,511
Egypt Air
Delhi
Beirut
1,033
1,033
748
759
72.4%
51.7%
73.5%
Egypt Air
Sholapur
Beirut
506
759
438
589
86.6%
77.6%
Source: ICAO, CRISIL / M & A compilation

Note: Revenue passengers are commercial passenger for whose transportation an air carrier
receives commercial remuneration
( 94 )
Appendices
M& A
APPENDIX III
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Load Factor
Inbound Outbound Inbound Outbound
KLM
Northwest
Total
Delhi
Delhi
Amsterdam
Amsterdam
82,140
69,043
151,183
82,921
68,758
151,679
65,482
45,776
111,258
68,244
57,731
125,975
79.7%
66.3%
73.6%
82.3%
84.0%
83.1%
Bangladesh Biman
British Airways
Indian Airlines
Total
Kolkata
Kolkata
Kolkata
Dhaka
Dhaka
Dhaka
85,102
45,340
20,104
150,546
89,760
45,086
28,394
163,240
62,441
18,433
13,657
94,531
63,643
12,647
15,753
92,043
73.4%
40.7%
67.9%
62.8%
70.9%
28.1%
55.5%
56.4%
Northwest
KLM
Total
Mumbai
Mumbai
Amsterdam
Amsterdam
108,474
40,607
149,081
107,405
40,316
147,721
83,434
28,091
111,525
86,626
30,853
117,479
76.9%
69.2%
74.8%
80.7%
76.5%
79.5%
Lufthansa
Northwest
Total
Delhi
Delhi
Frankfurt
Frankfurt
137,591
273
137,864
137,981
101,988
101,988
71.2%
98.5%
71.3%
73.9%
137,981
97,987
269
98,256
Air France
Air India
Total
Delhi
Delhi
Paris
Paris
85,517
51,872
137,389
85,003
53,278
138,281
64,497
35,972
100,469
68,611
35,230
103,841
75.4%
69.3%
73.1%
80.7%
66.1%
75.1%
SIA
Air India
Total
Delhi
Delhi
Singapore
Singapore
106,128
19,796
125,924
106,128
20,729
126,857
80,169
15,010
95,179
82,769
11,935
94,704
75.5%
75.8%
75.6%
78.0%
57.6%
74.7%
Air India
Mumbai
Riyadh
113,543
110,949
74,625
85,579
65.7%
77.1%
Thai Airways
Indian Airlines
Total
Bangkok Kolkata
Bangkok Kolkata
49,809
56,585
106,394
49,809
41,505
91,314
37,389
36,261
73,650
37,242
28,195
65,437
75.1%
64.1%
69.2%
74.8%
67.9%
71.7%
Cathay Pacific
Thai Airways
Qantas
Air India
Total
Mumbai
Mumbai
Mumbai
Mumbai
76,336
8,559
421
293
85,609
76,336
8,559
421
62,135
6,592
374
69,101
82.4%
72.8%
42.8%
41.0%
81.1%
81.4%
77.0%
88.8%
85,316
62,894
6,228
180
120
69,422
Air India
Mumbai
Jeddah
82,218
79,997
49,643
52,280
60.4%
65.4%
Air France
Air India
Total
Indian Airlines
Mumbai
Mumbai
Paris
Paris
Delhi
Kathmandu
74,233
1,699
75,932
72,515
73,834
293
74,127
72,325
53,431
1,459
54,890
49,056
60,721
88
60,809
40,224
72.0%
85.9%
72.3%
67.6%
82.2%
30.0%
82.0%
55.6%
Bangkok
Bangkok
Bangkok
Bangkok
73.9%
81.0%
Srilankan Airlines
Indian Airlines
Total
TrivandrumColombo
TrivandrumColombo
52,330
11,455
63,785
52,341
11,455
63,796
41,633
8,742
50,375
41,851
9,149
51,000
79.6%
76.3%
79.0%
80.0%
79.9%
79.9%
Air India
KLM
Total
Delhi
Delhi
63,309
40,619
291
40,910
44,341
36,050
243
36,293
70.0%
88.8%
83.5%
88.7%
Dubai
Dubai
63,309
( 95 )
44,341
70.0%
Appendices
M& A
APPENDIX III - (Contd.)
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Load Factor
Indian Airlines
Indian Airlines
Lufthansa
Calicut
Cochin
Chennai
Sharjah
Sharjah
Frankfurt
62,840
62,256
59,966
62,176
62,008
59,966
40,283
45,858
48,359
40,379
44,880
50,973
64.1%
73.7%
80.6%
64.9%
72.4%
85.0%
Air India
Indian Airlines
Total
Bangalore
Bangalore
Singapore
Singapore
30,922
27,260
58,182
20,714
27,115
47,829
21,103
17,963
39,066
14,044
19,469
33,513
68.2%
65.9%
67.1%
67.8%
71.8%
70.1%
PIA
Mumbai
Karachi
57,798
57,907
36,139
44,776
62.5%
77.3%
Air India
Mumbai
Damman
55,563
53,756
27,091
33,000
48.8%
61.4%
Uzbekistan Airways Delhi
Tashkent
55,228
55,228
19,682
22,627
35.6%
41.0%
Malaysian Airlines
Kuala Lumpur
54,684
54,096
30,929
33,427
56.6%
61.8%
SIA
Kolkata
Royal Brunei Airline Kolkata
Total
Singapore
Singapore
29,614
21,357
50,971
29,614
21,408
51,022
21,505
13,689
35,194
22,474
12,026
34,500
72.6%
64.1%
69.0%
75.9%
56.2%
67.6%
Indian Airlines
Calicut
Doha
50,418
50,895
29,886
31,320
59.3%
61.5%
SAS
Delhi
Copenhagen
49,534
49,704
37,192
35,086
75.1%
70.6%
British Airways
Kolkata
London
49,197
49,927
33,001
39,397
67.1%
78.9%
Air India
Cochin
Dubai
48,611
40,632
36,764
31,518
75.6%
77.6%
Air India
Mumbai
Kuwait
47,337
57,114
30,660
42,359
64.8%
74.2%
Air India
Bangladesh Biman
Total
Mumbai
Mumbai
Muscat
Muscat
43,168
17,151
17,151
24,173
195
24,368
39.7%
43,168
40,619
221
40,840
39.7%
59.5%
88.2%
59.7%
Indian Airlines
Trivandrum
Male
42,251
42,147
35,018
34,365
82.9%
81.5%
Air India
Mumbai
Abu Dhabi
40,784
49,703
28,365
28,962
69.5%
58.3%
British Airways
Chennai
London
40,285
40,790
32,897
33,061
81.7%
81.1%
SIA
Mumbai
Manchester
40,138
40,138
26,040
29,906
64.9%
74.5%
Malaysian Airlines
Mumbai
Kuala Lumpur
40,048
38,642
17,602
18,183
44.0%
47.1%
Indian Airlines
Kolkata
Kathmandu
39,089
39,047
21,038
17,161
53.8%
43.9%
Indian Airlines
Varanasi
Kathmandu
36,685
36,975
13,182
24,230
35.9%
65.5%
Srilankan Airlines
Delhi
Colombo
33,958
33,976
21,160
23,064
62.3%
67.9%
Air India
Trivandrum
Dubai
32,407
33,753
23,278
30,948
71.8%
91.7%
Korean Air
Mumbai
Seoul
31,603
31,069
23,155
22,998
73.3%
74.0%
PIA
Delhi
Karachi
29,334
29,474
21,561
24,589
73.5%
83.4%
Air India
Cochin
Muscat
28,833
28,988
14,523
16,625
50.4%
57.4%
Bangladesh Biman
Mumbai
Dhaka
28,125
27,904
15,424
11,116
54.8%
39.8%
Delhi
Air India
Mumbai
Doha
28,009
18,366
17,699
9,512
63.2%
51.8%
Bangladesh Biman
Delhi
Dhaka
27,948
27,126
20,751
18,973
74.2%
69.9%
Bangladesh Biman
Delhi
Brussels
27,126
27,948
16,358
18,814
60.3%
67.3%
Air India
Cochin
Abu Dhabi
27,041
41,471
18,497
33,992
68.4%
82.0%
Air India
Calicut
Abu Dhabi
26,413
26,960
21,708
23,252
82.2%
86.2%
Srilankan Airlines
25,304
25,300
21,571
19,262
85.2%
76.1%
( 96 )
Appendices
M& A
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Load Factor
Air India
Delhi
Tokyo
25,781
25,488
15,007
17,163
58.2%
67.3%
Asiana
Asiana
Total
Delhi
Delhi
Seoul
Seoul / Jeju
24,480
520
25,000
25,496
17,067
17,067
65.2%
79.0%
65.5%
66.9%
25,496
15,973
411
16,384
Air India
Indian Airlines
Total
Cochin
Cochin
Doha
Doha
13,098
11,890
24,988
12,034
11,890
23,924
6,632
5,336
11,968
8,943
5,641
14,584
50.6%
44.9%
47.9%
74.3%
47.4%
61.0%
66.9%
Air India
Chennai
Dubai
24,353
41,807
12,055
26,258
49.5%
62.8%
Indian Airlines
Ahmedabad
Sharjah
24,041
23,938
17,483
16,245
72.7%
67.9%
Indian Airlines
Bangalore
Sharjah
23,648
24,144
16,304
17,066
68.9%
70.7%
Air India
Cochin
Damman
23,648
23,416
17,851
16,694
75.5%
71.3%
Indian Airlines
Ahmedabad
Muscat
23,055
22,910
14,224
14,600
61.7%
63.7%
Air India
Delhi
Jeddah
22,821
23,490
10,574
15,351
46.3%
65.4%
Indian Airlines
Chennai
Bangkok
22,765
22,765
14,525
16,388
63.8%
72.0%
Indian Airlines
Bangalore
Muscat
22,475
22,475
13,116
14,744
58.4%
65.6%
Air India
Trivandrum
Abu Dhabi
22,164
10,222
18,500
6,472
83.5%
63.3%
Silkair
Trivandrum
Singapore
22,152
22,152
15,101
15,165
68.2%
68.5%
Royal Brunei Airline
Kolkata
Dubai
21,408
21,357
12,164
16,071
56.8%
75.2%
PIA
Delhi
Lahore
21,344
21,230
12,643
14,719
59.2%
69.3%
Air India
Hyderabad
Singapore
21,145
21,132
16,166
15,808
76.5%
74.8%
Air India
Mumbai
Nairobi
20,886
20,886
13,042
12,923
62.4%
61.9%
Malaysian Airlines
Bangalore
Kuala Lumpur
19,992
19,992
12,451
11,237
62.3%
56.2%
Indian Airlines
Hyderabad
Dubai
19,352
19,745
9,083
6,770
46.9%
34.3%
Srilankan Airlines
Mumbai
Colombo
19,315
19,316
14,530
14,276
75.2%
73.9%
Air India
Delhi
Damman
19,330
21,409
11,056
14,483
57.2%
67.6%
Air India
Delhi
Riyadh
19,090
21,750
12,890
20,319
67.5%
93.4%
Air India
Cochin
Kuwait
16,086
10,348
9,913
8,347
61.6%
80.7%
Air India
Delhi
Abu Dhabi
15,432
12,822
12,511
10,369
81.1%
80.9%
Indian Airlines
Ahmedabad
Kuwait
15,225
15,080
11,339
11,455
74.5%
76.0%
Indian Airlines
Amritsar
Sharjah
15,225
15,080
8,531
8,742
56.0%
58.0%
Indian Airlines
Goa
Kuwait
15,080
15,225
9,205
9,420
61.0%
61.9%
Indian Airlines
Lucknow
Sharjah
15,080
15,080
11,749
10,268
77.9%
68.1%
Indian Airlines
Kolkata
Yangon
15,080
Indian Airlines
Cochin
Muscat
14,935
14,645
8,286
7,334
55.5%
50.1%
Air India
Delhi
Muscat
14,288
18,452
6,397
8,472
44.8%
45.9%
Air India
Dubai
Calicut
13,837
2,811
10,118
1,933
73.1%
68.8%
Lufthansa
Bangalore
Frankfurt
13,175
12,785
10,792
10,829
81.9%
84.7%
Egypt Air
Mumbai
Sharjah
13,099
13,099
5,908
6,160
45.1%
47.0%
( 97 )
11,594
76.9%
Appendices
M& A
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Load Factor
Indian Airlines
Mumbai
Karachi
12,208
12,208
6,579
6,823
53.9%
Malaysian Airlines
Chennai
Penang
11,852
278
8,933
138
75.4%
55.9%
49.6%
Air India
Cochin
Bahrain
11,802
13,285
7,060
8,684
59.8%
65.4%
Air India
Delhi
Kuwait
10,892
10,361
5,168
7,609
47.4%
73.4%
Air India
Bangalore
Dubai
10,350
9,978
7,354
7,643
71.1%
76.6%
Air India
Trivandrum
Muscat
10,338
10,338
6,411
6,824
62.0%
66.0%
Malaysian Airlines
Hyderabad
Kuala Lumpur
10,290
10,290
5,715
5,363
55.5%
52.1%
Silkair
Cochin
Singapore
9,940
9,940
5,164
5,161
52.0%
51.9%
77.5%
Bangladesh Biman
Kolkata
Chittagong
8,925
8,925
6,467
6,916
72.5%
Air India
Hyderabad
Dubai
8,771
8,972
4,845
3,547
55.2%
39.5%
Air India
Mumbai
Hong Kong
7,388
6,986
1,903
2,861
25.8%
41.0%
Indian Airlines
Calicut
Al-Fujairah
7,250
7,540
5,243
5,923
72.3%
78.6%
Indian Airlines
Calicut
Ras Al Khaimah
7,105
7,105
5,373
6,354
75.6%
89.4%
Air India
Chennai
Hong Kong
6,758
7,160
1,488
2,480
22.0%
34.6%
Air India
Trivandrum
Damman
6,356
6,504
4,735
4,085
74.5%
62.8%
Air India
Hyderabad
Jeddah
6,027
6,588
4,221
4,928
70.0%
74.8%
Air India
Calicut
Jeddah
5,426
5,827
4,928
5,522
90.8%
94.8%
Kyrghyzstan Airlines Delhi
Bishkek
4,639
4,617
2,629
2,702
56.7%
58.5%
Air India
Chennai
Kuwait
4,623
Indian Airlines
Hyderabad
Sharjah
4,464
4,216
1,391
2,224
31.2%
52.8%
62.0%
2,561
55.4%
Air India
Mumbai
Bahrain
4,285
27,313
1,824
16,947
42.6%
Air India
Kuwait
Calicut
2,985
189
1,069
143
35.8%
75.7%
Indian Airlines
2,261
2,261
1,065
1,022
47.1%
45.2%

( 98 )
Appendices
M& A
APPENDIX IV
Carrier
City Pair
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Inbound
Outbound
Load Factor
Inbound
Outbound
Singapore Airlines
Singapore
Chennai
138,662
138,662
111,421
120,341
80.4%
86.8%
British Airways
Virgin Atlantic
London
London
Delhi
Delhi
129,984
30,267
128,931
30,267
91,080
23,529
98,208
23,966
70.1%
77.7%
76.2%
79.2%
160,251
159,198
114,609
122,174
71.5%
76.7%
Bombay
Bombay
Singapore
Singapore
122,918
26,519
122,897
26,519
106,946
10,957
113,527
13,696
87.0%
41.3%
92.4%
51.6%
149,437
142,497
117,903
127,223
78.9%
89.3%
Trichy
Colombo
42,173
42,173
28,543
27,010
67.7%
64.0%
Total
Singapore Airlines
Qantas
Total
Sri Lankan Airlines
Sri Lankan Airlines
Delhi
Colombo
42,069
51,715
27,442
28,059
65.2%
54.3%
Sri Lankan Airlines
Chennai
Colombo
175,578
175,578
114,131
116,124
65.0%
66.1%
Lufthansa
Bombay
Frankfurt
132,814
132,814
99,742
106,752
75.1%
80.4%
Lufthansa
Delhi
Frankfurt
142,047
141,410
115,103
107,746
76.2%
81.0%
Cathay Pacific
Dubai
Bombay
76,305
75,969
52,204
61,089
68.4%
80.4%
Thai Airways
Delhi
Bangkok
114,594
115,220
96,158
99,768
83.9%
86.6%
Malaysia Airlines
Chennai
Kuala Lumpur
113,154
112,566
80,306
89,415
71.0%
79.4%
Singapore Airlines
Delhi
Singapore
107,100
107,100
83,756
89,285
78.2%
83.4%
Thai Airways
Cathay Pacific
Bombay
Bangkok
Bangkok
Bombay
49,366
75,969
49,061
76,305
36,939
62,163
40,083
62,587
74.8%
81.8%
81.7%
82.0%
125,335
125,366
99,102
102,670
79.1%
81.9%
65,210
65,210
44,610
49,398
68.4%
75.8%
Total
Bombay
Bangkok
Cathay Pacific
Delhi
Hong Kong
Sri Lankan Airlines
Trivandrum
Colombo
72,624
118,416
45,830
47,819
63.1%
40.4%
Lufthansa
Bangalore
Frankfurt
38,167
38,167
33,802
34,814
88.6%
91.2%
British Airways
Chennai
London
37,157
36,798
29,076
29,711
78.3%
80.7%
Malaysia Airlines
Bangalore
Kuala Lumpur
30,870
30,576
25,169
24,112
81.5%
78.9%
Thai Airways
Kolkata
Bangkok
48,711
48,711
36,253
37,281
74.4%
76.5%
Lufthansa
Chennai
Frankfurt
60,598
60,598
51,373
54,132
84.8%
89.3%
British Airways
London
Kolkata
25,276
25,496
18,155
18,038
71.8%
70.7%
Singapore Airlines
Bombay
Manchester
40,105
40,082
28,493
31,278
71.0%
78.0%
Asiana
Delhi
Seoul
24,332
24,332
17,694
18,630
72.7%
76.6%
Malaysia Airlines
Bombay
Kuala Lumpur
91,820
91,820
40,741
40,493
44.4%
44.1%
Malaysia Airlines
Delhi
Kuala Lumpur
62,040
62,040
43,551
44,912
70.2%
72.4%
Malaysia Airlines
Hyderabad
Kuala Lumpur
15,288
15,582
10,682
12,571
69.9%
80.7%
Royal Brunei
Kolkata
Dubai
28,496
28,496
13,471
18,201
47.3%
63.9%
Oman Air
Trivandrum
Muscat
59,848
59,848
40,164
44,956
67.1%
75.1%
Oman Air
Bombay
Muscat
72,351
72,351
44,088
49,753
60.9%
68.8%
( 99 )
Appendices
M& A
APPENDIX IV - (Contd.)
City Pair
Carrier
Pax Seat Capacity

Inbound
Outbound
Pax Revenue Traffic

Inbound
Outbound
Load Factor
Inbound Outbound
Singapore Airlines
Royal Brunei
Kolkata
Kolkata
Singapore
Singapore
31,266
28,496
31,266
28,496
24,122
14,807
25,199
10,468
77.2%
52.0%
80.6%
36.7%
Total
Singapore
Kolkata
59,762
59,762
38,929
35,667
65.1%
59.7%
Kyrghyzstan Airlines Delhi
Bishkek
4,587
4,483
2,295
2,454
50.0%
54.7%
Eqypt Air
Eqypt Air
Eqypt Air
Sharjah
Bombay
Bombay
Bombay
Sharjah
Sharjah
14,102
14,356
14,102
14,356
5,858
6,383
5,858
6,383
41.5%
44.5%
41.5%
44.5%
Oman Air
Kochi
Muscat
41,699
41,699
26,161
28,500
62.7%
68.3%
Sri Lankan Airlines
Bangalore
Colombo
17,043
17,043
8,943
8,865
52.5%
52.0%
Oman Air
Chennai
Muscat
44,890
44,890
25,406
26,520
56.6%
59.1%
British Airways
Bombay
London
116,215
116,475
83,928
93,127
72.2%
80.0%
Sri Lankan Airlines
Bombay
Colombo
31,155
31,155
20,638
20,627
66.2%
66.2%

( 100 )
Appendices
M& A
APPENDIX V
PASSENGERS CARRIED BY CITY PAIR FY 2002 (AS REPORTED BY DGCA)
Sr. No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
City Pair
Mumbai
Chennai
Mumbai
Mumbai
Chennai
Delhi
Mumbai
Mumbai
Mumbai
Delhi
Chennai
Mumbai
Mumbai
Delhi
Delhi
Kathmandu
Delhi
Delhi
Mumbai
Delhi
Calcutta
Thiruvananthapuram
Mumbai
Mumbai
Calcutta
Mumbai
Chennai
Mumbai
Mumbai
Chennai
Hyderabad
Delhi
Delhi
Delhi
Chennai
Delhi
Mumbai
Mumbai
Thiruvananthapuram
Mumbai
Inbound
Dubai
Singapore
Riyadh
London
Colombo
London
Singapore
Muscat
Frankfurt
Bangkok
Kualalumpur
Jeddah
Amsterdam
Dubai
Frankfurt
Delhi
Singapore
Amsterdam
Kuwait *
Paris
Dhaka
Muscat
New York
Paris
Bangkok
Abu Dhabi
Muscat
Bahrain
Damam
Dubai
Dubai
Zurich
Moscow
Vienna
Frankfurt
Hong Kong
Zurich
Bangkok
Colombo
Doha
309,009
213,941
153,401
151,239
152,008
140,799
143,665
144,969
116,945
113,994
109,957
108,692
103,998
109,900
96,883
106,996
94,296
86,242
81,070
82,177
75,587
71,344
68,616
68,762
68,233
68,344
62,642
60,481
52,840
54,408
59,692
55,547
52,710
54,455
53,243
53,320
51,314
50,188
47,525
48,533
( 101 )
Outbound
349,244
222,262
183,788
157,000
148,838
145,812
137,919
126,094
122,507
120,260
117,618
109,553
110,953
102,937
100,148
85,967
98,341
100,177
92,063
85,797
75,755
71,835
74,369
73,344
72,047
70,256
62,684
62,207
68,445
65,536
57,349
58,777
61,229
56,841
57,364
57,174
55,484
50,837
53,362
49,145
Total
658,253
436,203
337,189
308,239
300,846
286,611
281,584
271,063
239,452
234,254
227,575
218,245
214,951
212,837
197,031
192,963
192,637
186,419
173,133
167,974
151,342
143,179
142,985
142,106
140,280
138,600
125,326
122,688
121,285
119,944
117,041
114,324
113,939
111,296
110,607
110,494
106,798
101,025
100,887
97,678
Appendices
M& A
APPENDIX V - (Contd.)
Sr. No
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
Inbound
City Pair
Mumbai
Delhi
Mumbai
Mumbai
Thiruvananthapuram
Delhi
Calicut
Delhi
Cochin
Delhi
Cochin
Delhi
Thiruvananthapuram
Chennai
Bangalore
Amritsar
Mumbai
Chennai
Thiruvananthapuram
Chennai
Thiruvananthapuram
Mumbai
Delhi
Calcutta
Delhi
Thiruvananthapuram
Mumbai
Mumbai
Cochin
Cochin
Mumbai
Mumbai
Delhi
Thiruvananthapuram
Bangalore
Calicut
Calcutta
Tiruchirapal
Delhi
Bangalore
Delhi
Cochin
Mumbai
Amritsar
Delhi
Milan
Kuwait
Hong Kong
Nairobi
Doha
Muscat
Sharjah
Riyadh
Muscat
Abu Dhabi
Dubai
Kualalumpur
Male
Riyadh
Singapore
Ashkhabad
Kualalumpur
London-Heath
Kuwait
Kuwait
Abu Dhabi
Karachi
Copenhagen
Singapore
Tokyo
Dubai
Johanneburg
Chicagoil
Sharjah
Abu Dhabi
Mauritius
Seoul
Colombo
Bahrain
Kualalumpur
Abu Dhabi
London
Colombo
Jeddah
Frankfurt
Amman
Damam
Addis Ababa
Tashkent
Seoul
( 102 )
47,029
50,508
48,715
44,506
41,902
42,959
39,900
36,892
37,803
41,181
33,624
34,365
35,235
35,127
34,518
32,008
28,767
31,331
31,494
30,073
32,071
29,471
31,817
27,626
28,118
25,524
26,919
22,469
26,148
23,701
22,280
22,636
20,112
20,331
22,607
20,397
20,449
21,893
20,853
19,328
19,505
18,272
16,192
18,309
17,647
Outbound
50,299
46,571
46,776
47,267
45,789
42,490
39,696
42,663
39,117
33,795
40,411
37,013
35,488
34,472
31,330
32,315
34,666
31,669
31,365
32,217
29,600
31,270
28,824
28,632
27,305
29,136
27,623
28,108
22,198
22,779
23,459
22,023
23,559
22,536
19,118
21,236
20,619
19,086
19,956
20,005
19,155
17,364
18,939
16,611
16,886
Total
97,328
97,079
95,491
91,773
87,691
85,449
79,596
79,555
76,920
74,976
74,035
71,378
70,723
69,599
65,848
64,323
63,433
63,000
62,859
62,290
61,671
60,741
60,641
56,258
55,423
54,660
54,542
50,577
48,346
46,480
45,739
44,659
43,671
42,867
41,725
41,633
41,068
40,979
40,809
39,333
38,660
35,636
35,131
34,920
34,533
Appendices
M& A
Sr. No
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
City Pair
Calcutta
Hyderabad
Calicut
Delhi
Delhi
Chennai
Delhi
Delhi
Calicut
Thiruvananthapuram
Varanasi
Mumbai
Mumbai
Calicut
Mumbai
Hyderabad
Mumbai
Chennai
Delhi
Mumbai
Cochin
Chennai
Delhi
Mumbai
Calcutta
Chennai
Delhi
Mumbai
Lucknow
Mumbai
Cochin
Mumbai
Mumbai
Delhi
Delhi
Hyderabad
Calcutta
Calicut
Mumbai
Tiruchirapal
Hyderabad
Ahmedabad
Calicut
Cochin
Ahmedabad
Inbound
Kathmandu
Sharjah
Bahrain
Tashkent
Sharjah
Brussells
Karachi
New York
Doha
Singapore
Kathmandu
Tel Aviv
Colombo
Dubai
Sanna
Singapore
Moscow
Bangkok
Damam
Manchester
Doha
Jeddah
Ashkhabad
Tokyo
Dubai
Damam
Bahrain
Sydney
Sharjah
Teheran
Kuwait
Amman
Kathmandu
Mauritius
Lahore
Kualalumpur
Amsterdam
Kuwait
Dailastx
Sharjah
Muscat
Sharjah
Jeddah
Bahrain
Kuwait
18,576
17,673
16,057
15,036
16,349
15,293
14,599
13,824
14,871
15,137
11,312
14,282
13,889
15,433
13,760
12,075
10,726
11,080
10,195
10,132
10,056
13,157
10,302
9,926
10,805
9,956
9,425
13,445
10,624
10,404
10,318
9,491
9,623
9,319
8,786
8,360
8,554
7,757
6,130
7,671
7,441
7,476
7,075
6,682
7,159
( 103 )
Outbound
15,454
16,349
17,039
17,361
15,591
16,624
16,842
17,257
15,684
15,274
18,737
14,437
14,021
11,343
12,916
12,897
12,603
11,422
11,582
11,536
11,265
8,023
10,853
11,079
9,934
10,568
10,976
6,642
9,388
9,495
9,468
9,859
9,602
9,269
8,650
8,995
8,447
9,100
10,341
8,189
8,035
7,700
7,981
8,348
7,690
Total
34,030
34,022
33,096
32,397
31,940
31,917
31,441
31,081
30,555
30,411
30,049
28,719
27,910
26,776
26,676
24,972
23,329
22,502
21,777
21,668
21,321
21,180
21,155
21,005
20,739
20,524
20,401
20,087
20,012
19,899
19,786
19,350
19,225
18,588
17,436
17,355
17,001
16,857
16,471
15,860
15,476
15,176
15,056
15,030
14,849
Appendices
M& A
City Pair
Sr. No
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
Bangalore
Delhi
Ahmedabad
Amritsar
Bangalore
Bangalore
Calcutta
Goa
Bangalore
Hyderabad
Thiruvananthapuram
Goa
Chennai
Chennai
Cochin
Mumbai
Delhi
Mumbai
Mumbai
Coimbatore
Cochin
Delhi
Bangalore
Delhi
Calcutta
Hyderabad
Mumbai
Mumbai
Delhi
Delhi
Calcutta
Chennai
Mumbai
Mumbai
Calcutta
Delhi
Total
Inbound
Sharjah
Dhaka
Muscat
Sharjah
Dubai
Muscat
Chittagong
Sharjah
Kathmandu
Jeddah
Damam
Kuwait
Dhahran
Mauritius
Singapore
Cairo
Addis Ababa
Jakarta
Dhaka
Sharjah
Jeddah
Osaka
Bangkok
Damascus
Rangoon
Kuwait
Damascus
Medina
Almata
Paro
Amman
Bahrain
Dar-es-salaa
Sharjah
Sharjah
Chicago
Outbound
Total
7,534
7,284
5,167
6,472
6,284
6,163
6,056
6,262
6,062
5,739
5,916
5,689
6,508
5,434
5,182
4,845
4,807
6,451
4,671
4,006
4,770
4,141
3,666
3,646
3,405
3,877
4,331
4,567
2,987
3,359
3,604
4,519
3,182
3,863
2,977
3,951
7,298
6,232
8,081
6,553
6,657
6,773
6,714
5,908
5,442
5,732
5,460
5,466
4,405
5,147
5,161
4,986
4,851
3,196
4,431
4,950
3,947
3,919
3,995
3,981
4,181
3,551
2,930
2,584
4,092
3,568
3,319
2,372
3,255
2,228
3,010
1,745
14,832
13,516
13,248
13,025
12,941
12,936
12,770
12,170
11,504
11,471
11,376
11,155
10,913
10,581
10,343
9,831
9,658
9,647
9,102
8,956
8,717
8,060
7,661
7,627
7,586
7,428
7,261
7,151
7,079
6,927
6,923
6,891
6,437
6,091
5,987
5,696
5,818,195
6,013,740
11,831,935
Others
75,449
Grand Total
11,907,384
Source: DGCA
Note: * Outbound traffic figures for Kuwait have been assumed at 2002 /03 levels as 2002/01
figures were unavailable
( 104 )
Appendices
M& A
APPENDIX VI
FLIGHTS ADDED / DISCONTINUED BY KEY MARKETS
POST 9 /11 TO DATE
Sector
Flights (per week)

Added Withdrawn
Approx Seats (Year)

Added
Withdrawn
Approx
Date
Airline
CHINA / S. EAST ASIA

China
Beijing - Delhi
Beijing - Delhi
Beijing - Mumbai
1
1
1
10,400
10,400
12,700
SubTotal
33,500
Korea (South)
Seoul - Delhi
Seoul - Mumbai
1
1
14,000
15,300
SubTotal
29,300
Singapore
Singapore - Bangalore
Singapore - Hyderabad
Sydney (via Singapore) - Mumbai
3
4
44,900
24,500
SubTotal
Taiwan
Taipei - Delhi
41,300
SubTotal
41,300
Thailand
Bangkok - Mumbai
Bangkok - Bangalore
Bangkok - Bangalore
Bangkok - Chennai
Bangkok - Chennai
Bangkok - Gaya
Bangkok - Guwahati
Bangkok - Varanasi
1
4
1
4
n.a
n.a
n.a
SubTotal
10
Malaysia
Kuala Lumpur - Mumbai
Kuala Lumpur - Bangalore
Kuala Lumpur - Hyderabad
Kuala Lumpur - Chennai
Kuala lumpur - Kolkata*
SubTotal
CHINA / S.EAST ASIA TOTAL
59,200
69,400
2
1
2
100 seats
3
33
Apr-03
Apr-03
Asiana Airlines
Korean Air
Sep-03
Nov-02
Apr-02
Singapore Airlines
Silk Air
Qantas Airways
Apr-02
China Air
Nov-04
Apr-04
Nov-04
Oct-03
Nov-04
Nov-04
Nov-04
All Nippon
Thai Airways
Thai Airways
Thai Airways
Thai Airways
Thai Airways
Thai Airways
Thai Airways
21,200
244,460
21,200
28,900
15,300
30,600
36,400
45,864
China Eastern
China Eastern
Ethiopian Airlines
59,200
15,236
60,944
15,236
60,944
30,700
30,700
30,700
2
Aug-03
Apr-02
Apr-03
2003 / 04
2003 / 04
2003 / 04
2003 / 04
2003 / 04
Malaysia Airlines
Malaysia Airlines
Malaysia Airlines
Malaysia Airlines
Malaysia Airlines
157,064
7
575,024
( 105 )
80,400
Appendices
M& A
APPENDIX VI - (Contd.)
POST 9 /11 TO DATE.. (contd)
Sector
Flights (per week)

Added
Withdrawn
EUROPE
Austria
Vienna - Delhi
Vienna - Delhi
Vienna - Delhi
SubTotal
Belgium
Brussels - Chennai
SubTotal
Denmark
Copenhagen - Delhi
SubTotal
England
Manchester - Mumbai
SubTotal
France
Paris - Mumbai
Paris - Delhi
Approx Seats (Year)

Added
Withdrawn
1
1
2
5,100
5,100
3
3
10,200
EUROPE TOTAL
Canada
Toronto - Delhi
Toronto - Delhi
Vancouver - Delhi
Toronto - Mumbai
67,900
67,900
Feb-02
SAS
2
2
39,000
39,000
Apr-03
Singapore Airlines
39,300
Apr-02
Nov-03
Air France
Air France
May-02
Sep-01
Apr-03
Lufthansa
Lufthansa
Lufthansa
102,300
102,300
Oct-01
Northwest
13,000
Apr-03
2003 / 04
Alitalia
Alitalia
Winter 02
Nov-03
Swiss International
Swiss International
50,232
50,232
39,300
40,500
38,500
60,800
139,800
7
7
1
1
72,800
72,800
2
6
8
32
13,000
20,800
77,000
97,800
273,032
7
7
412,200
126,300
126,300
102,700
2
1
2
30,300
15,100
34,000
79,400
SubTotal
NORTH AMERICA
19
Sabena
5
5
2
3
3
8
NORTH AMERICA (U.S.A. & CANADA)

USA
Chicago - Delhi
SubTotal
Nov-01
37,600
37,600
17
Austrian Airlines
Austrian Airlines
Austrian Airlines
7
7
Nov-02
Jun-02
Nov-01
138 seats
SubTotal
Germany
Frankfurt - Mumbai
Frankfurt - Bangalore
Frankfurt - Chennai
SubTotal
Holland
Amsterdam - Delhi
SubTotal
Italy
Milan - Mumbai
Rome - Delhi
SubTotal
Switzerland
Zurich - Delhi / Zurich - Mumbai
Zurich - Delhi
SubTotal
15,300
15,300
Airline
Approx
Date
102,700
( 106 )
Oct-01
United Airlines
Nov-03
Nov-01
Nov-01
Nov-01
Air Canada
Canada 3000
Canada 3000
Canada 3000
332,000
Appendices
M& A
APPENDIX VI - (Contd.)
Sector
INDIAN SUBCONTINENT
Afghanistan
Kabul - Delhi
Kabul - Amristar
SubTotal
Seychelles
Seychelles - Mumbai
SubTotal
Sri Lanka
Colombo - Bangalore
Colombo - Bangalore
Colombo - Hyderabad
Colombo - Kochi
Colombo - Thiruvanthampurum
Colombo - Trichy
Colombo - Delhi ( via Bodhgaya)
SubTotal
INDIAN SUBCONTINENT
Flights (per week)

Added
Withdrawn
Approx Seats (Year)

Added
Withdrawn
Approx
Date
Airline
4
1
5
41,700
10,400
52,100
Feb-02
After April 02
Ariana Afghan
Ariana Afghan
1
1
5,800
5,800
Nov-01
Air Seychelles
1
3
n.a
3
2
1
1
11
7,300
21,800
n.a
21,800
15,000
7,800
7,300
81,000
May-03
Jul-02
2003 / 04
May-03
Apr-02
Jun-02
Nov-02
17
138,900
MIDDLE EAST
Iran
SubTotal
Jordan
Amman - Kolkata
SubTotal
Qatar
Doha - Mumbai
Doha - Kochi
Doha - Hyderabad
20,800
20,800
1
1
10,700
10,700
After June 02
2
3
3
15,000
22,500
26,000
Nov-02
Mar-03
Dec-02
Qatar Airways
Qatar Airways
Qatar Airways
63,500
5
3
2
10
157,500
37,900
25,300
220,700
Jul-03
Dec-02
Apr-03
Gulf Air
Emirates
Emirates
2
1
3
31,200
15,600
46,800
Apr-03
Nov-03
Saudi Arabian
Saudi Arabian
24
362,500
CIS COUNTRIES
Bishkek - Delhi
20,800
Jul-03
Kyrgyzstan Airlines
CIS COUNTRIES
20,800
SubTotal
UAE
Bahrain - Kochi (via Abu Dhabi)
Dubai - Kochi
Dubai - Kochi
SubTotal
Saudi Arabia
Riyadh - Kochi
Riyadh - Kochi
SubTotal
MIDDLE EAST TOTAL
GRAND TOTAL
100
58
1,472,956
( 107 )
Sep-02
Sri Lankan Airlines

Sri Lankan Airlines
Sri Lankan Airlines
Sri Lankan Airlines
Sri Lankan Airlines
Sri Lankan Airlines
Sri Lankan Airlines
Mahan Air
Royal Jordanian
824,600
Appendices
M& A
APPENDIX VII
FLIGHTS ADDED / DISCONTINUED BY INDIAN AIRPORT
POST 9 /11 TO DATE
Sector
Flights (per week)

Added
Discontinued
Approx Seats (Year)

Added
Discontinued
Amristar
Kabul
10,400
Total
10,400
Bangalore
Bangkok
Bangkok
Singapore
Colombo
Colombo
Frankfurt
Kuala Lumpur
1
4
3
1
3
3
1
15,236
60,944
44,900
7,300
21,800
38,500
15,300
Total
Chennai
Bangkok
Bangkok
Frankfurt
Brussels
Kuala Lumpur
16
15,236
60,944
60,800
3
100 seats
8
37,600
36,400
7
7
173,380
Ariana Afghan
Nov-04
Apr-04
Sep-03
May-03
Jul-02
Sep-01
2003 / 04
Thai Airways
Thai Airways
Singapore Airlines
Sri Lankan Airlines
Sri Lankan Airlines
Lufthansa
Malaysia Airlines
Nov-04
Oct-03
Apr-03
Nov-01
2003 / 04
Thai Airways
Thai Airways
Lufthansa
Sabena
Malaysia Airlines
2003 / 04
Nov-03
Nov-03
Nov-03
Aug-03
Jul-03
Apr-03
Nov-02
Nov-02
Winter 02
Sep-02
Jun-02
Apr-02
Apr-02
Feb-02
Nov-01
Nov-01
Nov-01
Oct-01
Oct-01
Feb-02
Alitalia
Air Canada
Swiss International
Air France
China Eastern
Kyrgyzstan Airlines
Asiana Airlines
Austrian Airlines
Sri Lankan Airlines
Swiss International
Mahan Air
Austrian Airlines
China Eastern
China Air
SAS
Canada 3000
Canada 3000
Austrian Airlines
Northwest
United Airlines
Ariana Afghan
37,600
72,800
102,700
6
138 seats
1
2
1
1
1
77,000
50,232
10,400
20,800
14,000
5,100
7,300
1
2
1
1
3
10,400
20,800
5,100
10,400
41,300
5
2
1
3
7
7
4
67,900
30,300
15,100
15,300
102,300
126,300
41,700
Total
31
Gaya
Bangkok
n.a
30,700
Total
30,700
Guwahati
Bangkok
n.a
30,700
Total
30,700
After April 02
Airline
203,980
1
4
3
Total
Delhi
Rome
Toronto
Zurich
Paris
Beijing
Bishkek
Seoul
Vienna
Colombo (via Bodhgaya)
Zurich
Tehran
Vienna
Beijing
Taipei
Copenhagen
Toronto
Vancouver
Vienna
Amsterdam
Chicago
Kabul
Approx
Date
32
402,632
( 108 )
444,600
Nov-04
Thai Airways
Nov-04
Thai Airways
Appendices
M& A
FLIGHTS ADDED / DISCONTINUED BY INDIAN AIRPORT
Sector
Hyderabad
Colombo
Singapore
Doha
Kuala Lumpur
Flights (per week)

Added
Discontinued
Approx Seats (Year)

Added
Discontinued
n.a
4
3
2
n.a
24,500
26,000
30,600
Total
81,100
Kochi
Bahrain (via Abu Dhabi)
Doha
Riyadh
Riyadh
Colombo
Dubai
Dubai
5
3
2
1
3
3
2
157,500
22,500
31,200
15,600
21,800
37,900
25,300
Total
19
311,800
Kolkata
Amman
Kuala Lumpur
1
3
10,700
45,864
Total
56,564
Mumbai
Sydney (via Singapore)
Bangkok
Beijing
Manchester
Milan
Seoul
Zurich
Seychelles
Frankfurt
Paris
Toronto
Doha
Kuala Lumpur
5
2
1
12,700
39,000
13,000
15,300
1
1
2
10,400
5,800
40,500
3
2
2
2
39,300
34,000
15,000
28,900
Total
Thiruvanthampurum
Colombo
15,000
Total
15,000
Trichy
Colombo
7,800
Total
7,800
n.a
30,700
Varanasi
Bangkok
16
Total
Grand Total
118,200
Airline
2003 / 04
Nov-02
Dec-02
2003 / 04
Sri Lankan Airlines

Silk Air
Qatar Airways
Malaysia Airlines
Jul-03
Mar-03
Apr-03
Nov-03
May-03
Dec-02
Apr-03
Gulf Air
Qatar Airways
Saudi Arabian
Saudi Arabian
Sri Lankan Airlines
Emirates
Emirates
After June 200 Royal Jordanian

2003 / 04
Malaysia Airlines
59,200
21,200
2
1
Approx
Date
Apr-02
Apr-03
Apr-03
Apr-03
Apr-03
Winter 02
Nov-01
May-02
Apr-02
Nov-01
Nov-02
Oct-03
Qantas Airways
All Nippon
Ethiopian Airlines
Singapore Airlines
Alitalia
Korean Air
Swiss International
Air Seychelles
Lufthansa
Air France
Canada 3000
Qatar Airways
Malaysia Airlines
Apr-02
Sri Lankan Airlines
Jun-02
Sri Lankan Airlines
Nov-04
Thai Airways
216,100
30,700
100
51
1,472,956
( 109 )
698,300
Appendices
M& A
APPENDIX VIII
TOURIST ARRIVALS TO INDIA FROM TOP 15 SOURCE MARKETS BY QUARTER
FY 2001
180,000
160,000
Tourist Arrivals
140,000
120,000
100,000
80,000
60,000
40,000
20,000
USA
UK
Jan-Mar
Sri Lanka
Apr-Jun
Canada
France
Jul-Sep
Oct-Dec
35,000
Tourist Arrivals
30,000
25,000
20,000
15,000
10,000
5,000
Australia
Germany
Jan-Mar
Japan
Apr-Jun
Malaysia
Nepal
Jul-Sep
Oct-Dec
18,000
16,000
Tourist Arrivals
14,000
12,000
10,000
8,000
6,000
4,000
2,000
Singapore
Netherlands
Jan-Mar
Italy
Apr-Jun
Korea (S)
Jul-Sep
( 110 )
U.A.E
Oct-Dec
Appendices
M& A
APPENDIX IX
DETAILS ON INDIAS AIR SERVICE AGREEMENTS (2001)
S. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
Country
Afghanistan
Algeria
Armenia
Australia
Austria
Azerbaijan
Bangladesh
Belarus
Belgium
Bhutan
Brunei
Bulgaria
Canada
China
Croatia
Cyprus
Czech Republic
Denmark
Egypt
Ethiopia
Fiji
Finland
France
Georgia
Germany
Ghana
Greece
Gulf (Oman)
Gulf (Qatar)
Gulf (Bahrain)
Gulf (UAE)
Hong Kong
Hungary
Indonesia
Iran
Iraq
Ireland
Israel
Italy
Japan
Jordan
Kazakhstan
Kenya
Republic of Korea
Kuwait
Kyrghystan
Latvia
Lebanon
Lesotho
Lithuania
Luxembourg
Macau
Madagascar
Malaysia
Maldives
Utilization
of ASA
Y
N
N
N
Y
N
Y
N
N
Y
Y
N
N
Y
N
N
N
N
Y
Y
N
N
Y
N
Y
N
N
Y
Y
Y
Y
Y
N
N
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
N
N
N
N
N
Y
Y
( 111 )
Air India/
Indian Airlines
Foreign
Carriers
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Appendices
M& A
S. No.
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
Country
Utilization
of ASA
Malta
Mauritius
Mongolia
Morocco
Myanmar
Nepal
Netherlands
New Zealand
Nigeria
Norway
Pakistan
Philippines
Poland
Portugal
Russian Federation
Romania
Saudi Arabia
Seychelles
Singapore
Slovakia
Slovenia
South Africa
Spain
Sri Lanka
Sweden
Switzerland
Syria
Taiwan
Tajikstan
Tanzania
Thailand
Turkey
Turkmenistan
United Kingdom
U.S.A.
Uganda
Ukraine
Uzbekistan
Vietnam
Yemen Arab Republic
Yugoslavia
Zambia
N
Y
N
N
Y
Y
Y
N
N
N
N
N
N
N
Y
N
Y
Y
Y
N
N
Y
N
Y
N
Y
Y
Y
N
N
Y
N
Y
Y
Y
N
Y
Y
N
N
N
N
Total
46
Air India/
Indian Airlines
Foreign
Carriers
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
20
44
Source : Lok Sabha, Unstarred Question No. 4976, dated on 27.08.2001.
( 112 )
Appendices
M& A
APPENDIX X
AIR INDIAS BLOCK SPACE ARRANGEMENTS
Airline
Crossair
Austrian Airlines
Asiana Airlines
Singapore Airlines
Air France
Air France
Air France
Air France
Air France
Air France
Virgin Atlantic
Aeroflot
Emirates
Kuwait Airways
Kuwait Airways
Kuwait Airways
Air Mauritius
Air Mauritius
Air Mauritius
Malaysia Airlines
Malaysia Airlines
Malaysia Airlines
Malaysia Airlines
Lufthansa
Lufthansa
Thai Airways
Silk Air
Silk Air
Flights
/Week
10
3
3
7
2
3
3
3
3
3
2
3
7
4
4
3
3
2
1
4
2
1
7
3
4
3
4
3
Aircraft
A332L3
A340
767
747
B744
343
A320
A320/319
A320/B737/A319
A320/A319
747
B-777
A330
A310-300
A310-300
A300/605R
B767/A340
B767/A340
B767
B777
A330
A330
A744
B747
747
A330
A320
A319/A320
Sector
Mumbai-Zurich / Delhi Zurich
Delhi-Vienna-Delhi
Delhi-Seoul / Seoul - San Fransisco
Singapore-Los Angeles-Singapore
Mumbai-Paris-Mumbai
Delhi-Paris-Delhi
Paris-Amsterdam-Paris
Paris-Berlin-Paris
Paris-Frankfurt-Paris
Paris-Geneva-Paris
Delhi - London -Delhi
Delhi - Moscow - Delhi
Dubai - Chennai / Dubai - Kochi
Trivandrum-Kuwait-Trivandrum
Chennai-Kuwait-Chennai
Kochi-Kuwait-Kochi
Mumbai-Mauritius-Mumbai
Delhi-Mauritius-Delhi
Chennai-Mauritius-Chennai
Mumbai-Kuala Lumpur-Mumbai
Bangalore-Kuala Lumpur-Bangalore
Hyderabad-Kuala Lumpur-Hyderabad
Kuala Lumpur-Los Angeles-Kuala Lumpur
Mumbai-Frankfurt-Mumbai
Delhi-Frankfurt-Delhi
Mumbai-Bangkok-Mumbai
Kochi-Singapore-Kochi
Hyderabad-Singapore-Hyderabad
100
Source: Air India website
Note: In all the above arrangements, the foreign carrier is the Operating Carrier and Air-India is
the Participating Carrier
( 113 )
Appendices
M& A
APPENDIX XI
RECENT MAJOR AIRPORT PRIVATISATIONS
Airport / Airport
Operator
Location
Jul 00
Jul 00
Sep 00
Nov 00
Nov 00
Dec 00
Hamburg
Aeroporto di Firenze
ASUR
Unique Zurich Kloten
Copenhagen Airports
Bristol Airport
Germany
Italy
Mexico
Switzerland
Peru
UK
Jan 01
Prestwick Airport
UK
Feb 01
Mar 01
May 01
June 01
Sep 01
Dec 01
East Midlands Airport

London Luton
Newcastle Airport
Bangalore Airport
Oman
Birmingham
UK
UK
UK
UK
Oman
UK
Date
Acquirer
Ochtief, Aer Rianta
IPO
IPO
Secondary Placement
Flughafen Frankfurt, Bechtel Enterprises, Cosapi
Macquarie Bank & Cintra Concesiones de Infrastructure
de Transporte
Infratil NZ, The Special Utilities Investment Trust &
Omniport
Manchester Airport
TBI, Bechtel
Copenhagen Airports
Unique Zurich Airport
BAA, Suhail Bahwan Group, ABB Equity Venture
Macquarie Airports Group
POTENTIAL MAJOR PRIVATISATIONS IN 2002 / 03
Airport / Airport Operator

Berlin Brandenburg Flughafen
Aeroporto di Firenze
Sydney Airports Corporation
Malta
Schiphol Group
Auckland International Airport
Malaysia Airports
Cyprus
Czech Airports Authority
Societa Esercizi Aeroportuali
Mexico Pacific Group
Thailand
Turin Airport
Munich Airport
Location
Method of Sale
Germany
Italy
Australia
Malta
Netherlands
New Zealand
Malaysia
Cyprus
Czech
Italy
Mexico
Thailand
Italy
Germany
Majority Trade Sale

Minority Trade Sale
Majority Trade Sale
BOT
IPO
Secondary Placement
Minority Trade Sale
BOT
Minority Trade Sale
IPO
IPO
IPO
Minority Trade Sale
Minority Trade Sale
( 114 )
Status
Current
Current
Current
Current
Expected
Expected
Possible
Current
Current
Current
Current
Expected
Possible
Possible
Appendices
M& A
APPENDIX XII
DISPARITY IN ATF PRICING FOR AIR INDIA / IAC
ON INTERNATIONAL ROUTES
Station
Ahmedabad
Mumbai
Bangalore
Kolkata
Delhi
Goa
Guwahati
Hyderabad
Chennai
Trivandrum
Cochin
Calicut
Supplier
IOC
IOC
IOC
IOC
IOC
IOC
IOC
IOC
IOC
IOC
IOC
IOC
/
/
/
/
/
/
BP
HP / BP
BP
HP / BP
HP / BP
BP
/
/
/
/
/
BP
HP / BP
BP
HP / BP
HP
U.S. Cents / Gallon (USC / USG)

Price
APT Fee
Total
(Sales Tax)
Rs / Gallon
116.1
115.6
115.6
125.7
118.7
119.7
109.2
121.9
112.0
118.9
119.0
114.0
41.8
23.1
32.4
31.4
23.7
23.9
24.0
4.9
28.2
46.5
46.5
44.6
157.9
138.7
147.9
157.1
142.4
143.7
133.2
126.8
140.3
165.4
165.6
158.6
75.8
66.6
71.0
75.4
68.4
69.0
63.9
60.9
67.3
79.4
79.5
76.1
116.8
26.0
142.8
68.5
96.00
94.00
102.75
104.00
88.78
89.40
94.39
99.43
111.80
104.00
106.44
91.71
86.02
98.04
110.04
107.93
87.32
96.94
90.95
90.55
95.01
96.28
97.13
88.53
95.90
99.43
89.78
87.63
2.75
2.75
4.70
1.06
3.30
4.70
0.61
0.61
2.00
2.00
1.25
9.72
5.28
11.65
15.60
3.50
1.06
0.70
10.50
96.00
94.00
102.75
104.00
91.53
92.15
99.09
100.49
111.80
104.00
106.44
95.01
90.72
98.04
110.65
108.54
89.32
96.94
92.95
91.80
104.73
101.56
108.78
104.13
99.40
100.49
90.48
98.13
46.21
45.25
49.46
50.06
44.06
44.36
47.70
48.37
53.82
50.06
51.24
45.73
43.67
47.19
53.26
52.25
43.00
46.66
44.74
44.19
50.41
48.89
52.36
50.12
47.85
48.37
43.55
47.24
Sub Total
97.60
46.98
Grand Total
116.97
56.22
Sub Total
Abu Dhabi
Al Ain
Bahrain
Bahrain
Bangkok
Bangkok
Chicago
Damman
Dar-E-Salaam
Doha
Dubai
Frankfurt
Hongkong
Jakarta
Jeddah
Jeddah
Kuala Lumpur
Kuwait
London
Muscat
Nairobi
New York
New Ark
Osaka
Paris
Riyadh
Singapore
Tokyo
ADNOCFOD
ADNOCFOD
AIR - BP
BANACO
Exxon - Mobil
Air Total
Texaco
Saudi Aramco
AIR - BP
Qatar Jet
ENOC
AIR - BP
Shell
Perta Mina
Shell
AGIP
Shell
KAFCO
Shell
AIR - BP
Chevron
Texaco
Texaco
Exxon - Mobil
Exxon - Mobil
Saudi Aramco
Exxon - Mobil
Exxon - Mobil
Source: Air India
( 115 )
Appendices
M& A
APPENDIX XII (contd.)
DISPARITY IN ATF PRICING FOR AIR INDIA / IAC
ON INTERNATIONAL ROUTES
(Rs. / KL)
Particulars
Basic Price
Excise Duty
Sales Tax*
Total
International Flights
Other
Air India /
Carriers
Indian Airlines
Domestic
Flights
15,240
15,240
15,435
nil
nil
2,470
nil
3,810
4,475
15,240
19,050
22,380
Source: Indian Airlines

Note:* Sales Tax on ATF is applicable for international flights operated by Air India and
Indian Airlines only as International carriers are exempt from payment of sales tax on ATF as
per the ICAO convention 1944
( 116 )
Appendices
M& A
BIBLIOGRAPHY
1)
Trade in Air Transport Services Opportunities & Constraints.

India Draft for WTO Negotiations 1999.
2)
Tourism Growth and the Importance of Airline Capacity

South African Tourism January 2002.
3)
The Aviation System Analysis Capability Airport Capacity and Delay Models April 1998.
(David A. Lee, Caroline Nelson and Gerald Shapiro Logistics Management Institute, McLean,
Virginia).
4)
Tax Policy Options For Tourism Related Industries.

Bombay Chamber of Commerce & Industry.
5)
The Civil Aviation Act, 2000 (Draft).

Ministry of Civil Aviation, Government of India February 2000.
6)
Trade In Tourism Services Opportunities & Constraints.

(Discussion Paper For WTO / GATS) ICRIER December 1999.
7)
Report of The Task Force on Infrastructure For Tourism February 1999.
8)
A White Paper on An Airline Industry For 21st Century India

Bombay Chamber of Commerce & Industry.
9)
The Contribution Of The Aviation Industry To The U.K. Economy.

Final Report. Oxford Economic Forecasting November 1999.
10)
Challenges To Indian Civil Aviation Sector.

Presentation by Mr. Sanat Kaul, Jt. Secretary, Ministry of Civil Aviation, Government of India.
11)
The Future Of Civil Aviation In India. Structure, Policy, Regulation & Infrastructure.
(CII and NCAER). September 2000.
12)
Formulation Of Draft Civil Aviation Policy.

Ministry of Civil Aviation, Government of India. February 2000.
13)
The India Infrastructure Show.

Presentation by Mr. Sunil Arora, Chairman & Managing Director, Indian Airlines
At the CII Conference 2003.
14)
Measuring the Economic Impact of Liberalisation of International Aviation on Hamburg Airport.

(David Gillen, School of Business & Economics, Wilfrid Laurier University, Waterloo, Canada
and Holger Hinsch, Science Application International Corporation, Center for Economic &
Financial Analyis, McLean, VA 22102).
15)
Unshackling Indian Air Transport. Policy Paper.

Dr. Laveesh Bhandari. October 2002.
16)
Current Market Outlook 2002.

Boeing Commercial Airplanes.
( 117 )
Bibliography
M& A
17)
World Travel & Tourism Council Year 2001.

TSA Research. Overview and Definitions.
18)
Trade in Air Transport Services.

Paper presented for WTO / GATS.
19)
Fifth Annual Report 1999 2000. Airports Authority of India.
20)
Seventh Annual Report 2001 2002. Airports Authority of India.
21)
Statistics on Capacities of Various Foreign Airlines & City-Pair International Traffic 2001 & 2002.
Ministry of Civil Aviation, Government of India - July 2003.
22)
The Economic Benefits of Air Transport - 2000

Study undertaken by IATA for the Air Transport Action Group.
23)
PATA India Outbound Report 2001

Study undertaken by Travel Research International Limited for PATA
24)
World Economic Outlook - 2001;

International Monetary Fund
25)
Flying Off Course: The Economics of International Airlines, Third Edition, Routledge. 2002
Rigas Doganis,
26)
Review of Transport in the ESCAP Region 1996-2001

United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)
27)
Paper on Commercialization and Liberalization

Presented by the Secretariat, ICAO at the Worldwide Air Transport Conference: Challenges And
Opportunities Of Liberalization, Montreal, 24 to 29 March 2003
28)
Proposal for a European parliament and council regulation on the negotiation and
implementation of air service agreements between Member States and third countries
Presented by the Commission, Commission of The European Communities, 2003
29)
The Liberalization Experience, The Case of Ghana

Presentation by Joe Boachie, Acting Director Genera, Ghana Civil Aviation Authority at the
Seminar prior to the ICAO Worldwide Air Transport Conference 22 / 23 March 2003
30)
Preliminary aircraft movement forecasts for the Middle East region (2000 - 2015)
Prepared By the Forecasting and Economic Planning Section, ICAO
( 118 )
Bibliography

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M& A

Impact of Civil Aviation Policies on Tourism In India

Background to the Study

Layout Of The Report

IMPACT OF CIVIL AVIATION ON THE ECONOMY

Economic Growth & GDP Growth - World

The Price Effect on Demand For Air Services

Indias GDP Vs Tourist Arrivals

Indian Air Transport Activity - Comparisons

Air Transport Driver of Economic Growth (World)

The Impact of Civil Aviation on Tourism

Aviation Industry Contribution to FDI

CAPACITY & LOAD FACTORS

Indias Air Connectivity Flag Carrier & Other Airlines

Seat Capacity & Load Factors

Load Factors on Key Source & Destination Markets

Increases & Decreases in Seat Capacity

Ticket Prices to India A Comparison

What the Airlines & the Trade Say / Want

DEMAND FOR AIR TRAVEL

Characteristics of Business / Leisure Travellers

India A Long Haul Destination

India Air Traffic Growth

Major Source Markets

NRI Source Markets

Major Outbound Source Markets

Overseas Foreign Workers

Outbound Traffic by Airport

Air Service Agreements & Bilaterals

Indias International Air Services Policy

Indias Need For A Clear Policy

Utilisation of Capacity Entitlements by Foreign Carriers

Inbound Charter Services

Outbound Charter Services

Impact of Civil Aviation Policies on Tourism In India

ECONOMICS OF AIRLINES & THE CASE FOR AIR INDIA

The Airline Industry

The Case for Air India

Airports A Case for Privatisation

Model On Relaxation of Blockshare / Royalty Arrangements

Civil Aviation Vs Tourism Effect on the Indian Economy

THE CASE FOR LIBERALISATION & RECOMMENDATIONS

Bilaterals & Seat Capacity

Airports / Ground Handling

Privatisation / Air India

Correlation Between World GDP / RPKs & ASKs

Passengers Carried by City Pair in FY 2002 (as reported by DGCA)

Flights Added / Discontinued by Key Markets Post 9/11 To Date.

Flights Added / Discontinued by Indian Airport Post 9/11 To Date

Tourist Arrivals to India From Top 15 Source Markets By Quarter FY 2001

Details On Indias Air Services Agreements (2001)

Air Indias Block Space Arrangements.

Recent Major Airport Privatisation / Potential Major Privatisations in 2002 / 2003.

Disparity In ATF Pricing For Air India / IAC On International Routes

Impact of Civil Aviation Policies on Tourism In India

AAI ACI AEA AI APEC ASA ASEAN ASK ATAG

Airport Authorities of India

Impact of Civil Aviation Policies on Tourism In India

Air Services Agreement -

An agreement with formal treaty status between

An agreement between airlines to cooperate in the

Available seat kilometers -

The total number of seats offered multiplied by the