Summer Internship Project Report on

A Systematic Blueprinting of India Entry Strategy onto Aviation, Hospitality and Tourism Domains and Mapping of Foreign Direct Investment Prospects
By Deepika Sharma ( Enrollment Number 1001100008 - MBA 2010-12 Batch, ICFAI Business School [IBS}, Dehradun) At Organization: Remorphing, India
[Remorphing is premia knowledge-focused syndication of the 200+ of the best of global industry practitioners and Ivy-league academia - management thinkers, trainers, speakers, technologists, even physicists and social scientists. This syndication drives feed to progressive corporate and societal firms, bodies and national/state governments, across a multitude of services.]

Executive Summary Overall

Acknowledgment

Table of Contents

Part I. Background Research. Executive Summary Overall Acknowledgment Study Plan Understanding India & Its Industries FDI Flows & Trends Globally FDI Flows & Trends Indian Perspective Bibliography Part II. Delving into Aviation Sector Executive Summary Aviation Sector A Five Forces Industry Mapping Aviation FDI Opportunities in Aviation Practitioner s Perspectives on India Entry in Aviation Blueprint for India Entry Strategy in Aviation Appendices for Reference Aviation Sector Bibliography xx xx xx xx xx xx xx xx xx xx xx xx xx xx

Part I. Background Research.

Executive Summary Overall

xx

Acknowledgment

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Study Plan

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Understanding India & Its Industries

xx

FDI Flows & Trends Globally Foreign direct investment (FDI) or foreign investment refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares. Types A foreign direct investor may be classified in any sector of the economy and could be any one of the following:
       

an individual; a group of related individuals; an incorporated or unincorporated entity; a public company or private company; a group of related enterprises; a government body an estate (law), trust or other social institution; or any combination of the above.

Methods The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods:
   

by incorporating a wholly owned subsidiary or company by acquiring shares in an associated enterprise through a merger or an acquisition of an unrelated enterprise participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:

   

low corporate tax and income tax rates tax holidays other types of tax concessions preferential tariffs

           

special economic zones EPZ - Export Processing Zones Bonded Warehouses Maquiladoras investment financial subsidies soft loan or loan guarantees free land or land subsidies relocation & expatriation subsidies job training & employment subsidies infrastructure subsidies R&D support derogation from regulations (usually for very large projects)

Foreign Direct Investment is any form of investment that earns interest in enterprises which function outside of the Domestic Territory of the investor. FDI requires a Business relationship between the parent company and its foreign subsidiary. FDI constitutes of about 28% of the Global GDP. It usually involves participation in management, joint venture, transfer of technology and expertise. There are two types of FDI:- Inward Foreign Direct Investment and Outward Foreign Direct Investment. Resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares. Foreign Direct Investment in India The Indian government has recognized the importance of foreign direct investment as an important factor in the economic growth of the nation. This is the reason that the government of India has been making several efforts in order to increase the flow of foreign direct investment in the country from Overseas Corporate Bodies (OCBs) and also Non Resident Indians. This will help to supplement as well as complement the domestic investment in India. Foreign direct investment in India is allowed freely in all sectors, except a small number of sectors, where specific guidelines do not allow foreign direct investment beyond a limit. Various Sector Specific Guidelines for FDI Various Sector Specific Guidelines for FDI have been issued by the government of India. Specific guidelines pertaining to limits on FDI and other financial clauses are laid down by the Reserve Bank of India (RBI). The Indian government has issued Sector Specific Guidelines for FDI in order to encourage more and more FDI to come into the country. The various Sector Specific Guidelines for FDI in India for the banking sector are that foreign direct investment up to 20% is allowed in the sector and in the case of investment being made by Non Residential Indians (NRI) it is up to 40%. Further the Sector Specific

Guidelines for FDI in India for the sectors of townships, built- up infrastructure, housing, and construction development projects is that foreign direct investment up to 100% is allowed in all the sectors. Sector Specific Guidelines for FDI in India for the sector of hotels and tourism is that foreign direct investment up to 100% is allowed through the automatic route in the sector. Sector Specific Guidelines for FDI in India for the sector of trading is that foreign direct investment up to 100% is allowed in the sector.

Global Foreign Direct Investment UNCTAD said that there was no significant growth of Global FDI in 2010. In 2010 was $1,122 billion and in 2009 was $1.114 billion. The figure was 25 percent below the pre-crisis average between 2005 to 2007. Global Trends Globally, foreign direct investment (FDI) inflows continued to rise in 2007: at $1,833 billion, they reached a new record level, surpassing the previous peak of 2000. The financial and credit crisis, which began to affect several economies in late 2007, did not have a significant impact on the volume of FDI inflows that year, but it has added new uncertainties and risks to the world economy. This may have a dampening effect on global FDI in 2008-2009. At the same time, the global FDI market is in a state of flux, making it difficult to predict future flows with any precision. This chapter examines recent trends in global FDI, cross border mergers and acquisitions (M&As) and international production. Section A describes their changing geographical and industrial distribution, the relative positions of countries in terms of their transnationalization and inward FDI performance, and recent developments in FDI policies. Section B focuses on the impact of financial crisis that erupted in 2007 and on the depreciation of the dollar on FDI flows. Section C sheds new light on the rise of sovereign wealth funds as direct investors, and section D presents UNCTAD's latest ranking of the world's largest transnational corporations (TNCs). The final section discusses the prospects for FDI, drawing on an UNCTAD survey of 226 large TNCs.

A. FDI and international production. 1. Recent trends in FDI a. Overall trends Global FDI reached a new record high in 2007, reflecting the fourth consecutive year of growth. With inflows of $1,833 billion, the previous record set in 2000 was surpassed by some $400 billion (figure I.1). All the three major groups of economies - developed countries, developing countries and the transition economies of South-East Europe (SEE) and the Commonwealth of Independent States (CIS) - saw continued growth in FDI.

Since the WIR reports the value and growth of FDI flows in United States dollars, their numbers in 2007 could be considered inflated to some extent, due to the significant depreciation of the dollar against other major currencies.1 Growth rates of dollar nominated global FDI flows in 2007 diverge from those denominated in local currencies under the current exchange rate realignment: if denominated in countries own currencies, the average growth rate of global FDI flows would be 23% in 2006- 2007, which is 7% lower than when flows are denominated in United States dollars (table I.1). FDI in all regions and sub regions except Central America In all regions and sub regions except Central America, FDI inflows grew less in local currency terms than in dollar terms. The difference was particularly pronounced in the euro zone in 2006-2007, given that the dollar hit a record low against the euro. A similar situation prevailed with respect to flows to South-East Asia, where many Asian currencies (e.g. Malaysian ringgit, Thai baht) appreciated considerably with respect to the dollar. That being said, estimates of global FDI flows in national currencies still point to an increase.

Source: UNCTAD, FDI/TNC database (wwwunctadorg/fdistatistics) and own estimates. Growth rates for world/region are weighted averages of country growth rates. The weight for each country is its share in the starting year in total FDI flows to the world/region denominated in dollars. Weighted growth rate for world/region is calculated using the following formula:

where the growth rate is calculated on the basis of FDI inflows denominated in local currencies. The continued rise in FDI in 2007 largely reflected relatively high economic growth and strong economic performance in many parts of the world. Increased corporate profits of parent firms (figure I.2) provided funds to finance investment and reduced the impact of decreasing loans from the banks affected

by the sub prime credit crisis. In foreign affiliates, higher profits, amounting to over $1,100 billion in 2007 (figure I.3), contributed to higher reinvested earnings, which accounted for about 30% of total FDI flows in 2007 (figure I.4). These profits are increasingly generated in developing countries rather than in developed countries. Regional FDI Trends in 2009 Annual trends: there was a decrease of 39% in global FDI flows in 2009, which impacted on all countries and FDI components. UNITED NATIONS * This report can be freely cited provided appropriate acknowledgement is given to UNCTAD. Quarterly profile: FDI flows remained relatively stable during the third quarter of 2009, but at a low level. No pick up was detected in the fourth quarter. Global inflows of foreign direct investment (FDI) fell by 39% from US$1.7 trillion in 2008 to a little over US$1.0 trillion in 2009, based on UNCTAD estimates. The decline in FDI was widespread across all major groups of economies. After experiencing a severe fall in 2008, FDI flows to developed countries continued their dramatic decline in 2009 (by a further 41%). FDI flows to developing and transition economies, which had risen in 2008, declined in 2009 (by 35% and 39%, respectively), as the impact of the global financial and economic crisis continued to unfold. All components of FDI.[equity capital, reinvested earnings and other capital flows (mainly intracompany loans)] were affected by the downturn. However, the decrease was especially marked for equity capital flows, which are most directly related to transnational corporations (TNCs) longer term investments strategies.

Regarding the mode of entry, cross-border mergers and acquisitions (M&As) were the most affected, with a 66% decrease in 2009 as compared to 2008. The number of international Greenfield projects also declined markedly, though to a much lesser degree (-23%). Quarterly profile: FDI flows remained relatively stable during the third quarter of 2009, but at a low level. No pick up was detected in the fourth quarter. After a sharp fall in the first quarter of the 2009, followed by a slight rebound in the second quarter, FDI flows in the third quarter remained relatively stable. UNCTAD s Global FDI Quarterly Index declined only slightly, from 113 to 111 (see table below). However, when compared to the corresponding quarter of 2008, global FDI flows in 2009 remained much lower. The Global FDI Quarterly Index in the third quarter in 2009 was 36 points lower than the level in the previous year. Initial indicators for the fourth quarter of 2009 show no signs of a pick up in FDI flows. Global cross-border M&As, which are highly correlated with FDI equity capital flows, plunged in the fourth quarter of 2009 after several quarters of marginal improvement. Nevertheless, it is still likely that a modest rebound in flows will take place in 2010,as investment conditions are improving in many countries. Global FDI flows in 2009 down by 39%, to about US$1.0 trillion The decline of FDI was widespread, affecting all three major groups of economies: developed, developing and transition. Of the major host economies there were only a few exceptions to this general decline (table 2). Sharp declines were recorded in all constituent components of FDI during the year.

FDI Flows & Trends Indian Perspective

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Bibliography

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Part II. Delving into Aviation Sector

AVIATION
A SUNRISE OPPORTUNITY FOR THE INDIAN ECONOMY

Executive Summary Aviation Sector The Aviation industry in India encompasses a wide range of services related to air transport such as passenger and cargo airlines, unscheduled service operators --- private jets and helicopters, airport management, and support services like Maintenance, Repairs and Overhaul (MRO), ground handling, inflight catering, and training. The Aviation sector has reaped massive benefit from the entry of private carriers, especially from those of the low fare ones. The growth of the airlines sector has caused a sharp upturn in demand for allied services including MRO, ground handling, and catering services. The booming aviation industry, along with its tertiary services, has wreaked a major talent crunch, boosting opportunities for training service providers. The ever-expanding Indian economy and increased demand for trade has pushed the need for air cargo services to a new high. Increasing number of entrants in the sector has forced airports to expand their cargo handling capacities. The aviation sector is still a small part of the travel and transportation services sector in India. 2006-07 posted annual passenger traffic of about 96 million, as compared to nearly 6 billion passengers carried by the railways. The industry has already bumped into several challenges; inadequate infrastructure being the most crucial. The airlines suffered losses of around USD 500 million in 2006-07 and the situation is expected to deteriorate in 2007-08. The high cost of operations, intense competition, and unsustainably low fares have contributed to these losses. While initiatives have been taken to remove bottlenecks to growth, a need for further investments in capacity is felt more than ever. A recent spate of mergers, however, has come to some relief. The decelerating profit margin does not entail a slump in revenue generation. It is the increasing costs that have thrown the aviation industry into the present plight. India s aviation sector stands up to the crisis and races against its fastest growing global competitors. Improved affordability and connectivity add to the expected improvement in both passengers and cargo traffic. Large public and private investments in air travel infrastructure, supported by government initiatives, are expected to pour in.

INTRODUCTION: India is one of the fastest growing aviation markets in the world. The Airport Authority of India (AAI) manages a total of 127 airports in the country, which include 13 international airports, 7 custom airports, 80 domestic airports and 28 civil enclaves. There are over 450 airports and 1091 registered aircrafts in the country. The genesis of civil aviation in India goes back to December 1912 when the first domestic air route between Karachi and Delhi became operational. In the early fifties, all airlines operating in the country were merged into either Indian Airlines or Air India. and, by virtue of the Air Corporations Act 1953, this monopoly continued for the next forty years. The aviation industry is a major driver of global economic development, enabling trade, tourism and investment. Air transport carries over 2.4 billion passengers per annum, and 35% of international cargo by value. The sector is essential for tourism and provides connectivity to remote regions. In addition to facilitating economic activity, aviation is a significant employer in its own right, with the Air Transport Action Group (ATAG) estimating that 4.7 million people are employed directly by airlines and airports, but that the sector generates an addition 27 million indirect and induced jobs. Estimates of the contribution of aviation to GDP vary, with the FAA putting it at 5.6%, while ATAG indicates a figure of 7.5%. Difference arise from variations in assumptions about the economic multiplier effects, but clearly the contribution is significant even at lower end of the scale. This report outlines the massive potential of aviation in India, a sunrise industry that can play a key role in economic and social development across the country. AVIATION IN INDIA India has seen dramatic growth in the aviation sector since 2003/04. During these transformational years, domestic traffic and international traffic has doubled. Domestic traffic growth for the current fiscal is expected to be around 18%, with similar growth next year. India Domestic & International Passenger numbers 1997-2010

50 45 40 35 30 25 20 15 10 5 0 Domestic International

And yet, despite this unprecedented expansion, trips per capita in India still remain very low (0.04) even by the standards of other emerging markets e.g. China (0.15), Brazil (0.25), and Malaysia (0.54). China s domestic traffic is 5 times the size of India s despite having population just 15% larger. The upside potential therefore remains huge, driven by strong fundamentals. Comparison with Selected Markets Population Australia USA Malaysia Brazil China India 21 million 307 million 26 million 199 million 1,339 million 1,166 million Domestic Traffic 50 million 650 million 14 million 50 million 198 million 46 million Trips per Capita 2.38 2.12 0.54 0.25 0.15 0.04 GDP per capita $38,100 $46,900 $15,200 $10,200 $6,000 $2,900

Source: CIA World Fact Book; FAA, DGCA India, CAAC, Malaysia Ministry of Transport, BTRE Australia, ANAC Brazil, Traffic data 09/10 for India, 08/09 for other countries

Economic, demographic and social trends are expected to provide continued support to the aviation sector over the long term:

y y y y y

Strong GDP growth combined with rising per capita income, increasing urbanization and industrialization; Burgeoning middle class with higher disposable incomes and greater propensity to travel as a result of changing social attitudes towards consumption and influence of internet and media; Increased economic and trade activity driving the growth of business travel; Propensity will see the conversion of surface travel by road or rail(often slow and arduous) to air-there were 600 million domestic trips in 2008; A relatively young society that will result in a large cohort of economically active people over the next two decades.

Historically, GDP has been the strongest driver of air traffic and India is projected to achieve rapid and sustained economic expansion. In emerging markets, air traffic has grown at 1.5-2x GDP growth. The Government of India is targeting a sustained growth rate of 9% per annum over the next decade which could result in very strong traffic growth over this period. International organizations such as Airport Council International, Airbus and Boeing have all highlighted the Indian domestic market as likely to be the fastest growing market in the world over the next 10-20 years. CAPA has developed proprietary passenger and freight forecasts for the period through to 2020, based on combination of statistical modeling and regression analysis overlaid industry and continuous monitoring of key indicators across the value chain. Assessing the growth of Indian aviation may be stronger and more sustained than anticipated. CAPA India Air Traffic Forecasts for 2020/21 2009/10 Actual Traffic Domestic Passengers International Passengers 46 million 34 million 2020/21 CAPA Forecast 180 million 90 million
Source: CAPA Research

It should be noted that these forecasts are based on a GDP growth rate of 8% per annum over the next decade, whereas the Planning Commission is targeting a higher rate closer to 9% suggesting possible upside on these unconstrained forecasts. Converting these forecasts into passenger movements handled at Indian airports, where one domestic passenger is equivalent to two passenger movement(arrival and departure) in terms of activity, the total number of passengers handled will increase from 126 million last year to 450 million in ten years from now. To place this in context, it is almost twice the size of the UK market today in fact,n450 million passenger today would be the largest aviation market outside of the US. Taking into account the growth of other markets, CAPA expects that India will be the 3rd largest aviation market in the world shortly after 2020.

CONNECTIVITY Air services have the potential to support national integration, enabling the inclusion of remote and underdeveloped regions where surface connectivity may be poor. In areas that are distant from large population centers, or are separated by geographical features such as water or high terrain, it may be possible to establish air services much more quickly and more effectively than other modes of transport. Building roads or railways can be expensive, require significant land acquisition and take months or years. On the other hand, basic, functional airfields to support general aviation or low cost services can built relatively quickly. Low cost airports, for example, could be constructed for approximately US$15 million. It is important to note that aviation needs to be defined much more broadly than merely scheduled commercial services focusing on metro cities. General aviation, consisting of helicopter services, turboprops, very light and regular business jets, has potential to transform the aviation landscape, by providing an extensive network of operations. New charter and ownership models, air taxis and intra-state helicopter shuttles could have a hugh impact on investment and trade flows in the country. General aviation needs to expand beyond business jets for corporate CEO s to small, light aircraft or helicopters that allow traders in non-metro cities to extend their markets. Greater access to aviation will facilitate the development of industry in regions that may be considered inaccessible today. Tourism is considerably dependent upon air connectivity, especially inbound, as the largest markets are long haul and India s geography does not lend itself to significant land border traffic flows. Liberalization has resulted not only in greater access to India, but also in opening up og rights to non-metro cities to improve the tourism potential in smaller cities, which will in turn drive construction of hotels and supporting infrastructure. Low cost airlines in particular, from Southeast Asia, SAARC and the Gulf, will facilitate short break holidays to leisure and religious locations, both, from an affordability and convenience perspective. The ability for a Thai visitor to spend a weekend in Gaya, or a Singaporean in Goa, creates a phenomenon that did not exist earlier. Bilateral policy and market access becomes an important driver of investment flows as a result. At the same time, domestic tourism has huge potential, and again increased point to point connectivity. Most importantly, a competitive environment that allows traffic to be stimulated through low fares can open up travel destinations across the country. Granting of licenses to new airlines and policies to encourage regional and sub regional operations will be critical to support this effort. TRADE Air cargo is a vital element of trade and economic development of any economy. Improved access creates business opportunities by allowing producers to get their goods to market. Contemporary Indian airports have limited air cargo infrastructure, processing and customs is slow and there is high rate of spoilage of perishable and sensitive cargo. As a result air cargo volumes in India remain low for a market

of its size, less than 2 million tones handles each year, compared with 9 million tones at the five largest Chinese airports alone. This suggest that Indian manufacturers and consumers are not being adequately served, contributing to sub optimal economic activity. The World Bank estimates that poor logistics can reduce GDP growth by up to 1 percentage point. India ranks 47th out of 130 countries on Logistics Performance Index and ranks poorly compared with key competing investment destinations: y y y y y y UAE 23rd China 27th South Africa 28th Thailand 35th Brazil 41st India 47th

India s large domestic economy and land mass, growing manufacturing base and strategic geographic location give it the potential to develop as a global air cargo hub if investment is directed towards it. EMPLOYMENT Based on traffic forecasts, CAPA has developed projections for manpower requirements. The total number of pilots, engineers and cabin crew (operational staff) is projected to grow from 32000 last year to just over 90000 by 2020. Total employment within airlines is on average 2.0x the operational staff strength, which would see total airline employment increasing from 64000 to 180000. CAPA Research Projections for Pilots, Engineers, and cabin Crew in Indian Aviation
120000

100000

80000

60000

2008/09 2009/10

40000

20000

0 Pilots Engineers Cabin Crew Total

This does not even touch upon airports employees, air traffic controllers, ground handlers, catering companies, retailers, security personnel etc. It is estimated that as many as 100,000 people may be employed directly on-site at Indian airports. Even assuming that this includes double counting of some airline employees above, in terms of gauging the order of magnitude involved, the fact is that the workforce involved in Indian aviation could grow from approximately 150,000 today to 450,000 in ten years from now, with atleast an addition 20,000 in the General Aviation sector. Based on IATA/ICAO s multiplier of 5.8, the direct and indirect economic impact of the aviation sector in India could be employment for over 2.6 million people by 2020. In a market such as India where there is a greater deployment of labor (e.g. Higher staff/guest ratios in hotels), this figure may be even higher. However, whilst this represents a huge opportunity, it also poses a major challenge. The need to provide skills to the workforce to ensure efficiency and safety will strain India s aviation education and training capacity which is barely able to meet current requirements. And this is does not even consider movement of some Indian labor offshore for better opportunities. The availability of skills in an economy wide issue, with the Planning Commission indicating that India has the infrastructure to deliver education and training to support GDP growth of 6% per annum, but faster growth runs into manpower issues. Aviation will therefore also face competition for people from other industries, particularly in the service and hospitality sectors. AEROSPACE In addition to civil and general aviation, India has great potential as an aerospace hub. The country s large pool of science and engineering graduates, strong IT capabilities and relatively lower salary levels make it an attractive location for aerospace research and manufacturing. For example, India has made great strides in automotive components manufacturing and assembly. Amongst the BRIC nations, Brazil, Russia and China have developed regional and/or narrow-body aircraft manufacturing, and it is not inconceivable that India could be a part of this trend. Some initiatives are already underway in the light and trainer aircraft category, but there may be scope for an indigenous aircraft, or at least outsourced manufacturing of the same. A further key driver is the impact of offset spending from government civil and defence contracts, which require up to 30-50% of the contract value to be spent in-country. This can consist of JVs, direct licensed production and maintenance agreements; R&D and University Initiatives. Over the next 5 years, the offset obligations associated with both defence and civil contracts are expected to reach US$10-15 billion. CONSTRAINTS

While the underlying economic fundamentals point to the above listed opportunities and level of growth on an unconstrained growth, the sector faces a number of challenges on the supply side that may result in actual traffic flow, below current levels. Some of the focus areas include: y y y y Regulatory and policy framework that is conducive to an efficient and competitive sector and which encourages adequate private investment, including foreign; Safety culture that is industry driven, which targets a continual reduction in accident rates to ensure that aviation remains a preferred mode of transport; Fiscal environment which recognizes that airline viability is central to stability of the aviation system; Economic regulation that strikes a balance between the need to reward investors for the risk associated with deploying capital to the aviation sector on the one hand and safeguard consumer interests on the other; Airport development that delivers a safe and efficient environment for aviation operations, across the country, appropriate for the market and which supports competitive operations, which in many cases may mean basic, functional facilities; Continuous investment in upgrading airspace to support the projected growth in aircraft movements; Traffic distribution beyond the six metros by encouraging regional airline and general aviation operations to Tier 2, Tier 3 and ultimately to remote area; Establish world class cargo and logistics infrastructure to facilitate domestic and international shipments, thereby improving India s competitiveness; Investment in training to develop a skilled and competent workforce, which is essential for safe, professional and efficient operations; Environment related initiatives to make Indian Aviation Sector a role model for the world in curbing carbon emissins and noise pollution; Security needs to be enhanced beyond the key airports, particularly if we are successful in developing general aviation, however this requires investment in training and equipment.

y y y y y y

Some issues are beyond the control of the aviation industry and government, particularly in the short term, and relate to the broader domestic and international economy. Fuel prices, the largest cost input for airlines, have the potential to significantly destabilize aviation operations, as was seen in 2008. The recent direction of oil price is a concern. Rising inflation in India could see monetary policy restrictions that might impact economic growth. A failure for wages to keep pace might result in consumption move away from discretionary activity such as air travel. ECONOMIC IMPACT As noted in the introduction, aviation is estimated to contribute between 5.6% and 7.5% to GDP. Even accounting for the fact that 15% of this is accounted for by aerospace activities concentrated in the US and Europe, and that the multiplier effects may be less in India where the tourism sector is comparatively less sophisticated, a contribution of 3-5% is not unreasonable.

Based on Planning Commission projected GDP growth rates of 9% per annum, India will be a US$3.3 trillion economy by 2020 and US$7.8 trillion by 2030. On these benchmarks, the aviation industry would be directly and indirectly responsible for US$100-165 billion of economic activity by 2020 and US$235390 billion by 2030, possibly much higher if we are able to develop greater linkages-Backward and Forward. This is the potential scale of the industry that we need to plan for and herein lies the risk. Failure to address the constraints that have been identified will have a significant impact on our national competitiveness with deep implications on our standard of living, employment generation and trade. There will be a high price to pay which adds significant urgency to the need to find solutions. The ball is in our court to create the environment that will not only create a vibrant aviation sector, but one which will act as a vital component of the country s overall economic infrastructure. Indian Aviation Segment: Salient Features Aviation industry in India has transformed radically from a mainly government controlled sector with monopoly character to an open sky regime post repeal of the Air Corporation Act in 1994. Indian aviation is one of the fastest growing aviation industries worldwide, with a reported compound annual growth of 18%. The monopoly of national carriers Indian Airline and Air India now looks a distant past with private airlines commanding 75% of the market share. India has 454 airports and strips with 16 amongst them designated International Airports. The following features underscores features salient to Indian aviation industry: Phenomenal Growth As recent as November 2010, the following chart shows the growth of aviation industry in India on a year on year and month on month basis

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jan-Nov Nov-Nov 2009 2010

Growth: YOY: +18.9%; MOM: +25.1%, Source: Ministry of Civil Aviation, Gol

An analysis of the current state of the Aviation business in India, along with a critical analysis of Low Cost Carriers, their strategies and impact on the Industry. Projections for passenger growth included. CLASSIFICATION OF THE INDIAN AVIATION INDUSTRY The Indian aviation sector can be broadly divided into the following main categories: 1. Scheduled air transport service, which includes domestic and international airlines. 2. Non-scheduled air transport service, which includes charter operators and air taxi operators. 3. Air cargo service, which includes air transportation of cargo and mail. ` Scheduled air transport service: It is an air transport service undertaken between two or more places and operated according to a published timetable. It includes: 1. Domestic airlines, which provide scheduled flights within India and to select international destinations. Air Deccan, Spice Jet, Kingfisher Airline and IndiGo are some of the domestic players in the industry. 2. International airlines, which operate scheduled international air services to and from India. Non-scheduled air transport service: It is an air transport service other than the scheduled one and may be on charter basis and/or non-scheduled basis. The operator is not permitted to

publish time schedule and issue tickets to passengers. Air cargo services: It is an air transportation of cargo and mail. It may be on scheduled or nonscheduled basis. These operations are to destinations within India. For operation outside India, the operator has to take specific permission of Directorate General of Civil Aviation demonstrating his capacity for conducting such an operation. At present, there are 2 scheduled private airlines (Jet Airways and Air Sahara), which provide regular domestic air services along with Indian Airlines. In addition there are 47 non-scheduled operators providing air-taxi/non-scheduled air transport services. Apart from this, the players in aviation industry can be categorized in three groups: ` ` ` Public players Private players Start up players There are three public players: Air India, Indian Airlines and Alliance Air. The private players include Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan and many more. The start up players are those planning to enter the markets. Some of them are Omega Air, Magic Air, Premier Star Air and MDLR Airlines. CHALLENGES FOR THE INDIAN AVIATION INDUSTRY The growth in the aviation sector and capacity expansion by carriers have posed challenges to aviation industry on several fronts. These include shortage of workers and professionals, safety concerns, declining returns and the lack of accompanying capacity and infrastructure. Moreover, stiff competition and rising fuel costs are also negatively impacting the industry. 1. Employee shortage: There is clearly a shortage of trained and skilled manpower in the aviation sector as a consequence of which there is cut-throat competition for employees which, in turn, is driving wages to unsustainable levels. Moreover, the industry is unable to retain talented employees. 2. Regional connectivity: One of the biggest challenges facing the aviation sector in India is to be able to provide regional connectivity. What is hampering the growth of regional connectivity is the lack of airports. 3.Rising fuel prices: As fuel prices have climbed, the inverse relationship between fuel prices and airline stock prices has been demonstrated. Moreover, the rising fuel prices have led to increase in the air fares.

4.Declining yields: LCCs and other entrants together now command a market share of around 46%. Legacy carriers are being forced to match LCC fares, during a time of escalating costs. Increasing growth prospects have attracted & are likely to attract more players, which will lead to more competition. All this has resulted in lower returns for all operators. 5. Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to support growth. While a start has been made to upgrade the infrastructure, the results will be visible only after 2 - 3 years. 6. Trunk routes: It is also a matter of concern that the trunk routes, at present, are not fully exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of genuine competition. The entry of new players would ensure that air fares are brought to realistic levels, as it will lead to better cost and revenue management, increased productivity and better services. This in turn would stimulate demand and lead to growth. 7. High input costs: Apart from the above-mentioned factors, the input costs are also high. Some of the reasons for high input costs are:Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increasing manpower costs due to shortage of technical personnel. SWOT Analysis Strengths: 1. Growing tourism: Due to growth in tourism, there has been an increase in number of the international and domestic passengers. The estimated growth of domestic passenger segment is at 50% per annum and growth for international passenger segment is 25% 2. Rising income levels: Due to the rise in income levels, the disposable income is also higher which are expected to enhance the number of flyers.

Weaknesses: 1.Under penetrated Market : The total passenger traffic was only 50 million as on 31st Dec 2005 amounting to only 0.05 trips per annum as compared to developed nations like United States have 2.02 trips per annum. 2. Untapped Air Cargo Market: Air cargo market has not yet been fully taped in the Indian markets and is expected that in the coming years large number of players will have dedicated fleets.

3. Infrastructural constraints: The infrastructure development has not kept pace with the growth in aviation services sector leading to a bottleneck. Huge investment requirement for physical infrastructure for airports. Opportunities: 1. Expecting investments: investment of about US $30 billion will be made. 2. Expected Market Size: Average growth of aviation sector is about 25%-30% and the expected market size is projected to grow upto100 million by 2010. Threats Huge investments are expected to take place in aviation sector in near future. It is estimated that by 2012. 1. Shortage of trained Pilots: There is a shortage of trained pilots, co-pilots and ground staff which is severely limiting growth prospects. 2. Shortage of Airports: There is a shortage of airport facilities, parking bays, air traffic control facilities and takeoff and landing slots. 3. High prices: Though enough number of low cost carriers are already existing in the industry, majority of the population is still not able to fly to other destinations REASONS FOR BOOM IN THE INDUSTRY 1. Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident Indian) investment up to 100 per cent is permissible in domestic airlines without any government approval. However, the government policy bars foreign airlines from taking a stake in a domestic airline company. 2. Low entry barriers: Nowadays, venture capital of $10 million or less is enough to launch an airline. Private airlines are known to hire foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines in senior management positions. Further, they outsource such functions as ground handling, check-in, reservation, aircraft maintenance, catering, training, revenue accounting, IT infrastructure, loyalty and programme management. Airlines are known to take on contract employees such as cabin crew, ticketing and check-in agents. 3. Attraction of foreign shores: Jet and Sahara have gone international by starting operations, first to SAARC countries, and then to South-East Asia, the UK, and the US. After five years of domestic

operations, many domestic airlines too will be entitled to fly overseas by using unutilized bilateral entitlements to Indian carriers. 4. Rising income levels and demographic profile: Though India's GDP (per capita) at $3,100 is still very low as compared to the developed country standards, India is shining, at least in metro cities and urban centres, where IT and BPO industries have made the young generation prosperous. Demographically, India has the highest percentage of people in age group of 20-50 among its 50 million strong middle class, with high earning potential. All this contributes for the boost in domestic air travel, particularly from a low base of 18 million passengers. 5. Untapped potential of India's tourism: Currently India attracts 3.2 million tourists every year, while China gets 10 times the number. Tourist arrivals in India are expected to grow exponentially, especially due to the open sky policy between India and the SAARC countries and the increase in bilateral entitlements with European countries, and US. 6. Glamour of the airlines: No industry other than film-making industry is as glamorous as the airlines. Airline tycoons from the last century, like J. R. D. Tata and Howard Hughes, and Sir Richard Branson and Dr. Vijay Mallya today, have been idolized. Airlines have an aura of glamour around them, and high net worth individuals can always toy with the idea of owning an airline. All the above factors seem to have resulted in a "me too" rush to launch domestic airlines in India. TRENDS IN THE INDIAN AVIATION INDUSTRY 1. Consolidation in aviation sector: The rise in the number of alliances in aviation industry will help in further growth of aviation sector in India. The Jet-Sahara merger is probably just the beginning. The recent 26% stake acquisition by the Dr. Vijay Mallya (United Breweries group) in the low-cost carrier Deccan Aviation is further confirmation that the Indian aviation industry is looking forward to more consolidations. 2. The number of passengers traveling by air is on the rise: With passenger boarding expected to double by 2025, and aircraft operations expected to triple by the same time, the number of passengers traveling by air is on rise. 3. For the traveling public, price is paramount in choosing a carrier. Due to the Internet and round-the-clock search capability, airfares are fully transparent to the public and travelers are choosing the lowest price option. Air travel is now a commodity business, and legacy carriers will have to adapt further to a low-cost/low-fare environment in order to survive. Even business travelers, who have been less price-sensitive, are resisting fare increases. The only premiums that travelers are willing to pay for are time-of-day and direct flights, not the brand. 4. Capacity is growing without much constraint. Indian carriers are placing orders for new aircraft for delivery in the coming period, without clear plans to retire older planes. They are also adding significant numbers of regional jets. The air taxi

fleet is also expanding rapidly. Kingfisher Airlines has already ordered 5 Airbus A380 aircrafts that will operate on international routes. 5. Cost structures will continue to handicap legacy carriers as they compete with newer airlines, as well as with overseas carriers. Low cost carriers are posing great threats to legacy carriers, as a result of which they are restructuring their pricing policies. Apart from this, they are also facing competition from overseas players. 6. Oil prices are not expected to fall. The public sector oil marketing companies (OMCs) have raised the prices of Aviation Turbine Fuel (ATF) by 3.5 per cent, in line with the rise in international oil prices. This is likely to trigger a marginal increase in airfares. 7. Outsourcing: Private airlines are known to hire foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines, in senior management positions. Further, they outsource such functions as ground handling, check-in, reservation, aircraft maintenance, catering, training, revenue accounting, IT infrastructure, loyalty and programme management. Airlines are known to take on contract employees such as cabin crew, ticketing and check-in agents. SCOPE The Indian aviation industry has shown continued growth in recent years with key drivers being positive economic factors (including high GDP growth), industrial performance, corporate profitability/expansion, higher disposable incomes and growth in consumer spending as well as wider availability of low fares. Current scenario: The current growth rate in domestic and international travel exceeds 25%, the highest in the world. In the period April-September 2006, the total aircraft movements witnessed an increase of 29.6% year-on-year to 494.92 thousand aircraft movements, as compared to 318.89 thousand during AprilSeptember 2005.

FUTURE SCENARIO The aviation industry is expected to grow at a compounded annual growth rate of 25% till 2010. Also, by 2010 Indian airports will be handling between 90 and 100 million passengers per year, as against the current 34 million passengers. It is expected that nearly 80% of this growth will be driven by the low cost carrier segment (LCC). By 2008, the LCCs would capture 65% of the direct on-line air ticket market from 61% in 2005.

RECENT DEVELOPMENTS IN THE AVIATION SECTOR ` ` ` ` ` ` ` Modernization of airports Policy on merchant airports Growth in MRO segment: Airport security policy Augmentation of fleet by various airlines Foreign equity participation in air transport services Boom in Indian aviation sector is likely to generate more jobs

MODERNIZATION OF AIRPORTS ` The Airports Authority of India (AAI) is undertaking the development and modernization of all 35 non-metro airports in the country simultaneously and work is due to be completed by March 2010. Wholly owned subsidiaries of AAI are being created for the development and operation of these airports. According to the AAI, it has already awarded work orders for terminal buildings at 13 airports, and for airside development, including runway, taxiway, apron, fire station, control tower and isolation bay, at 19 airports. Two greenfield airports at Bangalore and Hyderabad are being developed under PPP format. The first phase is planned to be finished by end-2008. The other two metro airports - Chennai, Kolkata -- may soon be on the modernization path. At least 10 non-metro airports are being developed as strategic airports serving the region or respective states, and at least a few more non-metro airports are being positioned strategically as regional hub airports or nodes providing better connectivity to overall airport network and feeding international network through hub/metro airports. With these developments in aviation infrastructure, we may also see some airports making money not purely on passenger traffic, but also by means of cargo, logistics, SEZs and real estate projects being developed adjacent to airports. As per CAPA estimates, domestic passenger movement across airports is likely to grow at a CAGR of 20-25 per cent till 2010, and passenger traffic is expected to increase to around 120 million by 2010. Hence modernization, privatization and development of airports in the form of Greenfield and/or Brownfield airports is the need of the hour. POLICY ON MERCHANT AIRPORTS

In a step that could allow 100 per cent foreign direct investment (FDI) in the development of airport infrastructure, the Government is fast moving towards finalizing a policy on merchant airports. Under this new concept, merchant airports will be built entirely by private parties with their own resources, without any government funding. Under the proposed policy, the Government would allow entrepreneurs to set up and operate airports on the basis of commercial viability. However, these airports would function subject to safety and security oversight of the Government. As such a project would require huge investments, the Government might adopt a more liberal and licence-based approval procedure, besides allowing 100 per cent FDI in such airports. Merchant airports would also be beneficial in developing new cargo hubs, thereby providing a thrust to cargo and freight handling. GROWTH IN MRO SEGMENT The advent of low-cost airlines, ever-increasing passenger traffic and fleet expansion in the Indian aviation sector has opened up a whole new business avenue for global aircraft companies in maintenance, repair and overhaul (MRO). A typical MRO facility provides major and minor maintenance, modifications, refurbishment and repairs of aircraft. Boeing and Airbus have announced their plans for MRO facilities in India. Others include Timco Aviation Services, USA, Max Aerospace & Aviation, India, Singapore Airlines and Singapore Technologies Aerospace, Lufthansa Technik, Germany, and El Al, Israel. Even renowned engine manufacturers such as GE, Rolls Royce, Snecma, CFM International and Pratt & Whitney are planning to develop MRO facilities here. Airbus has predicted that India would need over 935 aircraft over the next 20 years. Such a large expansion also means growth in MRO activity. It is considered more prudent to have these facilities within the country rather than outside for cost saving. Growth in the MRO segment in India is estimated at 10.2 per cent, and is expected to outpace growth in Asian and global markets. The total MRO market in the country is around $405 million and is likely to touch $1.06 billion by 2014. By then, India's contribution to Asia's MRO market is expected to grow to seven per cent. The MRO facilities will foster creation of ancillary and associated industries and services like training institutes, component repair and testing of avionics equipment, electrical and electronic system components, hydro mechanical and pneumatic system components, repair of composite structures, passenger seat repair, cabin panel repair, etc.

AIRPORT SECURITY POLICY The main objective of civil aviation security continues to be safeguarding of civil aviation operations against unlawful interference and to avoid causing inconvenience to passengers. The Ministry has taken a number of steps to strengthen sense of security among the air-passengers making Indian aviation sector one of the safest in the world. More emphasis is given on passenger security.

Systems like integrated registered baggage screening system, which facilitates the process of registered baggage handling in a safe and secure way, intrusion detection alarm system, biometric based integrated passenger profiling system (BIPPS), which will ensure identity of the passengers, have been introduced. The Bureau of Civil Aviation security provides continuous training on aviation security for airports security staff, police officers of the rank of SIs and above, airlines staff, air taxi operators and airport management. AUGMENTATION OF FLEET BY VARIOUS AIRLINES With both full-service and low- cost airlines now pursuing fleet-expansion plans, the world's aircraft manufacturers are focusing on India as a lucrative market. Alongside Boeing and Airbus, regional jet makers Bombardier and Embraer, as well as European turboprop maker ATR, have all benefited from the boom in the country's civil aviation sector. Alliance Air, the fully-owned subsidiary of Indian, is expanding its fleet of regional aircraft in a bid to revamp its operations as a no-frills carrier. The ageing Boeing 737 fleet of the airline is being phased out and one aircraft has already been dropped from the fleet for conversion into a freighter. The revised business strategy is in line with Indian's plan to induct two wide-bodied Airbus A330 aircraft and the impending merger with Air India. Besides this, Kingfisher has also ordered five Airbus A380 aircraft. India is expecting to add aircraft worth about US$80 billion by 2020. FOREIGN EQUITY PARTICIPATION IN AIR TRANSPORT SERVICES The Domestic Air Transport Policy approved by the government provides for foreign equity participation up to 49% and investment by Non-Resident Indians (NRIs) up to 100% in the domestic air transport services. Foreign airlines are, however, not permitted to pick up equity directly or indirectly. Moreover, the flow of foreign investment into aviation is likely to get smoother as the government is planning to fix a higher foreign direct investment (FDI) ceiling for five sub-sectors of the industry. The FDI ceiling for the sectors would be higher than the 49% allowed in airlines now. The five categories proposed in the Cabinet note for FDI review include maintenance, training facilities, cargo handling, passenger handling and chartered services.

The Aviation industry in India began with the birth of Tata Airlines, through the business relationship between Mr. Nevill Vintcent, a Royal Air Force pilot and Mr. JRD Tata, the first Indian to get an A-license. Tata Airlines became Air India in August 1946. In 1953, the Air Corporation Act nationalized all existing airline assets and established the Indian Airline Corporation and Air India International for domestic and international air services respectively. These two companies enjoyed monopoly power in the industry until 1991, when private airlines were given permission to operate charter and non scheduled services under the Air Taxi scheme to boost tourism. These carriers were not allowed at the time, to fly scheduled flights or issue air tickets to passengers. As a result, a number of private players including Jet Airways, Air Sahara, Modiluft, Damania Airways, NEPC airlines and East West Airlines commenced domestic operations. In 1994, following the repeal of the Air Corporation Act, private players were permitted to operate scheduled services. Ultimately the carriers with more efficient operations and strategies survived and by 1997, only Jet Airways and Air Sahara made the cut from the original group. The next big change in the industry came in late 2003 with the emergence of India s first no-frill airlines, Air Deccan. It revolutionized the industry, offering fares as low as INR 500 (USD 10 roughly), compared with Full Service fares offered by the incumbents, averaging about INR 3000 or more. Since then, Spice Jet (restructured Royal Airways and Modiluft), Go Airways and Kingfisher Air have also entered the industry. Paramount Airways is another player, though it is positioned on the other end of the spectrum, as an all business class airline. With the further advent of online ticket sales through companies such as makemytrip.com, prices have crashed and tickets are available for as little as INR 0.99. In fact, now many airline tickets can be bought for a price comparable to an upper class railway ticket for the same route. In December 2004, Indian scheduled carriers with a minimum of 5 years of continuous operations and a minimum fleet size of 20 aircraft, were permitted to operate scheduled services to internationals destinations. On January 11, 2005 the government designated four scheduled Indian carriers (Air India, Indian Airlines, Jet Airways and Air Sahara) to operate international services to and form Singapore, Malaysia, Thailand, Hong Kong, the UK and the USA.

MACRO ENVIRONMENT ANALYSIS Macro environment analysis refers to study of those factors which affect an organization but are beyond the control of an organization. These factors are uncontrollable. Macro environment consist of following six broad areas: Political environment Economic environment Social environment

Technological environment Demographic environment Natural environment POLITICAL ENVIRONMENT Indian political scenario has, is and will undergo various changes. Following are the various policy changes which might have an impact on aviation industry incoming years: Open Sky Policy India had this agreement with 40 countries and lately it signed the policy with UK, USA and European Union. According to this policy, the signatories are allowed to fly over the skies of India. Under this arrangement, airlines from EU member nations will be allowed to operate flights to India from any of the 25 EU nations regardless of the carrier's country of origin. Effect: Tourist arrivals in India are expected to grow exponentially, especially due to the open sky policy between India and the SAARC countries and the increase in bilateral entitlements with European countries, and the US. The increase in number of international tourists will percolate down to increase in domestic passengers. Deregulation Year of Amendment 1986 No of Aircraft Seats Max. of 10 May provide service to Notified Airport only May provide service when 2hrs before/after National Airlines Who can service National and non scheduled Fares

Regulated by National Airlines

9.8.1989 May-Dec 1990

Max. of 50 seats Min of 15/No max

55 Notified Airports All Airports(93) Prior approval of flight times abolished Ownership expanded to Citizens, NRI Government 40% Foreign Equity allowed Fare restriction abolished

25th Feb 1993 1st March 1994

8.3.94 A max of 30 seats for new entrants No restrictions No restrictions No restrictions

A company/body registered in India Anyone in the aforementioned category No restrictions

24th Jan 1997

02 Feb 2006

Do

Do

Do

FDI 49% airline 100% airport

No restrictions

Prior to 1991, aviation was nationalized and heavily regulated. In 1953, the Air Corporation Act 1953, changed the landscape of the airline industry in India. In 1991 the Air Corporation Act was repealed and thus it allowed private operators to operate in the domestic airline and aviation industry. Requirements to become a scheduled operator air carrier in India have being reformed, the reduced restrictions on foreign direct investments is 49% for flights and 100% for airports. Effect: Entry into the air travel industry is not only cheaper, but also affordable to new operators.

Modernization of Airports The Indian Cabinet has approved a proposal mandating the state-run airport operator to modernize 35 airports in second-tier cities within the next two years. The modernization process will cost the government between Rs. 70 to 80 billion. Delhi (Rs.8,700 cr) to GMR and Mumbai Airport Modernization (Rs.6,400 cr)to GVK are two biggest investment projects . Total investment on hand in airport infrastructure crossedRs.35,000 crore in the quarter ended January 2006.Thisinvestment was spread over 89 projects. Up gradation of Kolkata and Chennai airports is on anvil.. Simultaneously, 20 nonmetro airports will be developed .Two biggest active projects are the Bangalore International Airports Authority Ltd (Rs.1.5 crore) and GMR Hyderabad International Airport Ltd (Rs.1.5 crore). Effect: Improved infrastructure would lead to rise in no. of travellers and also so would encourage more operators. Abolishment of Taxes Foreign Travel Tax (FTT) Rs500 and 15% inland air travel tax (IATT) charged on Basic airfare has been abolished by the government wef from January 9, 2004 to reduce fares. Reduction on Exise Duty From January 9, 2004, the excise duty on ATF was reduced from 16 to 8 per cent The average domestic price of ATF is 99 per cent higher than prices in foreign countries and affects domestic airlines drastically as ATF accounts for 30 to 40per cent of operating costs Effect: It would lead to low fares thus giving a boost to air travel The government has reduced the average age of aircraft being imported into India for commercial airline operations by five years. Effect: It would lead to increase in imports of aircraft thus can discourage more operators coming in and improve services.

Landing Charges abolished Landing charges for aircraft with less than 80 seats were abolished and landing charges for larger aircraft have been reduced by 15% with effect from February11, 2004.

ECONOMIC ENVIRONMENT India ,ranked tenth in the world in 2004,is expected to be holding eighth rank in the world by 2014 and fourth rank in next years with a GDP of $1.15-1.4 trillion and $2.1-3 trillion respectively ,and a projected growth rate of 6-8%. Effect: This rise in income levels along with introduction of no-frills flights will lead to rise in no of travellers, more investments in aviation, more competition and rise in industrialization leading to more need of air transport SOCIO-CULTURAL ENVIRONMENT Change in Lifestyle Average income of middle class household is expected to rise to 194000 Rs by2010 from 169000 Rs in 2001-02.No of households projected to be 43.6million in2010. Effect: So there is going to be change in lifestyle and spending of people Due to this change people will prefer Low cost airlines instead of Railways first air conditioned thus rise in air traffic Rise in Leisure travel Tourism industry grew 8.8 per cent over 2003- highest growth rate in the world.3.2 million foreign tourists visited India last year .There has been an increase in leisure travel by tourists of 15% in 2004. Effect: It will lead to rise in number of tourist passengers thus more encouragement for new operators. TECHNOLOGICAL ENVIRONMENT Introduction Of Airbus A380 The double deck Airbus A380 is the most ambitious civil aircraft program yet was launched in December 2000.An all new design Superjumbo, the Airbus A380 is the world's first twin-deck, twin-aisle airliner .It could be outfitted for special passenger uses such as sleeper cabins, business centers or even child care service. In a one-class configuration, theA380 could accommodate as many as840 passengers Advantages of the A380 include lower fuel burn per seat and lower operating costs per seat. Airbus states theA380 will use 20% less fuel and will fly quieter, cheaper and more environmentally friendly than 747. ILS-Instrument Landing System Instrument landing system (ILS) facilities are a highly accurate means of navigating to the runway under low visibility conditions Various runway environment lighting systems serve as integral parts of the ILS system to aid the pilot in landing When using the ILS, the pilot determines aircraft position by instruments. ILS is classified according to capabilities of the ground equipment.

DEMOGRAPHIC ENVIRONMENT Middle class population of India was 300 million in 2005 and is projected to be 400 million for 2010. Effect: For aviation, this growth is a remarkable achievement and a sign that the industry can only expand as more people gain the ability to purchase airline travel, supported by introduction of low-cost carriers. High %age of young population India has highest percentage of people in age group of 20-50, with high earning potential. Also younger segment has more mobility needs due to education or work. So it shows high probability of rise in Domestic air travel.

A Five Forces Industry Mapping Aviation

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FDI Opportunities in Aviation

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Practitioner s Perspectives on India Entry in Aviation

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Blueprint for India Entry Strategy in Aviation

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Appendices for Reference Aviation Sector

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Bibliography

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Part III. Delving into Media Sector

Executive Summary Media Sector

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A Five Forces Industry Mapping Media

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FDI Opportunities in Media

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Practitioner s Perspectives on India Entry in Media

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Blueprint for India Entry Strategy in Media

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Appendices for Reference Media Sector

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