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AGENDA
Industry Overview Major Players in the Industry Performance Overview Recent Happenings Major Events in Aviation Industry Porter Analysis Aero Turbine Fuel (ATF) Policy Support Future Outlook
% of [Occupied Seat/Available Seating Capacity] No. of Revenue Payers * No. of miles flown in a period Revenue/No. of Seats available No. of Seats Available * No. of miles flown during given period Estimate of money already received
Year / Parameter
No. of Aircraft No. of Operational Airports Passenger Handling Capacity at airports Scheduled Airlines: Distance Flown
Then [2000]
125 50 66 million 199 (mn km)
Now [2012-13]
369 125 233 million 762 (mn km)
Revenue Areas
Freight Passengers On-Board Sales
Expense Areas
ATF Crew MRO
Passenger Services
Source: http://www.ibef.org/industry/indian-aviation.aspx Airports Authority of India, Planning Commission, Ministry of Statistics and Programme Implementation, Aranca Research
Parameters Market Share [May 2013] Passenger Load Factor [May 2013] On-time Performance [OTP] [May 2013] Cancellation Rate [May 2013] Airline Debt [in USD bn, FY 2013] Net Income [in USD mn, FY 2013] 29.50 % 89.60 % 95.00 % 19.80 % 80.90 % 85.20 % 22.50 % [JetLite = 5.40 %] 76.15 % 91.80 % 19.10 % 82.00 % 89.20 % 9.00 % 85.80 % 89.40 %
0.70 % 9 (950)
SpiceJet has a high cancellation rate , which ultimately effected its market share
Air Indias debt is approximately twice that of all the other carriers in India combined (taking kingfisher debt of 1.8 bn USD)
Indigo scores the best on all the parameters Except Indigo, all airlines suffer loses
The three LCCs combined account for just 4-5% of total industry debt and this is largely aircraft-related
Source: DGCA Report on Indian Airline Industry CAPA Centre for Aviation, DGCA centreforaviation.
Source : DGCA
Key Highlights
Trends of the decade show a 300% increase in the domestic passengers, and 160% in international passengers traffic Passenger load factors of all except kingfisher has not changed significantly
The market share of Jet Airways and Jet Lite has shown a decrease over the year, Indigo with around 30% share
Domestic passenger traffic expanded at 15.6 per cent compound annual growth rate (CAGR) over FY06-12
International passenger traffic posted a compound annual growth rate (CAGR) of 10.5 per cent over
Increase Competitiveness
Increase Competitiveness
Competitive Advantage
Increase Competitiveness
Commenced operations in May 2005 and had the 2nd largest market share till end of 2011 License suspended in October 2012 GOI withdrew both domestic and international flight entitlements allocated to the airline in Feb 2013 Kingfisher have lost nearly three quarters of their value this year and currently have a market capitalisation of
Both the airlines plan to sign a "code share agreement" shortly MOU to pave way for better commercial viability An increase in domain of operations for both the airlines
Threat of New Entrant s Bargainin g Power of Suppliers Intra Industr y Rivalry Threat of Substitu te Product s
of Suppliers
Fuel CompaniesFew suppliers Aircraft manufacturers Labour unions Switching costs Airports facilities Brand value
Financial Highlights
Implications
With direct ATF import it is expected that airfares will come down and that passenger numbers will rise ATF costs 30-45% of overall operating costs for Full Service Carriers (pscs) and 40-55% for Low cost carriers Domestic ATF prices are linked to fluctuation in crude oil prices and movement of INR Vs $ High central and state levied taxes translates into 60-70% higher ATF prices ICRA Ratingaverage. Feature- Indian Aviation inSource: India over global
Industry
FY13 budget
In the Union Budget for FY13 the Finance Minister has proposed support worth USD 58.3 million to AAI to develop airport infrastructure in north eastern states Aviation Regulator DGCA has been allocated USD 12.5 million for implementing developmental plans
Under the Twelfth Five Year Plan(2012-2017), Government of India have set aside USD 11.4 billion for infrastructure investment and development Focus on GOI have plans to invest around USD 30 billion in next 10 years to Infrastructur open new airports and modernize the existing ones e 100% tax exemption for airport projects for period of 10 years 100% FDI under automatic route for Greenfield projects 100% FDI for existing projects with automatic route up to 74% and Government route beyond 74% FDI Policy 49% FDI in civil aviation sector for foreign players
Liberalizati Approval for Greenfield Airports in 2008 on and New regulatory body (Airport Economic Regulatory Authority) set up in 2009 Open Sky Policy
Source: IBEF Report on Airports, March 2013
Growth Indicators
Challenges
Increase in Demand
More people travelling by air Rise in tourist travelers Strong growth in external trade
Policy Support
Large proposed government spending on infrastructure Liberalization & Open Sky Policy
Poor Infrastructur e
Delay in take-off and landing
High Airport Charges Stifling growth rates
Company Specific
Lack of focus Faulty M&A decisions and failed Mergers KingfisherAir Deccan, Jet-Air Sahara
Lack of focus
Faulty M&A decisions and failed Mergers Eg: KingfisherAir Deccan, Jet-Air Sahara
FDI Policy
Future Outlook
ADVANTAG E INDIA