SUMMER TRAINING REPORT ON Aviation Sector in India Submitted in the Partial Fulfillment for the Requirement of Post Graduate

Diploma in Management (PGDM) Submitted to: Mr. Sandeep Ranjan Pattnaik Marketing and Sales Manager At Air Uddan Pvt.ltd Submitted by: Biswanath Panigrahi Roll No: 121 (2011-2013)

Jagannath International Management School Kalkaji, New Delhi.

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Acknowledgment I have made this project report on Aviation Sector in India under the supervision and guidance of Miss Palak Gupta (Internal Mentor) and Mr.Sandeep Ranjan Pattnaik (External Mentor). The special thanks go to my helpful mentors, Miss Palak Gupta and Mr.Sandeep Ranjan Pattnaik. The supervision and support that they gave truly helped the progression and smoothness of the project I have made. The co-operation is much indeed appreciated and enjoyable. Besides, this project report making duration made me realize the value of team work.

Name: Biswanath Panigrahi

STUDENTS UNDERTAKING

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I hereby undertake that this is my original work and have never been submitted elsewhere.

Project Guide: (By:Biswanath Panigrahi) Mr. Sandeep Ranjan Pattnaik Marketing and Sales Manager Air Uddan Pvt.ltd (EXTERNAL GUIDE) Ms. Palak Gupta (Astt. Professor JIMS)

S.NO. NO. 01. 5

CHAPTERS CHAPTER 1

PAGE

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EXECUTIVE SUMMARY 02. 8 COMPANY PROFILE 03. 33 CHAPTER 3 CHAPTER 2

Brief history of Indian Aviation sector

04. 40 05. 43 06. 46 ANALYSIS AND INTERPRETATION 07. 57 FINDINGS AND INTERFERENCES 08. 60 09. 62 CHAPTER RECOMMENDATION CHAPTER APPENDICES AND BIBLIOGRAPHY 9 8 CHAPTER 7 CHAPTER OBJECTIVE OF THE PROJECT CHAPTER RESEARCH METHODOLOGY CHAPTER 6 5 4

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CHAPTER 01

Executive Summary

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Aviation sector in India has been transformed from an over regulated and under managed sector to a more open, liberal and investment friendly sector since 2004. Entry of low cost carriers, higher house hold incomes, strong economic growth, increased FDI inflows, surging tourist inflow, increased cargo movement, sustained business growth and supporting government policies are the major drivers for the growth of aviation sector in India. While there are a lot of new avenues in aerospace services in the coming decades, the constraints associated need to be addressed to enable the smooth growth of the sector. Some of the issues faced by the sector include mounting losses of the airlines, rising aviation fuel prices, congestion at airports, shortage of qualified pilots and technical manpower, up gradation of security, land acquisition, high taxation, high airport charges etc. There is a need to study the causes of the issues and address the same thereby paving an unobstructed growth path for the various opportunities. This framework would act as a platform to scale new heights and make India one of the leaders in the global aviation industry. The framework would require prioritization of various issues on the basis of importance (high, normal or low). This would ensure a focused approach to understand the root cause of the issue and to address the same by taking necessary remedial actions. The framework would also emphasize on the time lines for leveraging the opportunities abound in the sector.

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CHAPTER 02

COMPANY PROFILE

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In 1946 it was a dream of Mr. Biju Patnaik, an aeronautical engineer, navigator, an ace pilot, industrialist, an eminent freedom fighter and above all a crowning statesman of national and international repute. Although man had dreamt of flying for centuries, on December 17,1903 the Wright brothers made the world's first flight in a power-driven, heavier-than-air machine. The plane flew 120 feet in twelve seconds. This flight lasted only twelve seconds, but it was nevertheless the first in the history of the world in which a machine carrying a man had raised itself by its own power into the air in full flight had sailed forward without reduction of speed and finally landed at a point as high as that from which it started. In Civil Aviation, only Licensed Pilots can fly the aircraft and only Licensed Engineer (A.M.E) can do maintenance of the aircraft. Only a competent Flayer, trained and licensed by the DGCA, Government of India can operate the "Flying Machine" after obtaining training from the approved Flying Training School

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CHAPTER 03

A BRIEF HISTORY OF INDIAN AVIATION SECTOR

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A Brief History of Indian Aviation Sector

1912 First flight from Karachi to Delhi started by Indian State Air Services and Imperial Airways UK collaboration. 1932 1946 Tata Airline introduced by JRD Tata. Tata Airlines was transformed into Air India.

1953 The Government of India nationalized the airline industry in 1953 through enactment of the Air Corporations Act. Pursuant to this Act, there were only two players left in the Indian aviation sector, both of which domestic were owned and controlled by the with operations to select government: (a) Indian Airlines, primarily serving sector international destinations; and (b) Air India, serving the international sectors. 1990 Liberalization in the aviation industry began in 1990, with private-sectors players being allowed to operate as air taxi operators, but not permitted to operate scheduled services. A number of private players (including Jet Airways, Air Sahara, Modiluft, Damania
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Airways, NEPC Airlines and East West Airlines) commenced operators. 1994 With repeal of the Air Corporation Act, private carriers were permitted to operate scheduled-carrier status upon fulfillment of certain applicable criteria. 1995 Jet, Sahara, Modiluft, Damania, NEPC, East West granted scheduled carrier status 1997 4 out of 6 operators shut down. Jet & Sahara continue 2003 Air Deccan, Indias first low carrier, started domestic operations as air taxi

operations in August 2003, taking the total number of private players providing scheduled service to three. The Naresh Chandra Committee Report was set up to chart out a road map for the civil aviation sector. Private domestic airlines were given permission to fly to international destinations in the SAARC region with effect from December 2003. 2004 Some of the Naresh Chandra Committees

recommendations were implemented. 2005 till now On 11 January 2005, Jet and Sahara

obtained permission to operate internation services

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to

and

from

Singapore,

Malaysia

Thailand,

Hongkong, the United Kingdom and the United States of America. However, the Persian Gulf routes were reserved for three years for public carriers Air India and Indian Airlines. Kingfisher, SpiceJet and GoAir launched services in the domestic sector.

Scope of Aviation Sector in India.

With a growth rate of 18 percent per annum, the Indian Aviation Industry is one of the fastest growing aviation industries in the world.. The government & apposes open sky policy has led to many overseas players entering the market and the industry has been growing both in terms of players and number of aircrafts. Today, private airlines account for around 75 per cent share of the domestic aviation market. India is the 9th largest aviation market in the world. According to the Ministry of Civil Aviation, around 29.8 million passengers traveled to/from India during 2008, an increase of 30 per cent on previous year. It is predicted that international passengers will grow up to 50 million by 2015. Further, due to enhanced opportunities and international connectivity, 69 foreign airlines from 49 countries are flying into India. Growth Rate 24% annual growth. AAI manages 128 airports, which include 15 International Airport, 08 Customs Airports, 81 Domestic Airports and 28 Civil Enclaves at Defense airfields. 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.
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Classification of Indian Aviation Sector

The Indian aviation sector can be broadly divided into the following main categories: 1Scheduled Air Transport Services- It includes domestic and international airlines. 2. Non-scheduled air transport service - It includes charter operators and air taxi operators. 3. Air cargo service - It 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:

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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.

Key industry characteristics

1) Under-penetrated markets
Despite recent growth in air passenger traffic, India continues to have relatively high under penetration of air services. According to the CMIE, domestic air traffic in the year ended March 31, 2005 reached 20 million. For a country with a billion plus population, this amounts to an average Indian making 0.02 trips per annum which is one of the lowest in the world, compared to an average of 2.02 trips per person per year in the United States for the same period. Consequently, there is a high level of potential demand which may be generated as the Indian economy grows and air travel becomes more affordable for a larger population.

2)

High fixed cost operating environment

Despite recent reforms, the domestic aviation sector in India continues to experience high input costs in terms of overnment charges levied on fuel and airport related charges. These fixed costs often represent a substantial portion of the operating costs of most airlines. Domestic
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airlines generally have to pay higher charges than those paid by international airlines procuring fuel within India, as such international airlines are exempt from paying excise duty and sales tax.

3)

Regulatory constraints
The domestic aviation sector in India continues to be highly regulated. The Route Dispersal Guidelines issued by the DGCA require all scheduled airlines operating in India to provide a minimum number of ASKMs on routes that service certain rural or smaller urban destinations that are classified as Category II and Category IIA, which results in lower average passenger load factors and yield for many airlines.

4)

Infrastructure constraints
With the entry of four new players in the short span of a year and with more having announced their intentions for the same, the continued growth of the domestic aviation sector may be hampered by shortage of enabling infrastructure, such as airport facilities, parking bays, air traffic control facilities and takeoff and landing slots.

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5)

Relatively limited reach across the country

Historically, many areas of the country have not been served by scheduled airlines. Although the Route Dispersal Guidelines have helped to ensure that certain areas of the country are serviced, airport infrastructure and economic feasibility have meant that many airports do not have scheduled airline service. Of the approximately 450 airports in India less than 100 airports have a daily flight.

Demand Drivers
1) High economic growth
Growth in air transport (both passengers and cargo) is closely associated with growth in GDP. According to the IATA (International Air Transport Association) air transport can be projected to grow at roughly twice the rate of GDP growth. With Indian GDP expected to expand at a rate of 7.5% for 2005-2007, the IATA expects air traffic in India to grow approximately 15% for the same period.

2)

Increasing consumerism and affordability

The aviation market in India consists of leisure travellers, business-related travellers and corporate travellers. Leisure and business related traffic tends to be more price-elastic. Corporate travellers, who fly at the expense of their employer or client, have historically formed the
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majority of the domestic air travel market in India. However, with increasing income levels and the emergence of flexible fare schemes and low-cost carriers, we expect that middle- to high-income leisure travellers and business travellers paying their own travel costs are likely to shift more from premium class travel in trains to air travel. In contrast to the 15.25 million passengers carried by domestic Indian airlines in fiscal 2004, the Indian railways carried approximately 52 million passengers in its premium class products, i.e., air conditioned and first class coaches during the same period.

3)

Growth in tourism
The Indian tourism market has been growing at a significant pace over the last few years, with the Government giving impetus to the industry through various schemes and organized events. According to the World Travel & Tourism Council India 2004 report, domestic tourists visits in India grew by 19% from 309.0m to 367.6m in fiscal 2004. During the same fiscal domestic air travel has grown by 13% while in fiscal 2005 domestic air traffic registered a growth of approximately 27%. The same source has predicted that travel and tourism expenditure in India is expected to achieve an annualised real growth rate of 8.8% over the 10-year period from fiscal 2004 to fiscal 2014.

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4)

The emergence of low-cost carriers

Low-cost carrier airlines in the United States (such as Southwest Airlines and JetBlue) and in Europe (such as Ryanair and easyJet) have created a revolution in the aviation sector. These airlines have sought to provide lower, if not the lowest, fares along with relatively high margins, by providing: no-frills service; careful route selection to optimise passenger loads and yields; minimised costs on various aspects of business; innovative use of Internet and other communications technology to avoid the high cost of traditional airline reservations and communications systems; innovative approaches to attracting customers; introducing previously unavailable routes on a

commercially feasible basis; and lower or lowest initial pricing with careful revenue management.

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The concept of low-cost carriers has also generated interest in Asia, and a number of no-frills airlines have emerged. For example, AirAsia is a low-cost carrier based in Malaysia and Thailand with destinations including Malaysia, Thailand, China, Hong Kong, Macau, Indonesia and the Philippines. Air Deccan was the first such airline in the Indian market, commencing operations in August 2003, with SpiceJet and GoAir beginning operations subsequently and plans for more low-cost carriers announced. Air India Express, a subsidiary of Air India, is providing an international low-cost carrier service. Indian low-cost carriers, seeking to take advantage of the growth of disposable income in India and the increasing need for geographic connectivity, have sought to adapt the lowcost carrier model to the Indian aviation climate.

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:
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 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 startup players are those planning to enter the markets. Some of them are Omega Air, Magic Air, Premier Star Air and MDLR Airlines

Growth of Aviation Sector in India

Domestic airlines flew 3.67 million passengers in August 2009an increase of 25 per cent. The Centre for Asia Pacific Aviation (CAPA) forecasted that domestic traffic will increase by 25 per cent to 30 per cent till 2010 and international traffic growth by 15 per cent, taking the total market to more than 100 million passengers by 2010. The government plans to invest US$ 9 billion to modernise existing airports by 2010. The government is also planning to develop around 300 unused airstrips. India ranks fourth after US, China and Japan in terms of domestic passengers volume. The number of domestic flights grew by 69 per cent from 2005 to 2008. The domestic aviation sector is expected to grow at a rate of 9-10 per cent to reach a level of 150-180 million passengers by 2020. The industry witnessed an annual growth of 12.8 per cent during the last 5 years in the international cargo handled at all Indian airports. The airports handled a total of 1020.9 thousand metric tones of international cargo in 2006-07.
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 Further, there has been an increase in tourist charter flights to India in 2008 with around 686 flights bringing 150,000 tourists. Also, there has been an increase in non-scheduled operator permits 99 in 2008 as against 66 in 2007.

Trends

in

Aviation

Industry

1. Consolidation in aviation sector: In aviation industries the rise in the number of alliances will help in promote the growth of aviation sector in India. Example of the Jet-Sahara merger is just the beginning. Indian aviation industry is looking forward to more consolidations. 2. The number of passengers travelling by air is on the rise: By 2025 passenger boarding expected to double and by the same time aircraft operations are expected to triple, the number of passengers travelling by air is on rise. 3. For the travelling public, price is paramount in choosing a carrier: Airfares are fully transparent to the public and travellers are choosing the lowest price option because of the Internet and round-the-clock search facility. Even business travellers, who have been less price-sensitive, are resisting fare increases. Travellers are not giving preference to brand but the only premiums they are willing to pay for are time-of day and direct flights. 4. Capacity is growing without much constraint: The new aircraft have been ordered by Indian carriers for delivery in the coming period, without clear plans to retire older planes. Significant numbers of regional jets are also adding by them. 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: Great threats are being posed by the low cost carriers to legacy carriers, as a result of

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which they are reshuffle, their pricing policies. Apart from this, they are also facing competition from overseas players. 6. Outsourcing: Private airlines are famous to hire foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines, in senior management positions. Airlines are also famous to take on contract employees such as cabin crew, ticketing and check-in agents.

Investments, revenues, jobs: All set to take off

Indias civil aviation passenger growth, at 20 per cent, is among the highest in the world. The sector is slated to cruise far ahead of other Asian giants like China or even strong economies million. Between April and September 2006, however, amid a flurry of new entrants to the sector, domestic traffic growth accelerated to more than 45 per cent. The centre for Asia Pacific Aviation (CAPA) predicts that domestic traffic will grow at 25 per cent to 30 per cent a year until 2010 and international traffic growth by 15 per cent, taking the overall market to more than 100 million passengers by the end of decade. Indian carriers have 480 aircraft on order for delivery by 2012 as compared with a fleet size 370 aircrafts operating in the country today. As pointed out by Minister of Civil Aviation, Praful Patel presently, the number of air travelers is about 0.8 per cent of
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like

France

and

Australia.

The

number

of

passengers who will be airbone by 2020 is a whooping 400

the population. By the time even 10 per cent of the pupulation begins fly, India will need about 5000 aircraft.

Upgrading Airport Infrastructure

By 2020, Indian airports are estimated to handle: 100 million passengers Including 60 million domestic passengers Cargo in the range of 3.4 million tones per annum Several improvements growth in airport are the envisaged civil to sustain sector. this The

tremendous Governments

aviation

modernization

plan

proposes

investments of US$ 9 billion. In January 2006, joint venture companies with 74 per cent private sector participation won contracts to upgrade New Delhi and Mumbai airports. The Airports Authority of India has got the contract to upgrade Kolkata airport and Government is also planning to upgrade the Chennai airport. International no-frills budget carriers, especially Asian low-cost carriers (LCCs) are also making a beeline for India. Already, Irans Jazeera Airways and Sharjah-based Al Arabia have registered their presence here. Other airlines planning to enter the market are: Tiger Air(a joint venture between Temasek Holdings and Singapore Airlines), Thailand-based private carrier Nok Air, Indonesias Lion Air, United Arab EmiratesRas Al Khaima(RAK) Airlines, Malaysias Air Asia and Saudi Arabias Sama Airway.
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Increased activity in the maintenance and repairs (MRO) sector has attracted many foreign companies. Lufthansa has tied up with GMR Hyderabad International Airport Limited (GHIAL) to open an MRO facility for which it intends to invest US$100 million in a facility in Nagpur. With airport infrastructure being upgraded, non-aeronautical revenues(from malls, bookshops and entertainment centres) are expected to contribute almost 50 per cent to revenue of airports. Of late, the domestic market is witnessing a trend towards consolidation. In a bid to augment capacity and grab market share, the sector is witnessing a consolidation as well as rationalization of resources. Accordingly, Jet Airways has acquired Air Sahara, King Fisher and Air Deccan, Air-India and Indian Airlines have merged.

Airlines on a buying spree

With such rapidly growth in the sector, manufacturers like Boeing and Airbus are filling their order book fast. Boeing has received a US$ 1.5 billion order for 10 aircraft from Jet Airways, Indias private airline. Airbus plans to invest more than US$1 billion in the Indian aviation industry in the next 10 years. Bombardier Aerospace, a Canada-based company that manufactures regional aircraft and business jets, is looking to tap the growing regional market in India for flight services.
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SpiceJet has ordered 10 next-generation Boeing 737-800 aircraft valued at a list price of more than US$ 700 million.

FDI Policy in Indian Aviation

Paving the way for foreign investment in domestic airline companies, the Reserve Bank of India (RBI) has said that foreign institutional investors (FIIs) can pick up stake in these airlines beyond the sectoral FDI cap of 49 per cent through secondary market purchases.

1. Airports
For greenfield airports, foreign equity upto 100 per cent is permitted through automatic approvals. For existing airports, foreign equity upto 74 per cent is permitted through automatic approvals and upto 100 per cent thorugh special permission (from FIPB).

2. Air Transport Services

Foreign equity upto 49 per cent and NRI investment upto 100 per cent is permissible in the domestic air transport services through the automatic route; Equity from foreign airlines is not allowed, directly or indirectly, in the domestic air transport services.

Aviation Sector Boomed

Reason for Boom in Aviation Industry:

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1. Foreign equity allowed: Without any Government approval, foreign equity up to 49 per cent and NRI (Non-Resident Indian) investment up to 100 per cent is allowable in domestic airlines. 2. Low entry barriers: Nowadays, to launch an airline venture capital of $10 million or less is enough. Private airlines are hiring foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines in senior management positions.

3. Attraction of foreign shores: Many private players like Jet and Sahara have gone international by starting operations, first to SAARC countries, and then to South-East Asia, the UK, and the US and many more domestic airlines too will be entitled to fly overseas by using unutilized bilateral entitlements to Indian carriers. 4. Rising income levels and demographic profile: As compared to the developed country standards, India's GDP (per capita) at $3,100 is still very low but as India is shining, at least in metro cities and urban centres, where IT and BPO industries have made the young generation prosperous. Demographically, In India people in age group of 20-50 among its 50 million strong middle class, has the highest percentage with high earning potential. It contributes the boost in domestic air travel, particularly from a low base of 18 million passengers. 5. Untapped potential of India's tourism: Presently India attracts 3.2 million tourists every year, while China gets 10 times the number. Due to the open sky policy Tourist arrivals in India are expected to grow exponentially.

6. Glamour of the airlines: An airline is as glamorous as the film-making

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industry. Today Airline tycoons, like J. R. D. Tata and Howard Hughes, Sir Richard Branson, Dr. Vijaya Mallya, have been idolized. Airlines have an aura of glamour around them, and high net worth individuals can always toy with the idea of owning airlines.

Current Domestic Airline Companies Operating In India

Following are the airline companies which are currently operating in India:
1.

National Aviation Company of India Limited (NACIL) Air India GoAir Airlines Indigo Airlines Jet Airways + JetLite (Air Sahara) Kingfisher Airline +Kingfisher Red (Air Deccan) Spicejet Airlines

2. 3. 4. 5. 6.

Market Share of Scheduled Domestic Airlines

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Source: Directorate General of Civil Aviation Air India

Founder of Air India is J.R.D Tata & it was the first Indian airline, was owned by T ata Sons Ltd. T ata Airlines converted into a Public Limited Company on July 29, 1946 and renamed AIR INDIA. Air India is a state-owned flag carrier and currently the oldest and largest airline of the Republic of India. It is a part of the Indian government-owned National Aviation Company of India Limited (NACIL). The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Europe and North America. It is the 16th largest airline in Asia . Air India has two major domestic hubs at Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. Currently it has 31 fleets & it has ordered 30 more fleets. Aircraft In
service Orders Passengers First Business Economy

Current Scenario of Air India The director general of civil aviation (DGCA) has approved phasing out the commercial mandatory agreement for airlines, which stipulates that foreign carriers operating to India have to enter into seat block arrangement and code sharing with state carriers, by January 1, 2010.
The move would mean that foreign carriers can choose code-sharing

partners other than Air-India and will not have to pay royalty fees. In 2004-05, Air-India earned Rs 550 crore through commercial mandatory agreements, an increase of 18.36% over the previous fiscal. It would definitely be a setback for Air-India since revenues from block space agreement contribute to 4.5% of the total revenue earned. Nacil, which runs the national carrier Air India, is expected to incur a loss of approximately Rs 5,400 crore during 2009-10, only marginally lower than the preceding fiscal despite a host of cost-saving measures being initiated. In 2007-08, Nacil had incurred a loss of Rs 2,226.16 crore and then Rs 5,548 crore in 2008-09. The airlines total outgo on lease rental payments for 2007-08 was Rs 717.2 crore, for 2008-09, Rs 811 crore and for 2009-10 (up to February 2010) Rs 759.25 crore. Currently its total Working Capital loan is Rs. 16000 crore & total debt is Rs, 79,000 crore.

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Analysis on NACIL (Air India)

1) It should focus more on risk management practices. 2) It requires an effective turnaround management to rebuild their brand image in aviation sector. 3) NACIL should be given autonomy in decision making. 4) The government should provide capital in the form of convertible debt. Convertible debt would provide the government the option to convert into equity. 5) They should opt for IPO to generate more revenue which will help them to reduce the losses. 6) There should be transparency in their working process. 7) Corporate governance is required to be taken into consideration. NACIL requires visionary leader which would drive NACIL in a better way. 8) As per Civil Aviation Minister Praful Patel informed that turnaround plan of National Aviation Company of India Limited (NACIL) has projected benefits of Rs 1,911 crore during Financial Year (FY) 2010. However, NACIL has achieved savings of Rs 753 crore in the FY 2010, which is a good recovery & it will benefit them to compete with the private players in aviation sector.

Go Air Airlines
Go Airlines (India) Pvt. Ltd. is the aviation foray of the Wadia Group, one of Indias top business houses. The airline operates its services under the brand Go Air. Go Air launched its operations in 2005. Go Air is a low-fare carrier launched with the objective of commoditizing airline travel by offerings airline seats at marginal premium to first class train fares across India. Go Air is positioned as The Smart People's Airline. Its captivating theme, Fly Smart is aimed at offering passengers a consistent, quality-assured and time-efficient service. Its unique product portfolio comprises of some of the most innovative offerings in the industry including GoSave, GoFlexi, GoHappy and a bundle of Red Eye flights. The airline uses the state-of-the-art Airbus A320 aircraft fleet. Its product offering is driven by frequency based service
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between various commercial hubs of the country. Go Air has been honored with the Best Airline Award for Efficient & Quality service by PATWA for two consecutive years in a row. The airline currently operates across 18 destinations 160 daily flights and approximately 1120 weekly flights.

Current Scenario of Go Airlines

Go Air Indias smartest airline, today announced that it has registered an 84 per cent load factor for the month of June 2010. During the last quarter (April 2010 June 2010), Go Air has consistently registered average passenger loads in excess of 83 per cent. During the past year Go Air has been on a continuous growth phase. For the period of April 2009 -March 2010, Go Air flew 2.41 million passengers as against 0.95 million passengers during the same period in 2008-2009 thus achieving a 153 per cent growth rate in passenger traffic. Similarly for the Quarter ended 30th June, 2010 Go Air flew 787000+ passengers which were almost 52% higher than in the similar period last year. Go Air Indias smartest airline, announced the addition of two new stations to its growing network namely Nagpur and Nanded. Services has commence from 6th of April 2010. This move comes as part of Go Airs growth strategy and to strengthen its existing network. The introduction of these 2 new stations will take the total number of weekly flights to 700 and 50 routes. Wadia group-promoted budget air- carrier Go Air is in the process of raising around $100 million to fund its aircraft acquisition programmed, airline sources said on Tuesday. The airline is currently in talks with financial institutions and a deal is expected to be arrived at over the next 2-3 months, they said. GoAir, which currently has 10 Airbus A-320s in its fleet, plans to take delivery of another 10 aircraft over the next three years.

Analysis on Go Air Airlines

1. Go Air is having a very sound business in low cost carrier by comparing with other private players in aviation sector as their performance speaks for them.
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2. Go Air is doing a good business within domestic market but they should opt for towards expanding their business by starting international flights. This will help them to increase their customers. 3. Go Air should go for joint venture with international airline company which will aid them with new technology and new innovative tariff structure which will attract more customers. 4. Wadia group can generate more funds for Go Air Company by listing in stock market as the performance of the company is good in domestic sector which might attract investors in it. 5. They should use some fleets on lease which will help them to reduce their cost of capital & will help them to utilize their fund in an efficient manner.

Indigo Airlines
Indigo commenced operations on 4 August 2006 with a service from Delhi to Imphal via Guwahati. The airline is owned by the Gurgaon based InterGlobe Enterprises. It took delivery of its first Airbus A320-200 aircraft on 28 July 2006 and received six aircraft during 2006. Nine more aircraft were delivered in 2007 taking the total to 15. Former US Airways Executive VicePresident, Marketing and Planning Bruce Ashby joined IndiGo as their Chief Executive Officer. The airline has also acquired 3 parking spots in Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. Recently IndiGo changed the outfits for their crew members on occasion of its 4th anniversary. IndiGo is a private domestic low-cost airline based in Gurgaon, Haryana, India. It operates domestic services linking 24 destinations. Its main base is Delhi's Indira Gandhi International Airport. It was awarded the title of Best Domestic Low Cost Carrier in India for 2008.

Current Scenario of Indigo Airlines

Indigo plans to launch international services on 15 routes starting from the middle of next year, according to a proposal it has submitted to the aviation ministry. The Gurgaon-based carrier, which has a 13.6 % share in the domestic passenger market, will complete five years of local operations in August, meeting a key requirement for local airlines to fly overseas. Indigo, with at least 16 Airbus A320 aircraft to augment its
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fleet of 32 A320s between now and 2011, plans to launch international services in a phased manner from August.
Indias leading low-fare carrier IndiGo, run by InterGlobe Aviation Pvt.

Ltd, is planning to raise $500 million (Rs2,215 crore) through its initial public offering (IPO), the highest ever for an Indian airline, and this may lead to a re-rating of airline stocks. The IPO is scheduled for the last quarter of the current fiscal ending March 2011. The countrys biggest discount airline IndiGo, run by InterGlobe Aviation Pvt. Ltd, has sought in-principle approval from the civil aviation ministry for a possible future order of 150 aircraft. The carrier wants approval for import/acquisition of an additional 150 aircraft for scheduled air transport, it said in a letter to the ministry that has been reviewed by Mint. The airline had ordered 100 Airbus A320 jets in 2005, deliveries for which will run till 2015. In the fiscal, considered to be the worst for the industry, the unlisted carrier earned a profit of Rs82.16 crore, the first since its launch three years ago, according to its annual submission to the Directorate General of Civil Aviation (DGCA). The profit, on revenue of Rs1,876.35 crore, compared with a loss of Rs212.28 crore in 2007-08 and Rs174.13 crore in 2006-07.

Analysis on Indigo Airlines

1) Indigo Airlines is currently making a decent brand image in low cost carriers with having a market share of 13.6%. It was awarded the title of Best Domestic Low Cost Carrier in India for 2008. 2) To raise the funds they have opt for the IPO which will benefit them to improve their business growth which will keep them stable in the current competitive environment. 3) Indigo Airlines should currently to be more focused to increase their number of fleets as they are going for expansion of business which is very crucial for them to capture more customers along with their loyal customers. 4) They can also give more focused on risk management practices.

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5) In future they are now focusing to start an international route which is very good as now only Jet; Kingfisher & NACIL are given permission for international routes that will lead to competition among companies.

Jet Airways
Jet Airways is a major Indian airline based in Mumbai, Maharashtra. It is India's largest airline and the market leader in the domestic sector. It operates over 400 flights daily to 67 destinations worldwide. Its main hub is Chhatrapati Shivaji International Airport, with secondary hubs at Delhi, Chennai, Bengaluru, Pune and Kolkatta. It has an international hub at Brussels Airport, Belgium. Jet Airways is owned by Naresh Goyal. Jet Airways was incorporated as an air taxi operator on 1 April 1992. It started Indian commercial airline operations on 5 May 1993 with a fleet of four leased Boeing 737-300 aircraft. In January 1994 a change in the law enabled Jet Airways to apply for scheduled airline status, which was granted on 4 January 1995. It began international operations to Sri Lanka in March 2004. The company is listed on the Bombay Stock Exchange, but 80% of its stock is controlled by Naresh Goyal (through his ownership of Jets parent company, Tailwinds). It has 10,017 employees (as at March 2007). Naresh Goyal who already owned Jetair (Private) Limited, which provided sales and marketing for foreign airlines in India set up Jet Airways as a full-service scheduled airline to compete against state-owned Indian Airlines. Indian Airlines had enjoyed a monopoly in the domestic market between 1953, when all major Indian air transport providers were nationalised under the Air Corporations Act (1953), and January 1994, when the Air Corporations Act was repealed, following which Jet Airways received scheduled airline status.

Air Sahara Buyout

In January 2006 Jet Airways announced that it would buy Air Sahara for US$500 million in an all-cash deal, making it the biggest takeover in Indian aviation history. The resulting airline would have been the country's largest but the deal fell through in June 2006. On 12 April 2007 Jet Airways agreed to buy out Air Sahara for INR14.5 billion (US$340 million). Air Sahara was renamed JetLite, and was marketed

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between a low-cost carrier and a full service airline. In August 2008 Jet Airways announced its plans to completely integrate JetLite into Jet Airways.

Jet Konnect
Jet Konnect is the low-cost brand of India-based Jet Airways. It was launched on 8 May 2009, and shares the same airline code and call sign as Jet Airways. It operates a mixed fleet of ATR 72-500s and Boeing 737-800s.

Current Scenario of Jet Airways

Jet Airways (India) Ltd, the countrys largest carrier by passengers, swung to a profit in the second quarter from a loss in the year-ago period on improved seat occupancy and greater efficiency, underscoring the revival of the Indian aviation industry. The airline, which has a market share of 26.9% along with its low-fare subsidiary, reported a stand-alone net profit of Rs. 12.40 crore for the quarter ended 30 September against a net loss of Rs. 406.69 crore in the same period last year.
In a first for any Indian carrier, Jet Airways (India) Ltd plans to strike

deals with European railway operators to let passengers reach destinations its air network doesnt cover. Foreign airlines such as Lufthansa, Air France SA, Emirates and Continental Airlines Inc. already have such arrangements with railway firms, allowing passengers to carry on with their journey by train after a flight, or vice versa, on a single ticket. The concept is particularly popular in Europe. Jet Airways has sought the civil aviation ministrys approval to sign such agreements before it approaches European governments for similar clearances, said a government official, requesting anonymity. Indias largest airline by passengers, Jet Airways (India) Ltd, is set to become the countrys first carrier to fly to South Africa.The airline is also entering into an agreement with Kenya Airways to connect to the northern regions of Africa, coinciding with Indias recent thrust to improve economic diplomacy in the continent. Indias largest airline by passengers carried Jet Airways (India) Ltd plans to join a global alliance soon, chairman Naresh Goyal said, changing its policy of reaching separate pacts with individual carriers. Joining an alliance can take as long as 18 months and typically increases revenue by about 5%, depending on the network feed and the agreements signed between member airlines and the alliance.
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 Passengers carried by domestic carriers rose 19.3% to 33.9 million passengers in Jan-Aug with Jet Airways recording the highest market share among domestic carriers, government data showed.

Analysis on Jet Airways

1) Jet airways are the market leaders in the aviation sector in India with highest number of passengers carried i.e. 33.9 million so it can be said that they are the market driver in this sector & also they are having the maximum number of fleets with them i.e. around 100 fleets are with them which are currently operating. 2) Due to hike in fuel price & recession period the company is currently suffering from debt burden of around Rs. 1,236crore so in order to reduce the debt burden company can go for further public offer or they can sell their some stake to another company to recover their debt. 3) They should tap the cargo market which they have not venture till now. Jet Airways (India) Ltd, which runs Indias largest airline, is in initial discussions with FedEx Corp. for a dedicated cargo airline that it wishes to set up either as a joint venture or in alliance with the multinational logistics firm. 4) They should use turnaround strategy by improving their services regarding customer enquiring, in flight entertainment, change in meals which will them to distinct themselves from their competitor i.e. kingfisher airlines. 5) In current year they have generated revenue more than 37% higher and profitability was superior to Kingfisher due to a higher share of fullservice carrier operations which is very good & they should sustain this growth in future also.

Kingfisher Airlines
Kingfisher Airline is a private airline based in Bangalore, India. The airline is owned by Vijay Mallya of United Beverages Group. Kingfisher Airlines started its operations on May 9, 2005 with a fleet of 4 Airbus A320 aircrafts. The destinations covered by Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata, Pune, Agartala, Dibrugarh, Mangalore and Jaipur.
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In a short span of time Kingfisher Airline has carved a niche for itself. The airline offers several unique services to its customers. These include: personal valet at the airport to assist in baggage handling and boarding, exclusive lounges with private space, accompanied with refreshments and music at the airport, audio and video on-demand, with extra-wide personalized screens in the aircraft, sleeperette seats with extendable footrests, and threecourse gourmet cuisine. Kingfisher Airlines is one of six airlines in the world to have a 5-star rating from Skytrax, along with Asiana Airlines, Cathay Pacific, Malaysia Airlines, Qatar Airways and Singapore Airlines. Kingfisher operates more than 375 daily flights to 71 destinations, with regional and long-haul international services. In May 2009, Kingfisher Airlines carried more than a million passengers, giving it the highest market share among airlines in India. Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, in which Vijay Mallya also owns. Kingfisher Airlines serves 63 domestic destinations and 8 international destinations in 8 countries across Asia and Europe. Kingfisher's short haul routes are mostly domestic apart from some cities in South Asia, Southeast Asia and Western Asia. All short haul routes are operated on the Airbus A320 family aircraft. ATR 42s and ATR 72s are used mainly on domestic regional routes. Kingfisher has its medium, long-haul destinations in East Asia, Southeast Asia, and Europe. Its first long haul destination was London, United Kingdom which was launched in September 2008. It has plans to launch new long haul flights to cities in Africa, Asia, Europe, North America and Oceania with deliveries of new aircraft. All long haul routes are operated on the Airbus A330-200.

Kingfisher Red
Formerly known as Air Deccan, the airline was previously operated by Deccan Aviation. It was started by Captain G. R. Gopinath and its first flight took off on 23 August 2003 from Hyderabad to Vijaywada.[3] It was known popularly as the common man's airline, with is logo showing two palms joined together to signify a bird flying. The tagline of the airline was "Simpli-fly," signifying that it was now possible for the common man to fly. The dream of Captain Gopinath was to enable "every Indian to fly at least once in his lifetime." Air Deccan was the first airline in India to fly to second tier cities like Hubballi, Mangalore, Madurai and Visakhapatnam from metropolitan areas like Bangalore and Chennai.

Synergy benefits with Kingfisher

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 Sharing of physical resources both on ground and in air could potentially spread fixed cost over a larger base and hence lower unit cost; to illustrate, if the current inventory of maintenance spares of the two airlines are pooled together, both the airlines can induct four aircraft each without incurring any additional expenditure on maintenance spares; Sharing of management bandwidth that has been a problem for Deccan off late; Route and network strategy formation would be reworked jointly with Kingfisher so that both the airlines benefit together; Fleet expansion is set to be optimised so that lesser capacity is brought in by each of them and at the same time they could benefit from the premium aircraft delivery slots prevailing in the market. The Air Deccan-Kingfisher combine will have a fleet of 71 aircraft and fly to 70 cities and towns. The combine will control a third of the market and will be closer to the Jet Airways-Air Sahara market share. The two airlines will benefit from sharing infrastructure, ground handling services and security.

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Company Analysis of Deccan Aviation Ltd.

Deccan Aviation Limited operates Air Deccan, Indias first low cost carrier. It is also a leading player in the helicopter and aircraft chartering services.

Business Segments
DECCAN AVIATION LIMITED

Deccan Aviation (Helicopter & Charter Service)

Air Deccan (LCC Model)

Air Deccan Cargo (Proposed Cargo Airline)

DALPL (48% JV with Sri Lankan Companies)

Deccan Aviation -Helicopter, Charter & Other Services

Deccan Aviation (the helicopter & charter division) is Indias largest private sector charter aviation company with a network spanning seven locations across the country. Deccan aviation commenced operations in 1997 as chartered aircraft service provider. It currently has a fleet of 11 helicopters and 3 fixed winged aircraft. It provides a variety of charter services through out India including Heli-tourism, VIP and corporate executive travel, Aerial surveys etc. Deccan aviation cater

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largely to higher-income individuals and corporations. Some of its clients are: Adidas, Dell, Fiat and Bank of America.

Air Deccan
Air Deccan is the low cost, no frills scheduled carrier which primarily targets the higher end rail travelers and the leisure travel segment. Air Deccan commenced its operations in August 2003 and is currently the largest LCC in India. It has carried more than 14 mn passengers since its launch, with a market share of about 14%.Since its launch, the airline grew to 62 destinations by June 2007; with its vision being to empower every Indian to fly, the airline penetrated extensively into the deeper pockets of the country and provided low-cost connectivity to all towns.

DALPL Joint Venture with Sri Lankan Company

Deccan Aviation Lanka (Private) Ltd. (DALPL) is a joint venture between Deccan Aviation and two Sri Lankan entities, Favourite Investments & Navamaga Investments. It was Incorporated in Colombo in December 2003 and will be providing helicopter charter services with intention of providing scheduled airline operations in Sri Lanka. Deccan Aviation Limited currently has 48% stake in the Joint Venture.

Key Milestones : Deccan Aviation

1997 Launch

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1998 2001 2007

Commencement of Offshore Flying Operations 1st Fixed Wing Aircraft introduced into the Fleet BOD Approval to spin off the Charter Business into a separate entity

Key Milestones : Air Deccan

2003 2004 Launch Introduction of 1st Airbus into Fleet Launch of Rs.500 Ticket Schemes Launch of Travel Agent Credit Cards 2005 2006 Tie Up with Club HR Alliance with Jet Airways for Code Sharing Foray into Air Cargo business through a wholly owned subsidiary 2007 United Breweries Group acquires 26% stake by way of preferential allotment Merger of Air Deccan with Kingfisher Airlines approved by BOD 2008 Demerger of Scheduled Airline Business of Kingfisher approved with effect from 1-April-2008

Business model of airline operation

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The elements of Air Deccans no-frills, low-cost air carrier business model include:

1)

Offering low fares to stimulate demand

We believe low fares will help Air Deccan generate new business throughout India not only in new and underserved markets, but also in established markets that have so far failed to offer Indian middle-class consumers and cost-conscious businesses a choice of sufficiently costeffective fares. Air Deccan targets leisure, small business and corporate customers, and seeks passengers from the Indian middle class as well as from the cost-conscious segments of more well off classes.

2)

Selecting routes to stimulate demand

As of November 30, 2005, Air Deccan offers passengers a choice of 62 routes and 44 destinations. As at November 30, 2005, it is the only carrier providing service to 9 of its destinations and one of only two carriers providing service to 7 of its destinations. We believe that Air Deccans route strategy will help it grow new markets for air travel in India, as well as help it serve major urban centres with cost-effective fares. As it grows, we expect Air Deccan to increase the frequencies of its flights on certain existing routes, connect new city pairs among destinations it already serves and initiate service to new destinations, including some already served by other airlines and some currently not served by airlines at all.
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3)

Reducing costs, increasing utilisation

To help make its low-fare strategy as profitable as possible, Air Deccan strives to: (i) Reduce the costs of its operations. It does so in part by seeking to simplify its operations, minimise the aircraft types in its fleet consistent with its route strategy, use technology when such use can reduce costs and rejecting it when such use can complicate operations, such as in passenger check-in, and outsource non-core business processes. (ii) Provide a no-frills service. Air Deccan seeks to provide a simple service in exchange for its low fares. Product and service extras that are not reasonably necessary to the core task of flying passengers safely and efficiently are eliminated. Practices that many other airlines engage in regularly, such as providing help to passengers during layovers or offering frequent flier programmes, are not offered. Air Deccan passengers experience a pareddown version of flying compared to what many other airlines offer. But, they can pay less for an Air Deccan ticket and still get the basic transportation service they require. (iii) Seek high aircraft utilisation.
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Air

Deccan

employs

dense,

single-class

seating

arrangements in its aircraft and follows scheduling, ground handling and operational strategies designed to keep its planes in the air as long as practical every day. These measures help Air Deccan to increase its available seats flown. Air Deccan then uses load factor and yield management techniques in order to help maximise the revenues earned available seats flown. from, and help minimise the operating costs associated with, those

4)

Providing a safe and on-time service.

We consider the provision of safe travel to be of essential importance to our service. We believe that customers also demand on-time service and expect a minimum of delays, flight cancellations, baggagehandling errors and other inconveniences. We strive to provide these requirements while delivering a safe, no-frills service.

5)

Increasing ancillary revenues.

In addition to charging for tickets, Air Deccan earns revenues from charging for in-flight food and drink, selling advertising space on the interior and exterior of its aircraft and in a number of other ways. The airline regularly seeks to earn ancillary revenues where
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opportunities exist and the simplicity of its operations will not be compromised.

Competitive strengths of airline operation

Air Deccans competitive strengths include:

1)

First mover advantage

Air Deccan is the first no-frills, low-cost, scheduled commercial passenger airline in India. As a number of existing and new competitors seek to adopt a no-frills or low-cost approach to one or more parts of their operations, Air Deccan retains the advantage of being known the longest as a no-frills, low-cost carrier and having had the longest time to adopt and refine its low cost carrier strategies. By moving earlier, Air Deccan has also had an easier time getting desirable flight slots and building its operations in other ways.

2)

Simplifly!
Air Deccan follows a strategy of simplifying its operations to help keeps its costs down, its fares as affordable as possible and its services as easy for customers to evaluate, purchase and use as possible. Air Deccan seeks to embody and project this strategy to its employees and customers through the advertising slogan, Simplifly!. Simplification steps include such strategies as flying only point-to-point routes without seeking to facilitate onward
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connections, outsourcing services such as in-flight food and drink and moving to a manual, rather than computerised, flight check-in system.

3)

Strong management team, with leading lowcost carrier expertise.

We believe that Air Deccans management team has the necessary depth and capability to expand the airlines operations, refine its service delivery and implement its business model. The Air Deccan team is bolstered by a Chief Operating Officer who worked as Head of UK and Europe Operations at Ryanair and by others with extensive experience at Ryanair and JetBlue Airways. In addition, the relative youth of the Air Deccan organisation helps to provide new perspectives on Air Deccans operations.

4)

Load factor and yield management through dynamic pricing.

Many airlines vary ticket prices in the run-up to a flight in order to balance load factor (the level of filled seats) against yield (revenue earned per ticket). Air Deccan seeks to maximize revenue from ticket sales by attempting to achieve the best possible ticket price by filling as many seats as possible. Air Deccan uses dynamic pricing to help optimise its load factors and yields. Optimising load factors and yields allows an airline
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to

better

approach

a maximum

level of revenues

consistent with the preservation and increase of market share. Using dynamic pricing, Air Deccan can vary its ticket prices for a given flight over a wide range of possible prices, for many weeks prior to that flight, in order to capture more revenue while also seeking to extend its market. Air Deccan is in the process negotiating an agreement for implementing Navitaire software, for conducting its dynamic load factor and yield management, which is used by many leading no-frills, low-cost airlines around the globe for their revenue management.

Current Scenario of Kingfisher Airlines

Vijay Mallya-promoted Kingfisher Airlines Ltd joined other leading operators in making a turnaround when it posted an operating profit in the second quarter, a traditionally weak season during which approximately 30% of its medium-sized planes were grounded, resulting in an 18% reduction in seats offered. While Indias second largest airline by passengers carried reported an operating profit of Rs175 crore for the quarter ended 30 September against a year-ago operating loss of Rs65 crore, it reported a net loss of Rs230 crore for the second quarter, narrowing from the year-ago Rs419 crore loss. Kingfisher Airlines earned an average Rs4.56 lakh per flight during the quarter, 38.85% higher than the year earlier.Airline passenger growth rose 12%, while airlines added 8% more capacity from the year ago. The loss before tax and other income was RS240 crore compared with a Rs416 crore loss in the year earlier. The airlines domestic division posted an operating profit of Rs108 crore against an operating loss of Rs147 crore in the year earlier. International operations continued to be in the red, posting an operating loss of Rs53 crore versus an Rs134 crore loss in the year before.
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Kingfisher Airlines said its going slow on international expansion and striving to put six grounded planes back in the air. Kingfisher Airlines Indias second largest carrier by market share said on Thursday its board has approved a debt recast that seeks to convert some of its debt into equity. The move will help the company reduce its interest burden and stem losses. Kingfisher, controlled by United Breweries Holdings Ltd, will convert lenders loans of up to Rs13.55 billion into shares. It also plans to convert founders debt of up to Rs6.48 billion into share capital. It plans to issue up to 575 million redeemable preference shares and up to 780 million convertible preference shares to its consortium of lenders. Its board also approved issuing up to 648 million convertible preference shares to founder entities United Breweries (Holdings) Ltd. and to Kingfisher Finvest India Ltd. Kingfisher Airlines Ltd, the countrys second largest airline by passengers carried, will join Oneworld Alliance, a global grouping of airlines, becoming only the second airline in the country to become part of a global airline alliance after Air India which is already part of Star Alliance, according to the airlines request submitted to the civil aviation ministry. Kingfisher Airlines received approval to run flights on seven new international routes this month. The carrier, which runs 14 daily flights on seven international routes, said it will announce the launch dates of flights for the new routes later. Four of the new routes connect New Delhi to London, Hong Kong, Bangkok and Dubai, while the others link Mumbai with Colombo, Bangkok and Dubai

Analysis of Kingfisher Airline

1) Kingfisher Airlines currently operates with a brand new fleet of 8 Airbus A320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the first airline in India to operate with all new aircrafts. Kingfisher Airlines is also the first Indian airline to order the Airbus A380. It placed orders for 5 A380s, 5 A350-800 aircrafts and 5 Airbus A330-200 aircrafts in a deal valued at over $3 billion on June 15, 2005.

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2) Kingfisher Airlines has launched Five Star Privileges, an exclusive program that entitles guests to avail of great deals at partner establishment around the country. 3) Kingfisher Airlines captures market share with strong passengers in February 2009 as per the latest ministry of Civil Aviation data. 4) Kingfisher Airline has not effectively penetrated in the domestic market. They are more focused on international flight services they should focus more on domestic arena as there is scope for them to generate more revenue. 5) On comparison with jet airways kingfisher should have more expansion of fleets. 6) Should tie up with different state tourism (like Goa, Kerala, Tamil Nadu etc) to promote domestic air traffic. 7) Recasting of debt into equity is a good idea to generate more funds through FPO will help them to reduce the losses. 8) Kingfisher Airline is the only company in aviation sector which provides training to their employees, that means it suggests that they are more customer oriented. They want that their customer should face no problem while travelling. 9) Kingfisher Airlines should stop sponsoring in F1 Race & IPL as they are currently facing debt crunch. 10) They should join hands with certain banks like ICICI, SBI etc. to offer eticketing.

Spicejet Airlines
SpiceJet is a low-cost airline headquatered in Gurgaon, India. It began service in May 2005 and by 2008, it was India's second-largest low-cost airline in terms of market share after Indigo airline. SpiceJet was voted as the best low-cost airline in South Asia and Central Asia region by Skytrax in 2007. SpiceJet, India's leading low cost airline, is a reincarnation of ModiLuft. It is promoted by Ajay Singh and the Kansagra family. SpiceJet marked its entry in the Indian skies with 99 fares for the first 99 days, with 9,000 seats available at this rate.
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This deal was followed it up with a 999 promotional scheme on select routes. Their marketing theme "offering low 'everyday spicy fares' and great guest services to price conscious travelers. Their aim is to compete with the Indian Railways passengers travelling in air conditioned coaches. On 15 July 2008 Billionaire Wilbur Ross suggested he would invest 345 crore (US$76.25 million) in the low cost airline. The board of directors of SpiceJet accepted an offer in-principle from the US-based PE firm that would make available about 345 crore (US$76.25 million) to SpiceJet, a joint statement issued by SpiceJet and WL Ross & Co. Indian media baron Kalanidhi Maran acquired a major stake (37.7%) in this airline on June 2010. On December 9, 2010, SpiceJet made a firm order for 15 Bombardier Dash 8 Q400 and options for another 15. Currently, SpiceJet operates 21 Boeing 737-800/900ER aircraft across 19 destinations and has a 14% share of the Indian market. SpiceJet flies to 22 destinations across India, Nepal and Sri Lanka. It commenced international operations with flights from Chennai to Colombo, Sri Lanka on 7th October 2010, and flights from New Delhi to Kathmandu, Nepal on 9th October 2010.

Current Scenario of Spicejet Airlines

Low-cost carrier Spice Jet plans to buy as many as 30 planes from Canadas Bombardier in a deal worth up to $900 million intended to help boost its fleet. The airlines board approved the order for 15 turboprop planes along with an option to buy 15 more as part of a drive to boost services to smaller cities in India as demand for air travel expands. The plane purchase announcement came as the airline reported it swung to a profit of Rs. 10.10 crore ($2.30 million) in the three months ended September from a loss of one billion rupees a year earlier.
Chennai-based Sun TV Network Ltd chief Kalanithi Maran took control

of Gurgaon-based carrier SpiceJet Ltd on Monday by inducting new board members and a new chief operating officer, concluding the acquisition. He will be the new chairman of the company with the single largest stake of 38.66% through KAL Airways Pvt. Ltd. It paid Rs. 746 crore after the June announcement for a 37.7% stake in the airline, which was followed by an open offer to buy another 20%. SpiceJet Ltd, buoyed by second-quarter profit, announced on Tuesday that it will begin regional flights next year with newly ordered planes.The company made a profit of Rs. 10 crore in the three months
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ended September compared with a loss of Rs. 101.29 crore in the yearearlier period as passenger traffic continued to grow and helped by Rs. 25.17 crore from the sale and lease-back of planes. SpiceJet Ltd has been cleared to fly overseas in June, starting with Dhaka, Kathmandu and the Maldives, after the airline completes five years of domestic service later this month. The countrys carriers that fly overseas are Air India, Jet Airways, Kingfisher Airlines and JetLite, making SpiceJet the fifth to do so. SpiceJet Ltd announced net losses of Rs133.50 crore in the year to March, around 85% more than the Rs72.1 crore it lost the previous year, in the wake of steeply rising aviation fuel prices and slowing growth in passenger traffic.

Analysis of Spicejet Airlines

1) Comparing with all other players in aviation sector Spicejet is performing well as its revenue increased by 37% on compare with kingfisher which reduced by 6.58%. 2) Appointment of Kalanithi Maran as a CEO of the company had a positive impact on the company & also the value of the shares of Spicejet has increased as investors are having faith in the capabilities of Kalanithi Maran. 3) Currently company is using few fleets on lease for their business which is very good as it will help them to reduce their expenses to buy a new fleet but in future when the company is performing extremely well than they should buy new fleets which will help them to increase their market share in the business. 4) Currently the fleets of the Spicejet are flying overseas in Dhaka, Maldives & Nepal which is very good as it is the only Low Cost Carrier to get approval for overseas business. In future they should focus to increase their overseas businesses which will help them to generate more revenue. 5) They should go for merger with international alliance in order to increase their market share in overseas business too.

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providing scheduled airline operations in Sri Lanka. Deccan Aviation Limited currently has 48% stake in the Joint Venture. SWOT Analysis of Industry Strengths: * Growing tourism * Rising income levels * Liberal Environment * Modern Fleet * High Quality * Economic Growth * Political Stability Weakness: * Under penetrated Market * Untapped Air Cargo Market * Infrastructural constraints * Airport Infrastructure * Airways Infrastructure * National Carrier * Deep Pockets * High Cost Structure * Skilled Resources Opportunities: * * * * Expecting Expected Market Geographic Market Threats: investments* Shortage of trained Pilots Size* Growth* Location* * Terrorism Shortage High Middle East of Airports prices Aviation

* Lower Costs, Higher Quality

Marketing in Aviation
Effective marketing depends upon effective marketing system employed by an industry or separate companies. Marketing as an activity is carried out in a variety of contexts. The most obvious context is of course the sale of goods and services to end-users. Marketing can be described as one of the functional areas of
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a business, distinct from finance and operations Marketing can also be thought of as one of the activities that, along with product design, manufacturing, and transportation logistics. In general, aviation industry is one of the profitable industries today which is characterized by of rapid technological and marketing changes. Nevertheless, the present situation requires cooperation between airlines and airports which should help them to market their services effectively to their clients. Marketing strategies include a wide variety of techniques aimed to deliver customer satisfaction and safety. New product and services development, technological changes mark the main strategic activities in this market segment. Technology, being a universal factor tha t crosses national and cultural boundaries, plays the crucial role in aviation and aerospace industry. It should be mentioned that technology is truly "stateless"; there are no cultural boundaries limiting its application. Once aviation technology is developed, it soon becomes available virtually everywhere in the world. One essential characteristic of the effective global aviation business is face-to-face communication among employees and between the company and its customers. Without modern jet travel, such communication would be difficult to accomplish. New transportation technology significantly reduces the level of prices. The costs associated with physical distribution both in terms of money and time have been greatly reduced as well. The per-unit cost of shipping
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automobiles from Japan and Korea to the United States by specially designed auto-transport ships is less than the cost of overland shipping from Detroit to either U.S. coast. Another key innovation has been increased utilization of 20- and 40-foot metal containers that can be transferred from trucks to railroad cars to ships. Another technological innovation, which helps to improve marketing activities, is the Internet and World Wide Web. Airlines and aviation can be called boundary less or global industries, and for this reason Internet and Intranet services has become a driven force for them. Today's information technology allows airline alliance partners to sell seats on each other's flights, thereby helping travelers get from point to point more easily while boosting revenues for companies such as United Airlines and Lufthansa. Meanwhile, the cost of international telephone calls has fallen dramatically over the past several decades. That fact, plus the advent of new communication technologies such as e-mail, faxes, and video teleconferencing, means that managers, executives, and customers can link up electronically from virtually any part of the world without traveling at all. Marketing departments in aviation and airline industry work closely with R&D departments to ensure that the products which are developed are those which cater for the changing needs of target customers and different needs of varying customer segments. In recent years, high failure rates in the introduction of new products have led departments to be very risk averse, with most 'new'
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products emerging being merely extensions of existing product lines and not truly new and innovative offerings. The marketer's role in aviation and airline new product development is therefore about providing a link between the market and the design department, with customers and R&D technicians both being involved in the process. It also requires involving senior management, as changes in customer demand and purchasing patterns may have serious implications for future business objectives and directions. The main marketing strategy in aerospace and aviation industries is to design a product that consumers did not explicitly request. The challenge of course is to get out in front of consumers; to extrapolate and infer future customer needs. Yet traditional forms of marketing research seldom seem to provide the insight necessary to engage in creative marketing. The basic aerospace initiative includes: . Fund revolutionary, not just evolutionary, changes to the air transportation system to obtain greater capacity, safety, traffic flow and automation It is easy to see the rationale for presenting the marketing department as the linchpin in the new product development process. They are the conduit of information between the market, and the firm and the various departments involved in the new product development process. Taking on a pivotal role means broader involvement of various stakeholders which can be further facilitated by project teams which bring members of all groups together at the same
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time to discuss and attempt to solve mutual problems. "Infrastructure and air traffic management issues will be a new topic to address both on behalf of aerospace manufacturers and service providers and the SBAC airports segment" The above apparently suggests that new product development is purely finding out what customers want and then delivering it. It is possible to suggest, however, that customers do not always know what they want, or at least cannot articulate it in concrete terms. David Kelley expresses an interesting idea supposing that Airlines "are not marketing even if they think they are". He explains that "consumers are, for the most part, choosing based on where their frequent flyer miles are (that they collect through their jobs) and price. The typical leisure traveler these days is checking online via Orbitz, Expedia or one of the other services for prices and schedules. When the selection of options comes up from United, Northwest, Delta, American, Air France, Virgin Atlantic--how many people are choosing based on how they feel about the airline?" (Kelley, n.d.). On the other hand, it is difficult to deny the role of advertising in airline marketing which has a great influence on consumers preferences and choice. Today, customer service in airlines relies on reputation and trustworthiness and this no less true in the new forms of systemservice. In fields such as package delivery and money management, consumers are seeking indications that their risks will be minimized or eliminated. For these kinds of consumer acts, customer service plays

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an essential role in assuaging the fears of consumers by projecting an image of trustworthiness and expertise (Johnson, Scholes, 1998). For maximum penetration it may help to select primary (first choice) media that interlock or cross support each other. If deeper penetration into the same target market, for example, is required, then vertical advertising in the media that reach the same target market will be sought. For example, advertising on commercial television may be linked with advertising in the magazine that provides the program schedules for viewers, or local radio advertising in a particular area may be accompanied by direct mail or press advertising. "The airline industry has literally fought for deregulation that has made each company nothing more than a commodity" (Kelley). Without new qualitative service airlines companies will not be capable to achieve the overall objectives that are why the main objective of a company is to maintain the level of service quality and develop strategies to improve its services. Service concepts are based on understanding the unique environment in which a particular firm operates. Usually, airline companies find specific marketing strategies and then translate them into a detailed plan of action which fore see an efficient marketing effort. Implementing a customer oriented strategy is more important than any other techniques. It also means impressing upon the entire staff the importance of customer service because a satisfied customer is the best marketing tool available.
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All customers have some expectation of the quality of services which have to be provided. Present day situation is marked by two factors specification, which is to do with the 'design quality' of service, and conformity, which is to do with the 'process' quality which is achieved are of particular importance to customers. Ultimately they are the two factors which determine the quality levels provided by companies to their customers. These two factors however are themselves determined by other factors. Specification in the airline industry is determined as a result of an organization's policy, which in turn resulted from decisions on its market policy, and consideration of the market or customer needs and requirements, and the activities of competitors. This is the process of designing quality into the service (Ennew, Reed, Binks, 1993). For instance, "Airlines are scrambling to fill seats and make their customers happy, that's clear. British Airways just this week signed a deal with the Worldwide Travel Exchange (WWTE) hotel-booking arm of Expedia inc company Travel scope, enabling the airline's passengers to book rooms at more than 40,000 hotel properties" (Cox, 2002). Proof of customer contact improvement includes measuring customer satisfaction, establishing new performance standards, and thereby gaining greater control over, and reutilization of, professional service work. At the same time, quality improvement through self-directed project teams has evolved into a practice whereby task forces adopt goals and use methods that are
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centrally determined. In this manner, 'success' is evaluated by others through institutionally defined performance improvement measures (Mascarenhas, Kesavan, Bernacchi, 2004). Today, a wide range of Web services are adopted by airlines and aviation to contact with the customers and to ensure customer satisfaction. It is not a unique and a new form of service but still it is one of the most beneficial areas for attracting a new customers and providing new services for target customers. For instance, "Travelocity provides Internet and wireless reservations information for more than 700 airlines, but it doesn't have special marketing relationships with all of them. It did sign a similar deal with Continental in January and has deals with British Airways, JetBlue and America West, among other airlines" (Cox, 2002). For airlines companies, Internet rationalizes the expensive and cumbersome proposition of large-scale customer service. Second, the system serves to reduce at least the appearance of risk associated with time-space distanciation and the opacity of the expert system. In only a short time, online finance has become immensely popular around the world. This might have something to do with the fact that in climates of risk, especially those involving investments, many customers prefer a 'hands-on' approach. Indeed, online services and trading has several advantages for customers. The main, it is available around the clock. There are, of course, risks for customers associated with online trading
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In aviation this approach includes maintenance of high standards which is a key factor in effective customer contact. The purpose of maintenance is to attempt to maximize the performance of service by ensuring that it performs regularly and efficiently. Service, however complex or simple, however cheap or expensive, is liable to breakdown. The effective operation of any system is dependent on the maintenance of all parts of the system, e.g. buildings, services. Indeed, company welfare or personnel practice is designed partly as a maintenance activity, e.g. training and retraining to maintain the availability of appropriate skills, facilities to maintain human capacity, counseling to maintain interest and motivation (Join setal, 2003). The audiences may be geographically dispersed in time, but they share common interests that are perhaps difficult to serve profitably though other international media. The online airlines sites (www.bluejet.net.tc or www.britishairways.com) thrive because they offer their participants the following: a forum for exchange of common interests; a sense of place with codes of behavior; a meeting place for specialists; the development of stimulating dialogues leading to relationships based on trust; encouragement for active participation by more than an exclusive few. "Customers can book on-line at www.CanJet.com through Can Jet's Reservations Sales Centre" (Cox, 2002). Service, however complex or simple, however cheap or expensive, is liable to breakdown. Another alternative is to deliver ads via third-party ad-server companies which can serve ad messages simultaneously to multiple Web sites, measure
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results, produce consolidated reports, report on the success of the entire campaign, and analyze these results immediately, enabling advertisers to quickly assess the ongoing effectiveness of the campaign. In traditional markets, dual distribution systems are not uncommon; there are numerous examples of companies using more than one channel of distribution to sell to different groups of customers. However, the process of managing multiple distribution systems can be both tricky and risky. While electronic commerce is creating new opportunities for differential pricing, it can also make such pricing strategies more difficult when it is used to provide customers with better information about their choices. Indeed, customer ignorance -about prices, features and relative product performance - has traditionally been a source of profit for companies. The relationship marketing process involves an iterative cycle of knowledge acquisition, customer differentiation and customization of the entire marketing mix. This process is sometimes referred to as a learning relationship (Johnson, Scholes, 1998). A learning relationship between a customer and an airline company gets smarter and smarter with each individual interaction, defining in ever more detail the customer's own individual needs and tastes. A problem with aerospace industry is that although there are only a few major companies, these companies have a majority of the control over the market, requiring an extremely unique spin off of this already established product to have a chance at
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success. There are many innovative products that enter the sector every year. A talented company management could definitely add these products to the list if they are willing to work hard, think outside of the box, and put their heart into their company (UK aircraft and aerospace industry, 2005) Competitive pressures have prompted many airlines and aerospace companies to involve marketers in design, manufacturing, and other value-related decisions from the start. This approach is known in some circles as boundary less marketing. Rather than linking marketing sequentially with other activities, the goal is to eliminate the communication barriers between marketing and other functional areas. Properly implemented, boundary less marketing ensures that a marketing orientation permeates all value-creating activities in a company (McDonald, Christopher, 2003). A partnership marketing strategy is the quickest and cheapest ways to develop a global strategy in aviation. It allows share control over assigned tasks, a situation that creates management challenges. Partnership in aviation is attractive because high product development costs in the face of resource constraints may force a company to seek partners and the technology requirements of many contemporary products mean that an individual company may lack the skills, capital, or know-how to go it alone (UK aircraft and aerospace industry, 2005). It is possible to conclude that aerospace and airline industries mature, fragmentation is overcome and the industry tends to become a consolidated industry dominated by a small number
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of large companies. Although industries begin by being fragmented, battles for market share and creative attempts to overcome local or niche market boundaries often result in a few companies' obtaining increasingly larger market shares. When product standards become established for minimum quality and features, competition shifts to a greater emphasis on cost and service. Slower growth combined with overcapacity and knowledgeable buyers put a premium on a firm's ability to achieve cost leadership or differentiation along the dimensions most desired by the market. The increasing opportunities of the Internet offer another area of strength for airlines marketing strategy. Customers want more help with the Internet, airlines in a better position to give it to them. In the traditional brand relationships, communication flows between the marketer and the consumer. The key to airlines successful relationship marketing program is information. The better information that a company can propose to a particular customer, the more value that firm will potentially be able to provide that customer.

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Domestic Market Share

Share of Passengers carried by scheduled operators during January, 2008

Financials
Particulars Total Revenue Net Profit after tax Earning per share Year ended June 07 21,423.09 (4,195.76) (44.24) 15 months ended Jun, 06 13,518.06 (3,405.47) (68.24) Rs. In millions Year ended Mar05 3,202.83 (195.31) (8.38)

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Challenges for Aviation Industry There are several challenges in front of aviation industry because of the growth in the aviation sector and capacity expansion by carriers. These include shortage of workers and professionals, safety concerns, declining income and the lack of accompanying capacity and infrastructure. Moreover, stiff competition and rising fuel costs are also negatively impacting the industry. 1. Shortage of trained Employee: There is a shortage of trained and skilled manpower in the aviation sector as a result 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: To provide regional connectivity is one of the biggest challenges facing the aviation sector in India. The lack of airports is hampering the growth of regional connectivity. 3. Rising fuel prices: As fuel prices have risen, the inverse relationship between fuel prices and airline stock prices has been established. Moreover, it also led to increase in the air fares. 4. Declining yields: As more players are attracted towards Aviation industry because of increasing growth prospects it 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 insufficient to support growth. While a initiate has been made to upgrade the infrastructure, the results will be visible only after some years.
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6. High input costs: The input costs are also very high because of some of the reasons like Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increasing manpower costs due to shortage of technical personnel.

Conclusion
Continuing an upward trend, India's domestic air traffic witnessed a 22% growth between January and April this year with airlines carrying over 1.62 crore travelers. Between January and April, domestic airlines carried around 1.62 crore passengers as against the 1.33 crore during the same period last year. This came against the backdrop of continued downward trends witnessed in the global aviation sector since it was hit by recession and experienced negative growth since 2008. In contrast, the scheduled Indian airlines flew a total of 41.88 lakh domestic passengers in April against 39.03 lakhs in March this year. Of these, Jet Airways and JetLite combined carried 10.84 lakh, Kingfisher 8.98 lakh, while Air India (domestic) remained at the third spot with 7.62 lakh passengers. Among the low cost carriers, 6.58 lakh passenger preferred to fly with IndiGo, SpiceJet carried 5.27 lakh and GoAir 2.46 lakh while all-business airline. Barring Kingfisher, all other airlines witnessed a growth in their market share. So it can be said that it was an average performance of the airline companies in the current year due to hike in fuel price & recession it did not performed well up to the potential it should be, but in future there is a scope for the companies to perform well as government is trying to take measures to reduce inflation which will benefit them. May be the year 2011 will be more joyful than the 2010 year for the aviation sector in India.

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Bibliography: 1. http://www.iloveindia.com/economy-of-india/aviation-industry.html 2. http://explore.oneindia.in/industry/aviation/ 3.http://www.indiahousing.com/infrastructure-in-india/aviation-industry-inindia.html 4. http://www.bharatbook.com/Aviation-Industry-in-India.asp 5. http://avindia.blogspot.com/ 6. http://www.india-server.com/magazine/airlines-3.html 7. http://business.mapsofindia.com/aviation/ 8. http://en.wikipedia.org/wiki/Indian_Airlines 9. http://www.researchandmarkets.com/reports/449298 10. http://www.naukrihub.com/india/aviation/overview/trends/

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