Marketing report on the airline industry of India

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                                Marketing management        

 

                      A report on

AIRLINE INDUSTRY IN INDIA

PRESENTED BY – GROUP

AMIT PATIL                      42005

NIRLIPTA DAS                  42015

PANCHANAN INGLE       42025

TANISHA LAL                   42035

GANESH RAJ                     42045

SUMIT SONI                       42055

                                                 

INTRODUCTION

Aviation industry in India has the potential to grow because -

  • 16 Millions Indians are travelling by rail daily

  • 19 Millions Indians are travelling by air yearly

Due to bilateral air traffic agreements, the international air traffic increased by 17%.Only 1% of the Indian population have used the airplane at least once(Air Deccan: „40% of our passenger are first time travellers“) 450 – 500 Million. Indians are potential air travellers. 

There were only TWO players in post independence era.All airlines were merged either into Indian Airlines or Air India (Air Corporations Act,1953). Government monopoly for next 40 years (till 1991).Huge entry barriers for private players.

CURRENT SCENARIO

The liberalization of aviation industry in India has precipitated the boom for domestic and international passenger carriers. The domestic passenger and cargo traffic recorded a growth rate of 44.6% and 8.7%, and the international passenger and cargo traffic recorded growth rates of 15.8% and 13.8% respectively during 2006-071. The Airport Authority of India (AAI) manages total 122 airports in the country, which include 11 international airports, 94 domestic airports and 28 civil enclaves. Top 5 airports in the country handle 70% of the passenger traffic of which Delhi and Mumbai together account for more than 50%. The latest data compiled by Airports Authority of India (AAI) shows that all the airports handled 90.44 million passengers during the calendar year 2006 compared with 67.95 million handled during the same period in the previous year2. The substantial growth of Indian aviation industry is mostly due to:

 (i) low fares offered by Low Cost Carriers (LCC) like Deccan, Spicejet, GoAir etc; and

(ii) Scheduled domestic air services are now available from 75 airports as against just 50 earlier so it is evident that Indian airline industry is

  • Growing vigorously at a rate of 25-30% and is expected to continue

  • International Players making a beeline to enter this emerging market

  • Carriers operating in India has grown from two state-owned players in 1991 to more than ten today

  • Numbers of Flights operating: 2500 per day

Some Major Players…

MAJOR PLAYERS

   Players in Indian aviation industry can be categorized in three groups:

  • Public players - Air India, Indian and Alliance Air  

  • Private players - Air Deccan, Air Sahara, GoAir Airlines,  IndiGo Airline, Jagson Airline, Jet Airways, Kingfisher Airline, Paramount Airways, SpiceJet Airlines

  • Start up players - Omega Air, Magic Air, Premier Star Air and MDLR Airlines

SWOT ANALYSIS OF AIRLINE INDUSTRY

STRENGTHS

  • In Apr-Dec 06, the domestic market has grown at about 46%, from 62000 to 91000 pax per day, over and above growth of 25% in Apr-Dec 05 over 04
  • In Dec’ 06, domestic market witnessed average daily carriage of around 114,000 passengers per day – another first for the industry

  • Indian aviation market has been booming – domestic at 46%, and international at 17%, over the past 2 – 3 years
  • 6 new airlines, almost all operating on the LCC model
  • Strong capacity growth in the domestic market, mainly in the LCC segment
  • Strong economic growth

  WEAKNESSES

  • LCCs and other new entrants together now command a market share of around 46%
  • Legacy carriers forced to match low LCC fares, during a time of escalating costs
  • The bottom-line – lower yields for all operators

Gaps in Infrastructure

Airlines paying for these strategic gaps in many ways

  • Higher fuel consumption  - long holding times, on ground and in the air
  • Lower utilisation of aircraft - slot constraints and air traffic congestion
  • Sub-optimal route network strategies, due to lack of night parking stands at major airports and navigational aids at many of the smaller airports
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High input costs

  • ATF prices in India continue to be far higher than global rates, making ATF account for 35-40% of operating cost, as against global average of 20-25%
  • High basic rates aggravated by high taxes imposed by State Govt.’s
  • ATF cost / kilolitre :
  • US$ 755 in Delhi
  • US$ 780 in Mumbai
  • US$ 455 in Singapore
  • US$ 497 in Dubai

OPPORTUNITIES

A large & growing potential market

  • The 4th largest & 2nd fastest growing economy in the world - GDP growth of 9.2% in Q3 2006
  • Over ...

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