Pest Analysis Indian Aviation Sector
Overview of Airline Industry
Air travel has grown in the past decade. Travel grew strongly for both leisure and business purposes. India will have nearly 800 to 1000 airplanes by 2023, it was estimated by Airbus. In spite of growth between 30 to 50 per cent in Indian aviation industry, losses of approximately 2200 crore is estimated for the current year.
During 19991-1992, Modiluft, East West and Damania went bankrupt. Air Sahara and Jet Airways survived along with government own Indian Airlines because they had the capability to bear losses. Globalization and privatization had a major impact on aviation industry. Indian aviation industry was deregulated by the government in 1990s. As a result now 14 airlines are operating today in Indian sky. Now, collaboration with international organization and foreign direct investment are welcome to improve infrastructure and technology. Today people who can not afford high prices of Full Service Carriers (FSC) can travel by Low Cost Carriers (LCC) or budget airlines. Air Deccan was India’s first LCC started in 2003. It flies to several metro and non-metro destinations. All airlines have three major fixed costs i.e. fuel costs, financing or aircraft lease and labour cost. But LCC costs are 10 to 15 per cent lower than FSC. This is because of three reasons. Firstly, saving on distribution cost as passengers book tickets on the internet. Secondly, no frills are offered on board. Thirdly, to accommodate additional seats, catering and cabin crew space in these aircraft has been used. So these aircraft have 40 seats more than the FSC.
Political Environment
There are several limitations in aviation infrastructure in India for instance parking bays, gates to board passengers, landing slots etc are in short supply. This often leads to massive delays, cancellation and major losses in revenue for many LCCs. For upgraded infrastructure facilities, India’s civil aviation
Air travel has grown in the past decade. Travel grew strongly for both leisure and business purposes. India will have nearly 800 to 1000 airplanes by 2023, it was estimated by Airbus. In spite of growth between 30 to 50 per cent in Indian aviation industry, losses of approximately 2200 crore is estimated for the current year.
During 19991-1992, Modiluft, East West and Damania went bankrupt. Air Sahara and Jet Airways survived along with government own Indian Airlines because they had the capability to bear losses. Globalization and privatization had a major impact on aviation industry. Indian aviation industry was deregulated by the government in 1990s. As a result now 14 airlines are operating today in Indian sky. Now, collaboration with international organization and foreign direct investment are welcome to improve infrastructure and technology. Today people who can not afford high prices of Full Service Carriers (FSC) can travel by Low Cost Carriers (LCC) or budget airlines. Air Deccan was India’s first LCC started in 2003. It flies to several metro and non-metro destinations. All airlines have three major fixed costs i.e. fuel costs, financing or aircraft lease and labour cost. But LCC costs are 10 to 15 per cent lower than FSC. This is because of three reasons. Firstly, saving on distribution cost as passengers book tickets on the internet. Secondly, no frills are offered on board. Thirdly, to accommodate additional seats, catering and cabin crew space in these aircraft has been used. So these aircraft have 40 seats more than the FSC.
Political Environment
There are several limitations in aviation infrastructure in India for instance parking bays, gates to board passengers, landing slots etc are in short supply. This often leads to massive delays, cancellation and major losses in revenue for many LCCs. For upgraded infrastructure facilities, India’s civil aviation
Bibliography: Newspaper Reference Badarinath, K.A and Choudhury,G (2006) ‘India rising: GDP goes up to 8.9 p.c.’, Hindustan Times, 30 September, p.1 Business Standard (2006) ‘Airbus, HAL to partner for $100m Nashik facility’, Business Standard, New Delhi, 3 October, p.4. Business Standard (2006) ‘Airline may face entry barriers’, Business Standard, New Delhi, 29 September, p.1. Guha, R and Jayaswal, R (2006) ‘Lalu set to clip airlines’ wings, cut AC fare 30%’, The Economic Times, New Delhi, 25 September, p.1. Jayaswal, R (2006) ‘Airports upgrade gets wide berth’, The Economic Times, New Delhi, 7 October, p.11. Padmakshan, M (2006) ‘Kingfisher flies into red with Rs 240- cr loss’, The Economic Times, New Delhi, 28 September, p.4. Subramaniam, G (2006) ‘Airline may’ve to go slow’, The Economic Times, New Delhi, 28 September, p.1. The Economic Times (2006) ‘Aviation losses’, The Economic Times, New Delhi, 29 September, p.14. The Economic Times (2006) ‘Civil aviation growth to pump up MRO business, The Economic Times, New Delhi, 25 September, p.5. The Economic Times (2006) ‘Is the Indian aviation boom threatened?’, The Economic Times, New Delhi, 26 September, p.15. The Economic Times (2006) ‘No airlines to fly for some time: Patel’, The Economic Times, New Delhi, 29 September, p.1. The Economic Times (2006) ‘There’s fear of bubble’, The Economic Times, New Delhi, 28 September, p.10. Times of India (2006) ‘India aims to be top holiday spot’, Times of India, 7 September, p.22. Times of India (2006) ‘India ranked world’s 4th best holiday haven’, Times of India, 7 September, p.1. Verma, S and Subramaniam, G (2006) ‘Pvt hands to train pilots, cabin crew’, The Economic Times, 7 October, p.6. Sheth, H et al, (2006) ‘Bottomline Blues’, Business India, 24 september, p.p 46-52