Mid Year assessment of Aviation Industry...

Its exactly half of 2009, lets have a assessment of Aviation industry in India. This report has been take from IBEF : -

*Sector structure/Market size : With a growth rate of 18 per cent per annum, the Indian aviation industry is one of the fastest growing aviation industries in the world. The government's 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 has jumped to 9th position in world's aviation market from 12th in 2006. The scheduled domestic air services are now available from 82 airports as against 75 in 2006. *Potential for Growth : The Indian Civil Aviation market grew at a compound annual growth rate (CAGR) of 18 per cent, and was worth US$ 5.6 billion in 2008. The Centre for Asia Pacific Aviation (CAPA) has forecast 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. India's civil aviation passenger growth, presently at 20 per cent, is one of the highest in the world. By 2020, 400 million Indian passengers are likely to be airborne. By 2020, Indian airports are expected to handle more than 100 million passengers including 60 million domestic passengers and around 3.4 million tonnes of cargo per annum. Moreover, significant measures to propel growth in the civil aviation sector are on the anvil. 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. *Airport Infrastructure : Mumbai and Delhi airports have already been privatised and are being upgraded at an estimated investment of US$ 4 billion over 2006-16.Greenfield airports are operational at Bangalore and Hyderabad. These are built by private consortia at a total investment of over US$ 800 million. A second greenfield airport being planned at Navi Mumbai is going to be developed using public-private partnership (PPP) mode at an estimated cost of US$ 2.5 billion. 35 other city airports are proposed to be upgraded. The city side development will be undertaken through PPP mode. Over the next five years, AAI has planned a massive investment of US$ 3.07 billion—43 per cent of which will be for the three metro airports in Kolkata, Chennai and Trivandrum, and the rest will go into upgrading other non-metro airports and modernising the existing aeronautical facilities. *Aviation Policy : Many policies supporting the infrastructure are now in place. 100 per cent FDI under automatic route is permissible for greenfield airports. For existing airports, FDI up to 74 per cent is permitted through automatic approvals and up to 100 per cent through special permission (from FIPB). Private developers allowed setting up of captive airstrips and general airports 150 km away from an existing airport. 100 per cent tax exemption for airport projects for a period of 10 years. 49 per cent FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies. 100 per cent equity ownership by Non-Resident Indians (NRIs) is permitted. overhaul (MRO) and training offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020. 74 per cent FDI is permissible in cargo and non-scheduled airlines. The Indian government plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players. *Major Investments : Over the past year, various companies have shown an interest in the Indian aviation industry. US-based business jet maker, Hawker Beechcraft Corporation (HBC), opened its first authorised service centre in Delhi in partnership with Interglobe General Aviation with a total investment of US$ 8 million. Richard Branson, who controls UK carrier Virgin Atlantic Airways Ltd, has sought permission to start a domestic airline in India. GMR Infrastructure is looking to tap the growing corporate jet market in India with investment plans to the tune of US$ 151 million. It is also in talks with aircraft component manufacturers such as Honeywell and Safran to set up a components assembly plant in the country. The company plans to invest US$ 60 million for the proposed JV. US aircraft maker, Boeing Co, will deliver 100 planes worth US$ 17 billion over the next four to five years to India. *Road Ahead : The Indian aviation sector is likely to see clear skies ahead in the years to come. Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5 years. The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020. Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure. Associated areas such as maintenance, repair and

Elections & General Aviation India...

With general eletions looming around in India, it brings a big hope for all charter companies which are facing the economic slowdown. As corporates have cut thier charter movement significantly, these elections are a big hope for all charter operators. With political parties ready to spend big bucks these elctions may become a boon for all the charter operators. Even regional parties are not shying away to invest in charters. Helicopters are favorites for all politicians as they can land on each & every voters back yard. Aircrafts (turbo-prop or Jet) are also a liked for fast movements. Hoping these elections may revive all charter companies.

Dealing with Challenges at Air India

Air India has been going through a major transformation over the past two years. It has been inducting new aircraft for the first time in well over a decade, has introduced new long-haul flights and in-flight products that are getting decent reviews, has merged its operations with the former Indian Airlines, is modernising IT systems and is preparing to join the Star Alliance. In reality it is all long overdue, as Air India had been stagnating for so long. Chairman and managing director Raghu Menon is the first to admit that the change process should have started long ago, but as he puts it: "It is better late than never." India's air transport market has itself seen massive change over the past five years, since Air Deccan was launched as the country's first low-cost carrier. Its success led to the launch of many more airlines, which in their fight for market share brought airfares down sharply, resulting in huge growth in demand. At the same time the government opened up air services agreements to allow foreign airlines to operate more services to India, and began modernising airport infrastructure at last. The new players put immense pressure on state-run Air India and Indian, which had long been regarded as employment machines with apathetic staff, ageing aircraft and outdated in-flight products. The plan was to create a true network carrier operation to help the combined entity compete effectively with the new players. Air India had until then focused on international services while Indian focused on the domestic market, with some international services to Southeast Asia and the Middle East. "The merger is one of the best things that has happened. It has made us an airline of competitive scale in the region, in the South and Southeast Asian region. The main gains that we anticipated have turned out to be quite realistic, particularly the network synergies and the synergies in operations, and despite all doomsday predictions the human resource merger has also been of great ­benefit," says Menon, who only became ­chairman and managing director earlier this year after moving over from the Ministry of Civil Aviation. Air India still has real problems and some rival airlines say privately that its change process has largely been cosmetic without addressing the real issues of ­improving the balance sheet and cutting staff ­numbers. Officials at Air India feels other way costs have been reduced due to the enlarged entity's increased purchasing power. Offices abroad are being merged, and there has been a significant revenue boost which has exceeded all expectations. The feed is the major positive development. Its trying to ensure that the traffic from the domestic network feeds into two major hubs of Delhi and Mumbai, from where most of our international operations take place, so that passengers travelling abroad as well as passengers coming to India are able to get good seamless connectivity. The route duplication is almost completely removed. Also the duplication in offices and personnel in various locations has been removed, helping a big saving in cost. Financial benefits are impossible to quantify as the carrier does not release earnings at timely intervals since results must first be ­presented to Parliament. The last published accounts were for the year ended 31 March 2007, when Air India posted a loss after ­several years of profitability. It admits it is still losing plenty of money. Insiders say it lost more than Rs20 billion ($406 million) in the last financial year and the civil aviation minister himself was recently quoted as saying losses could hit Rs30 billion this year. One of the assurances which the government gave at the time of the merger was that there would be no retrenchment of employees. Another major problem is with information technology, particularly the lack of a single reservations system. This means that although only the Air India name is now used, the old Indian Airlines code remains. Passengers booking online, for example, still need to choose their flights from one of two websites. Changing this is a priority and a new booking system should be in place by the middle of 2009 from vendor EDS which will allow the two airlines to merge fully under the Air India code. Pushing it to speed up the implementation is the fact that it is due to join the Star Alliance in 2009. Air India will be the first Indian carrier to join an alliance and this should give it an edge over its competitors at home, all of which are struggling financially as a result of increased costs, overcapacity and a recent drop in demand. The tougher times have led to major changes in the operating environment and over the past two years there has been a wave of consolidation. Aside from the Air India-Indian merger, Jet Airways acquired the former Air Sahara (now JetLite) and Kingfisher acquired the former Air Deccan.These three groups now control 77% of the market by passenger numbers. Air India is looking for injection of equity,as its equity base is very low. The second proposal is for a soft loan. Air India holds a lot of promise and should not be underestimated. It is an airline which has performed for over 75 years, and with the transformation that is taking place it will perform even better.

interview...

As promised I am finally publishing the Interview with MyJet CEO Mr. Sudheer Nair. It can viewed by clicking here... It was an email based interview which was a part of couple of mail sent to him. I thank him to replying all the questions. New concept of Air Charter will be started by MyJet. Hope readers will enjoy it.

Indian Aviation: lost & gone...

Its been a couple of months that I am not active with my posts. I know that its long due to give a good post & share a great piece of knowledge. Being working with Club One Air & watching closely my fav. sector has only given me a lot of disappointments specially with the growth of this industry. Like every body else I can also blame high ATF prices & blah-blah... I just want to know the base of this halt in growth. Are airlines to be blamed just like ATF hikes, I personally dont think so. In my opinion, Govt. is to be blamed for its double standard policies, be it development of airports, giving permissions to airlines to fly abroad or entry of new airlines. Govt. made such a hoopla about regional airlines, what happened to them. None of them has taken wings. In the past it self so many low cost airlines started but, nearly all of them are in the stage of dying. 

Who is at fault???

The Low Cost Charters (LCC)...

Just imagine getting the services of Air Charters in the cost of business class air tickets. Yes, this is going to be possible very soon. Till now we only discussed about the low cost model of the scheduled airlines. Today I will discuss about the low cost model in air chartering. Air chartering which was considered to be exclusive, is soon will be in the reach of middle class people. This can be done with VLJs i.e. Very Light Jets (more info about VLJs from wikipedia). There are already a few companies trying to get VLJs in India. These are :

MyJet India

Club One Air

Invision Air

MyJet & Club One Air are going to start their services soon. In fact, MyJet will offer per seat on demand which is very unique & first of its type in India, where as Club One Air will offer high end services (matching its present offerings). Not much information is there about Invision Air.

Watch out for MyJet !!!

Pilots in India often fail alcohol tests

Around 50 pilots each year in India are being grounded because they had consumed alcohol before taking a flight, the country's civil aviation authorities.

The Director General of Civil Aviation (DGCA), a body controlling airline operations in India, said dozens of pilots are found to have consumed alcohol during routine pre-medical tests every year.

India is one of the fastest growing aviation markets in the world with dozens of new airlines competing with each other everyday, often resulting in pilots forced to fly at short notices.

The country has about 4,500-5,000 commercial pilots, and another 2,500 are undergoing training. Civil aviation rules specify that pilots and cabin crew cannot consume alcohol 12 hours before taking a flight. A pilot can be grounded for three months and he can lose his license if he repeats the mistake again. Some times flights have to be canceled because of drunken pilots.