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Bizness Aviation%20 Industry%20 Analysis

Bizness Aviation%20 Industry%20 Analysis






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    Bizness Aviation%20 Industry%20 Analysis Bizness Aviation%20 Industry%20 Analysis Document Transcript

    • Bizness 11 domestic airlines scrambling for Aviation Industry Analysis traffic, when there was place for hardly two or a maximum of three players in the market. In 1953 came about the - Kensource nationalization of the airlines by the government, which merged the entire private, operators to create India buys 50% of world’s aircraft – Times News Network – June 17th Indian Airlines. Until almost a 2005 - This headline news that appeared a few days ago summarizes our decade ago, all aspects of aviation intention to cover in this issue, the literally high-flying sector of the Indian were firmly controlled by the economy – The Aviation Industry. For many years air travel in India was government creating a monopoly considered to be the privilege of the elite. It was mainly on account of the in the sector. By virtue of the Air prohibitive cost structure. This image of aviation has however undergone a Corporations Act of 1953, this sea change in recent times and now aviation is looked upon as an essential link monopoly continued for nearly the not only for international travel and trade but also for connectivity to different next 40 years. The Directorate General of Civil Aviation parts of the country. By its very nature, aviation is a critical part of the country’s controlled every aspect of flying, infrastructure. It has important ramifications for the development of tourism including granting of flying and trade and for opening up inaccessible areas of the country, thus providing licenses to pilots, certifying stimulus to business activity and economic growth. aircrafts for flight and issuing all rules and procedures governing T Indian airports and airspace. he story of aviation controlled Trans-Continental Gradually, the Airports Authority began more than a Airways; alias Imperial Airways, of India a separate body was century ago when in on deputation to the Tata’s to see entrusted with the responsibility of 1903 the Wright how it was done. Meanwhile the managing all national and brothers at Kitty Tata Services later became the Tata international airports and Hawk, USA, carried out the first Airlines and then Air-India and administering every aspect of air powered flight of a ‘heavier than spread its wings as Air India transport operation through the air’ machine. This was followed by International. Domestic aviation Air Traffic Control. With the the development of the IC engines however remained chaotic. With opening up of the Indian economy and multi-cylinder radial engines the American Tenth Air Force in in the early 90’s, this sector too saw in the later part of the 20th century India disposing off its planes at some important changes. The and actually set the pace for the throwaway prices there emerged repealing of the Air Corporation rapid growth of Aviation Technology with the introduction of Jet engines, turbo fans and digital fly-by-air systems. Aviation in India Aviation in India took off in October 1932 when J R D Tata made his inaugural mail flight from Karachi to Mumbai. Soon after, the Deputy General of Civil Aviation in his report for 1933-34 spelt out the government’s keen interest in the development of the aviation industry in the country by sending staff from the state
    • Bizness Act was a significant move in its reshaping as it ended the monopoly status of the public sector and introduced private competition. The Airline industry attained significance after it was de- regulated from government shackles on the domestic front, after the economy opened up in the 90’s. Private competition sprang up and services improved with consumers getting a wider choice than before leading to a higher proliferation of it as a preferred mode of transportation. The sector and for devising and industry today is poised at an Authority of India, however, will implementing schemes for the important crossroad from where it retain a number of areas in orderly growth of the sector. In can take off with concerted efforts particular the Air Traffic Control addition, the ministry oversees the in a right policy framework. function. The authority has also provision of airport facilities, air However it still has a lot of planned the purchase of a new traffic services and the carriage of catching up to do not only on the satellite based CNS-ATM system passengers and freight. international front but also and intends phasing out all There are two important internally, vis-à-vis other sectors ground-based communication and organizations under the MOCA such as IT and telecom, which have navigation systems by 2010. • The Airports Authority of visibly reaped the benefits in the India (AAI) and wake of general reforms and Infrastructure • Directorate General of Civil liberalisation. According to a white Aviation (DGCA). Infrastructure is a very crucial paper, by 2010 world aviation will The AAI owns and manages all aspect of the civil aviation handle over 2.3 billion passengers the operational airports in the industry. In an attempt to every year creating 28 million jobs country including air traffic modernize and make airports of globally. The Indian aviation control. The Directorate General really world class standard, issues sector is gradually moving in the of Civil Aviation is responsible for like customs and immigration and direction of gaining from the regulation of air services to and ancillary services such as taxis and boom.Tthe pace at which it has from within India and for the terminals will have to be addressed been happening in recent times formulation and enforcement of seriously. Presently these services leaves not even a speck of doubt civil air regulations, air safety and are handled by multiple agencies that this sector could soon be at the air worthiness standards. like, Airport Authority of India top. There has been a quantum jump (AAI), CISF, customs, Ministry of in the level of passenger and cargo Home Affairs and the State police. The regulatory framework traffic in the country in the recent In view of doing this in a more Although a number of sectors years. The need to meet this efficient manner, there has been a were opened up in 1991 the demand has forced the proposal to invite private aviation sector is still largely under government to look at private participation through joint venture government control. The sector enterprise to invest in and develop for the restructuring of the metro functions primarily under the facilities in this sector. It has made airports, especially Delhi and Ministry of Civil Aviation plans to lease out the four main Mumbai. The intent of inviting (MOCA), which is responsible for metropolitan airports to private private participation in the process the formulation of national policies investors for a period of 30 years is to add to the resources required and programmes for the and the process for the same has in view of the huge investment development and regulation of the already begun. The Airport envisaged for the purpose. This
    • Bizness India (for international traffic) and would also help in the form of operating domestic scheduled air Indian Airlines (for the domestic global technology, operations and services as well as international traffic). However, gradual release management practices becoming scheduled air services to of control by the government, available for the purpose. neighbouring countries. Indian especially in the domestic area has The government has also Airlines operated international air seen the emergence of newer planned two Greenfield projects at services to Bangladesh, Bahrain, players in the civil aviation sector Bangalore and Hyderabad on a Nepal, Maldives, Sri Lanka, on the domestic scene. The Built, Own, Operate and Transfer Pakistan, Malaysia, Thailand, domestic air transport sector now (BOOT) basis with public and Myanmar, Singapore, Kuwait, has many players – Indian private participation. The Oman, and U.A.E. Airlines, Jet Airways, Air Sahara concession agreement for being the primary operators in Bangalore was signed in July 2004 The future addition to which a host of other while for Hyderabad the low cost airlines have sprung up With the Indian economy doing consortium to implement the to benefit from the boom. There well, there has been a project has been identified and the has been a tremendous amount of corresponding YoY growth in the concession agreement is under competition of recent for a larger GDP. As the economy grows, the examination. With such initiatives share of an increasing and middle class and the resultant to attract private sector investment expanding market. Following this consumer market is expanding for additional resources, the increased level of competition, rapidly on a relative basis. This has Airports Authority of India (AAI) even state-owned carrier Indian been a remarkable achievement for can now utilize its resources for Airlines today operates on a very aviation and a clear sign that the developing other airports in the aggressive strategy of pricing and industry can only expand as more country. Had these initiatives not introduction of new products, and more people become capable been taken, the entire AAI rather than behaving like a typical of travelling by air. Despite 9 resources would have been spent public sector undertaking. The airlines and 350 aircraft, funding entirely behind Delhi and Mumbai result of all this has been a major and infrastructure remain a big airports, hardly leaving anything gain for the consumer in terms of question mark for the Indian for others. AAI is planning to pricing and services. aviation sector. In the last 6 upgrade and modernize 22 other On one hand where the months, private Indian airline important airports of the country domestic air transport scene is companies have placed orders for to world-class standards, most of characterised by a capacity nearly 250 aircraft that represent a which are famous tourist surplus, the international sector is whopping 43% of the total global destinations. Some other beset with problems of a severe orders placed with aircraft important issues are also being capacity shortage. The manufacturers; Airbus and Boeing. addressed. They include bringing international air transport sector is Add to it another 93 aircraft that round the systematic cost in the governed by bilateral air service national carriers, Indian Airlines sector on account of taxes and agreements between India and and Air India, have ordered takes duties, need for an independent various countries, which stipulate India’s share to a whopping 50% aviation economic regulatory the number of flights, capacity and of the world market. However the authority and the appropriate ports of entry to be allowed on a aviation world is sharply divided mechanism (whether through reciprocal basis. Air India, as the over India’s ability to sustain such Route Dispersal Guidelines or designated airline of the explosive growth. Though a provision of subsidy) for providing Government of India under section of the industry sees India air services to remote and various bilateral air services and China to be the future drivers commercially unviable sectors in agreements, has been authorized of the industry, questions of the comprehensive long-term civil to operate long and medium haul availability of manpower and aviation policy. scheduled international air infrastructure. Well, desi’s have a Sector Players services. Air India has also been long way to go with 9 of them The aviation sector till recently operating domestic services in trying to buyout 350 aircraft. It will was a sort of monopoly of conjunction with the international not be long before we have an government-owned carriers, Air services. Indian Airlines has been MBA in aviation!