It is a MBA thesis of feasibilty study for Commercial Aircraft Manufacturing business in India.
Indian Economy, Aviation Martket in India, Commercial & Financial Viability, Sensitivity & Strategic Analysis also discussed.
Commercial Aircraft Manufacturing; A Business Case Analysis in the Indian Context
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context.Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 1 of 64 Commercial Aircraft Manufacturing; A Business Case Analysis in The Indian Context A Dissertation submitted to Indira Gandhi National Open University in partial fulfillment of the requirements for the award ofMasters Degree in Business Administration in Finance Management Under the Guidance of Dr.M.Jayadev, Associate Professor Finance & Control Indian Institute of Management Bangalore, 560076 Submitted By Venkateswara Rao.G Enrollment No: - 061488037 October 2010 School of Management Indira Gandhi National Open University Maidhangarhi, New Delhi.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context.Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 2 of 64 Certificates
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 3 of 64 DeclarationI hereby declare that this dissertation titled “ Commercial Aircraft Manufacturing: A Business Case Analysisin the Indian Context” under the guidance of Dr. M.Jayadev, Associate Professor, Finance & Control, IIMBangalore, has been prepared independently, by collecting and referring information , pertaining to my topic.I further declare that this Dissertation has not been submitted to any other University or Institutionfor the award of any other degree of diploma.Date: 02.10.2010Place: Bangalore (Venkateswara Rao.G)
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 4 of 64 Acknowledgement “Any Man what he becomes tomorrow is entirely depends upon the thought processes he is learning today from the Surroundings with which he is in interaction”Iam Grateful especially to my Guide, Dr. M.Jayadev, Associate Professor (Finance & Control), IIM,Bangalore, for sharing his thoughts by accepting my request for guidance and advising me to do challengingdissertation work related to Indian Commercial Aircraft Manufacturing Industry and Indhira Gandhi NationalOpen University founders & it’s staff for giving me the opportunity to do this work for fulfillment of myMBA Course and my surroundings. And also thankful to Mr.Sandeep, Financial Analyst, M/s.Covensys Inc.,Bangalore and Mr.Venkata Ramana, Aircraft Maintenance Engineer, M/s.JetAirways, Mumbai forsuggestions and kind support during my work. I would like to place on record my gratitude, love and affection to my family members and friendsfor their constant support and encouragement throughout my life.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 5 of 64SynopsisRational of the Study:-So far in India manufacturing of Commercial Aircraft business not started. Because of no manufacturer inIndia, the Commercial Aircraft Acquiring Cost, Maintenance, Repair & Overhaul Costs are quite highcompared to that if it is done in India with already known, and realized examples of many productsmanufactured, repaired in India can save 50% of the Cost incurring for buying from Western Countries,because of Standard Man Hour rates are very less than the Western Countries. And there are examples ofincidents happened that for Repair Work of Rs.10, 000, Indian Airline Operators spending lakhs of rupees forgoing to Singapore or Western countries. And the present Population of India using Air-Transport facility isvery less because of high Air-Fares due to the above mentioned costs.Many major manufacturers like Airbus, Boeing, ATR, Sukhoi, etc companies had plans of startingManufacturing, Maintenance, Repair & Overhaul facilities, but theirs plans are limited to papers withouttaking into action. The Indian Government research laboratory, National Aerospace Laboratories also hadefforts for having indigenously designed, developed Commercial Aircraft, but still project has not rolled outas reality, still it is under Type Testing & Approval stage to meet Civil Airworthiness standards, required byDirectorate General of Civil Aviation (DGCA, India), Joint Aviation Authorities (JAA, Europe) and FederalAviation Authority (FAA, USA), also the passengers capacity of that Aircraft is limited to 14 no.s only.Objectives of the Study:-The basic reason and purpose of this study is laying foundation stone or initiate the Manufacturing ofCommercial Aircrafts in India by suggesting best suitable model of Aircraft for present and future IndianAviation Market. Feasibility factors finding for Commercial Aircraft manufacturing in India.Research Methodology used for carrying the Study:-a) Existing Models Study: - For finding out best model, primarily study of Indian Airliner’s fleet sizes for Regional & Domestic transport is analyzed.b) Scope of Modifications proposed for New-Aircraft: - Found out the more utilized Commercial Aircraft Model India as A320-200, next B767-800 models. Further modification recommended for the Aircraft model to make it more suitable for Indian Aviation Market. Technical modifications are proposed and among these one will be selected, for future research. The proposed New-Aircraft best suites for Indian Market (For Total Population, Airports, and Landing, Passengers, effecting Environment, Airliners, Government and Employment) after studying the customer needs in Market from data of secondary sources.c) Demand & Supply for proposed New-Aircraft:- For the proposed model, estimated the expected no. of proposed New-Commercial Aircrafts required to meet the traffic demand by studying & analyzing
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 6 of 64 the Market research reports of Airbus, Boeing, Embrarer, Sukhoi, and etc reliable research organizations related to Air Traffic Projections, Demand and Supply, Airliners Industry growth etc.d) Commercial Viability of the Project: - Production capacity of 30 aircrafts proposed for New- Commercial Aircraft and calculated the Acquiring or Developing the Aircraft. And various costs incurred in Manufacturing, Operations, & Marketing and Working Capital are estimated.e) Financial Viability of the Project: - Evaluated the Financial Viability using Break Even Analysis, Calculation of Internal Rate of Return, and Net Present Value at the Cost of Capital 11%, investment in the project is financially viable.f) Risk Analysis: - Project related risks analysed. Sensitivity Analysis and Scenario Analysis carried out, the investment in this type of project is less risky as per the present prevailing situationg) Strategic Analysis: - Competition issues like present foreign suppliers business strategies in India and High-Speed Rail projects in India, their effects on Commercial Aircraft Manufacturing business in India project explained with the example of past case of European Low Cost Airliners competition with High- Speed Rail Operators.Summary & Conclusions: -a) Best suitable New-Commercial Aircraft for India suggested, Optimum capacity for Manufacturing, Commercial Aircraft Manufacturing Business Opportunity in India, Commercial & Financial viabilities information, Risks, and Strategic Issues Information presented in the report.b) The Expected Contribution from the Study:-More suitable proposed New-Aircraft, Technology Independence, Advantages & Benefits to more Indian population, Economy, Idea for Commercial Aircraft Manufacturing Business, Cost benefits for MRO given. Less risky Air-Travel Business, even common man also can get the opportunity of exciting air travel with further reduced Air-fares; Valuable time of population will be saved, etc.c) Limitations, If Any and The Scope of Future Research:- Time and Secondary data sources are the limitations for completing this Thesis Work. Further with Market Research, etc. primary data, and development of new “Take-off and Landing System” will be the future research work.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 7 of 64 List of TablesTable-1: A320-200 Present Specifications ……………………………................................................ 10Table-2: A320 Family Deliveries …………………………………………………….…………….…. 13Table-3: Indian Economic Survey 2009-10 Key Indicators ……..………..……….………..….…... 15Table-4: Air-Traffic Projections ………………………….……………………….……………….…. 30Table-5: Boeing Current Market Outlook 2008-2027 for India ………………….…………...….… 33Table-6: Boeing Current Market Outlook 2009-2028 ……………….…………………........…….... 34Table-7: Key Indicators & Demand by Region ………………………………….…....….………..… 34Table-8: Single Aisle 90 to 175 Seats ……………………………………………………………..….. 34Table-9: Single Aisle 90 to 175 Seats ……………………….………………………..………..…….. 35Table-10: Region-Wise Comparison …………….….………………………………………..…….. 36Table-11: Growth Measures & Market Size ………………………………………………..……… 37Table-12: Deliveries & Market Share by Size ………..…………………………………….……….. 38Table-13: RPKs and Annual Growth ……………………..…………..…………………………….. 38Table-14: Cash Flows without discount ………………..………………………………………….…50Table-15: Assumptions & Output …………………..…………………………………....…….……. 50Table-16: Discounted Cash Flows yearly (in US$ millions) ………….…….………..…………….. 51Table-17: Aircraft and parts: Market data (in US$ million) …..………….………..……….……… 53Table-18: Selling Price Vs. NPV Analysis ……………..…….……………………..…..…….……… 54Table-19: Sold Aircrafts yearly Vs. NPV Analysis ……………….….……………..…….…….…… 55Table-20: Scenario Analysis …………………….……………..…………………….……………..…. 56 List of ChartsIndian Air-Traffic Annual Passengers 2001/02 – 2007/08 ……………………………….………….. 29Top 15 Indian Airports 2007/08 ……………………………………………………………….……… 29India Domestic Passengers and Growth: Oct-2008 to Oct-2009 ……………………………………. 32Indian Carriers Domestic Market Share: Oct-2009 …………………………………………….…… 32Indian Carriers’ Load Factor: Oct-2009 ……………………………..….…….……………….…….. 33Boeing Market Outlook-2009 India Market Growth Rates ………….…………………..……..….... 39Top 5 Counties in Aircraft Demand 2009-2028 …………………….……………..…………….……. 40Typical Aerospace Supply-Chain ……………………………………………………………..…….…. 47Value Added by Suppliers ………………………………………..…………………………..…..……. 48Break Even Analysis without Discount …………………………………………..……………..…….. 49NPV vs. Selling Price ……………………….…………………………….…………………….……… 55NPV vs. No. of Aircrafts Sold yearly ……………………………………..……..…..………………… 56
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context.Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 8 of 64 Table of Contents I. Title Page ………………………………………………………………….…… 1 II. Certificates ……………..…….………………………………………….......… 2 III. Declaration …...………………………………………………..…………….…. 3 IV. Acknowledgement.……………………………………………………...…..……. 4 V. Synopsis …………………………………………………….…………..…….…. 5 VI. List of Tables …………………………………………………………………..... 7 VII. List of Charts …………………………………………………………….…..… 7 VIII. Table of Contents …………………………………………………….….….…. 8 1. Chapters ………………………………………………… …………….……….... 9 1.1 Existing Models Study 9 1.2 Scope of Changes Proposed for New-Aircraft …..……….… ………….……….9 1.2.1 Existing Technology 9 1.2.2 Deliveries 13 1.2.3 Required modifications for New-Commercial Aircraft 14 1.3 Demand & Supply for proposed New-Aircraft …….……………..………...… 15 1.3.1 Indian Economy and Aviation Industry Growth Study 15 1.3.2 India’s Economic Outlook by IMF and Global Insight 16 1.3.3 International Air Transport Association (IATA) Review 16 1.3.4 Economic Growth during 2008-09 17 1.3.5 Centre for Asia Pacific Aviation (CAPA) Review 18 1.3.6 ACEXC (Aviation Center of Excellence India) Review 19 1.3.7 Indian Aviation Industry 20 1.3.8 Aircrafts & Parts Market 21 1.3.9 Partnerships & Mergers 22 1.3.10 Airports 23 1.3.11 Government’s Role 24 1.3.12 Forecasts for Aviation Market 26 1.4 Air-Traffic Projections, Demand and Supply ……………………….…….…. 29 1.4.1 Air-Traffic Study 29 1.4.2 Aircraft Demand & Supply Study 33 1.5 Estimating no. of Orders/Sales Expected ………… ………………….……….. 42 1.6 Commercial Viability of Project …………………………………………...….…. 42 1.6.1 Estimating New-Aircraft Project R&D Cost & Target Time 43 1.6.2 Manufacturing Plant with Production Capacity 44 1.7 Financial Viability of the Project ……………………………..………………..… 49 1.7.1 Break Even Analysis without Discount 49 1.7.2 Break Even Analysis with discount 50 1.8 Risk Analysis …………..…………………………………………………….…… 52 1.8.1 Project Related Risks 52 1.8.2 Sensitivity Analysis 54 1.8.3 Scenario Analysis 56 2) Strategies Analysis …..………………….……...……………….……………..… . 57 2.1 Aviation Industry SWOT Analysis 57 2.2 Air Transport versus Railroad Transport 59 3) Conclusions ...………………………………………………………….…..……….. 61 4 References ………………………………………………………………………….. 62
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 9 of 641. Chapters1.1) Existing Models StudyThe existing models Survey for Regional & Domestic Market in India carried-out. At present as per thepresent usage & placed orders by Airliners in India, A320-200 type 216 no.s; B737-800 type 88 no.s,ATR72-500 type 87 no.s; A321-200 type 69 no.s aircrafts were used more for Regional and DomesticTransportation (Short to Medium Range Hauls).For Long-Range Services A330-200 type is 39; B787-800 type is 37 aircrafts were preferred.But, For Regional & Domestic Market, out of the above available models A320-200, B737-800, ATR 72-500is the most popular1.1.2) Scope of Changes Proposed for New-AircraftFrom the fleets available & orders placed by Indian Airliners, Aircraft A320-200 is 216no.s. This is the morepreferred for Indian Domestic and Regional Passengers Market.1.2.1) Existing TechnologyThe Airbus A320 family is Low-Wing Cantilever Monoplanes with a conventional tail unit with a single Finand Rudder. They have a retractable Tricycle Landing Gear and are powered by Two Wing MountedTurbofan Engines. Compared to other Airliners of the same class, the A320 features a wider Single-AisleCabin of 155.5 inches (3.95 m) outside diameter, compared to 148 inches (3.8 m) in the Boeing 737 and131.6 inches (3.34 m) in the Boeing 717, and Larger Overhead Bins, along with Fly-By-Wire Technology. Inaddition, the aircraft has a Spacious Cargo hold equipped with large doors to assist in expedient loading andunloading of goods.The A320 features an ECAM (Electronic Centralized Aircraft Monitor) which gives the flight crewInformation about all the Systems of the Aircraft. With the exception of the very earliest A320s, most can beupgraded to the latest Avionics Standards, keeping the Aircraft advanced even after Two Decades in service.The flight deck is equipped with EFIS with side stick controllers. At the time of the aircraft introduction, the sbehavior of the Fly-By-Wire system (equipped with full flight envelope protection) was a new experience formany pilots. Three suppliers provide Turbofan Engines for the A320 series: CFM International withtheir CFM56, International Aero Engines, offering the V2500 and Pratt & Whitney whose PW6000 enginesare only available for the A318 variant.The Airbus A320 family is the first to fully feature the Glass Cockpit and Digital Fly-By-Wire FCS in a CivilAirliner. The only analogue instruments are the RMI (backup ADI on earlier models, replaced bydigital ISIS on later models) and brake pressure indicator. The first fully Digital Fly-By-Wire FCS in a CivilAirliner, see A320 flight controls. Fully Glass Cockpit rather than the hybrid versions found in aircraft suchas the A310, Boeing 757and Boeing 767.The first Narrow Body Airliner with a significant amount of the
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 10 of 64Structure made from Composites. The ECAM (Electronic Centralized Aircraft Monitoring) Concept, which isincluded in all Airbus aircraft produced after the A320. This system constantly displays informationconcerning the aircraft engines, as well as other key systems such as flight controls, pneumatics and shydraulics, to the pilots on the two LCD displays in the centre of the flight deck. ECAM also providesAutomatic Warning of System Failures and displays an Electronic Checklist to assist in handling the failure.Newer Airbus used LCD (Liquid Crystal Display) units in the flight deck of its A318, A319, A320, and A321flight decks instead of the original CRT (Cathode Ray Tube) displays. These include the main displays andthe backup artificial horizon, which was an analogue display prior to this. LCDs weigh less and produce lessheat than CRT displays; this change saves around 50 kilograms on the plane’s total weight. Early A320 planesused the Intel 80186 and Motorola 68010, in 1988 Intel 80286 family CPUs. The Flight ManagementComputer contained six CPUs, running in three logical pairs, with 2.5MB of memory. Digital Head-Updisplays are available. The A320 family is improved continuously, in the A320 Enhanced program andthe NSR, for "New Short-Range aircraft" as a far future replacement. Table-1: A320-200 Present Specifications A319-100 / A318-100 A320-200 A321-200 A319LR /A319CJ Cockpit Two Crew 132 (1-class, max) 156 (1-class, max) 180 (1-class, max) 220 (1-class, max) Seating 117 (1-class, typ) 134 (1-class, typ) 164 (1-class, typ) 199 (1-class, typ) Capacity 107 (2-class, typ) 124 (2-class, typ) 150 (2-class, typ) 185 (2-class, typl) Length 31.44 m (103 ft 2 in) 33.84 m (111 ft 0 in) 37.57 m (123 ft 3 in) 44.51 m (146 ft 0 in) Wing Span 34.10 m (111 ft 11 in) Wing Area 122.6 m2 (1,320 sq ft) Wing 25 degrees Sweepback 12.56 metres Tail Height 11.76 m (38 ft 7 in) (41 ft 2 in) Cabin 3.70 m (12 ft 2 in) Width Fuselage 3.95 m (13 ft 0 in) Width Cargo 27.62 m3 (975 cu ft) 37.41 m3 (1,321 cu ft) 51.73 m3 (1,827 cu ft) 21.21 m3 (749 cu ft) Capacity 4× LD3 7× LD3 10× LD3 Empty 40,800 kg 39,500 kg (87,000 lb) 42,600 kg (94,000 lb) 48,500 kg (107,000 lb) Weight, (90,000 lb)
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 11 of 64 typicalMaximum Take-Off 68,000 kg 75,500 kg 78,000 kg (170,000 lb) 93,500 kg (206,000 lb) Weight (150,000 lb) (166,000 lb)(MTOW) Cruising Mach 0.78 ( 828kmph / 511mph at 11,000m / 36,000ft ) SpeedMaximum Mach 0.82 ( 871kmph / 537mph at 11,000m / 36,000ft ) Speed 3,600 nautical milesMaximum (6,700 km; 4,100 mi) 3,000 nautical Range, 3,100 nautical miles LR: 5,600 nmi (10,400 km; 3,200 nautical miles miles (5,600 km; Fully (5,700 km; 3,600 mi) 6,400 mi) (5,900 km; 3,700 mi) 3,500 mi) Loaded CJ: 6,500 nmi (12,000 km; 7,500 mi) Take-Off Run atMTOW (at 1,355 m (4,446 ft) 1,950 m (6,400 ft) 2,090 m (6,860 ft) 2,180 m (7,150 ft) SeaLevel, ISA) 24,050 litres (5,290 imp gal; 6,350 US gal)Maximum 24,210 L 24,210 L (5,330 imp gal; 6,400 US gal) standard standard Fuel (5,330 imp gal; 30,190 L (6,640 imp gal; 7,980 US gal) optional 30,030 L Capacity 6,400 US gal) (6,610 imp gal; 7,930 US gal) optional Service 12,000 m (39,000 ft) Ceiling Pratt & Whitney Engines PW6000 series IAE V2500 series/CFM International CFM56-5 series (×2) CFM International CFM56-5 series 133–147 96–106 kilonewtons 98–120 kilonewtons (22,000– 111–120 KiloNewtons kilonewtonsThrust (×2) (22,000–24,000 lbf) 27,000 lbf) (25,000–27,000 lbf) (30,000– 33,000 lbf)
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 12 of 64A320 Enhanced, A320 Enhanced (or A320E) is the working title for a series of improvements of the A320series. The Improvements incorporate Engine Improvements, an Aerodynamic Tidy-Up, partly by addingLarge Curved Winglets, Weight Savings and a New Cabin.Re-Engined A320, Airbus proposed a re-engining of the A320 to achieve the same 15% improvement in fuelburn over the existing CFM56 and V2500 power plants as proposed by the Bombardier CSeries. Possibleengines include the CFM International LEAP-X and the Pratt & Whitney PW1000G.New Winglets, Airbus A320 first class Enhanced Cabin Virgin America, In 2006, Airbus tested three stylesof Winglet, intended to counteract the wing’s Induced Drag and Wingtip Vortices more effectively than theprevious Wingtip Fence. The first design type to be tested was developed by Airbus and was based on workdone by the AWIATOR program. The second type of winglet used a more blended design and was created byWinglet Technology LLC, a company based in Wichita, Kansas as well as the third type.Two aircraft were used in the Flight Test Evaluation campaign, the prototype A320 F-WWBA which hadbeen retained by Airbus for testing and new F-WWDL which later delivered to JetBlue Airways andregistered as N636JB, which was fitted with both types of winglets. Despite the anticipated Efficiency gainsand development work, Airbus announced that the new Winglets will not be offered to Customers, claimingthat the weight of the modifications required would negate any Aerodynamic benefits.On 17 December 2008, Airbus announced it was to begin flight testing a new Blended Winglet designdeveloped by Aviation Partners as part of an A320 modernization program. The aircraft used for the testprogram is MSN001 (F-WWBA) the original A320 prototype airframe, powered by the CFM56 engine. On15 November 2009, Airbus announced that it would be adding the Winglets, called Sharklets to A320 ,aircraft commencing in 2012 with Air New Zealand. The Winglets reduce fuel burn by 3.5 percent and offer aPayload increase of 500 kg or increase the aircraft Range by 100 nm at the original Payload. This scorresponds to an annual CO2 reduction of around 700 tonnes per Aircraft.New Enhanced Cabin, The Cabin was fitted to more than 600 Aircrafts (March 2009) since 2007. Airbusclaims it is offering better luggage Stowage and a quieter Cabin packaged with a more modern look and feel.Additional improved Cabin Efficiency by a New Galley Concept, reduced weight, Improved Ergonomics andFood Hygiene and Recycling requirements. LED ambience lighting is optionally available. Anytime LEDsare used for the Passenger Service Unit (PSU) and passengers can get information with TouchscreenDisplays. Older A320 series aircraft can be updated.Replacement Aircraft, Airbus is studying a future replacement for the A320 series, tentatively dubbed NSR,for "New Short-Range aircraft". Airbus is possibly considering partnering with Embraer for a ReplacementAircraft for the A320 series. In July 2007 it was reported that it may be built in "8-9 years" or "2017 or later".The expected follow-on aircraft to replace the A320 is named A30X. Airbus North America President BarryEccleston states that the earliest the aircraft will be available is 2017. In January 2010, John Leahy, Airbus s
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 13 of 64Chief Operating Officer Customers, stated that any all new single aisle craft is unlikely to be constructedbefore 2024/2025.The A320 family pioneered the use of digital Fly-By-Wire Flight Control Systems in a Commercial Aircraft.Although there was a continuously improvement process since introduction, currently the A320Enhanced program includes greater improvements. With over 4,000 built and an additional l 2,400 on order asof November 2009, the Airbus A320 family is Airbus’s best-selling aircraft to date. It is also the currentlybest-selling jet airliner family.1.2.2) DeliveriesBy the end of February 2010 a total of 6,539 aircraft of the A320 family has been ordered and 4,181delivered. The following Chart shows the number of aircraft, by type, delivered to customers in a particularyear. The bottom row is the total yearly production of all A320 family aircraft. Table-2 : A320 Family Deliveries Type A318 A319 A320 A321 Total 1990 58 58 1991 119 119 1992 111 111 1993 71 71 1994 48 16 64 1995 34 22 56 1996 18 38 16 72 1997 47 58 22 127 1998 53 80 35 168 1999 88 101 33 222 2000 112 101 28 241 2001 89 119 49 257 2002 85 116 35 236 2003 8 72 119 33 232 2004 10 87 101 35 233 2005 9 142 121 17 289 2006 8 137 164 30 339 2007 17 105 194 51 367 2008 13 98 209 66 387 2009 6 88 221 87 402 2010 1 45 212 42 300 2010 Data is Incomplete; Source2
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 14 of 641.2.3) Required modifications for New-Commercial Aircraft;Among these one to be selected, & Scope of Technical/Architectural/Landing at many Airports, TerminalSize suitability, etc improvements to be recommended for making the proposed New-Aircraft best suites forIndian Market (For Total Population, Airports, Landing, Passengers, Effecting Environment, Airliners,Government, and Employment).Take-Off & Landing: - Instead of Rolling-Wheels Landing Gear integrated to the Aircraft Fuselage,which weights nearly 4% of MTOW3. Incase of A320-200, 4% of 78000kg is 3100kg. At least 2000kg weightcan be reduced. And also instead of TurboFan Engines with extra Fan, high strength Compressors & Turbinerotating parts, can be replaced with Turbojet Engines (Less Weight), more fuel saving, reduced CO2emission, etc.a) ElectroMagnetic Propulsion for Take-Off and Braking for Landing In similar way as in High-Speed Mag-Lev (Magnetic Levitation) trains, with created ElectroMagetic field Aircraft will be levitated in the air, Magnetic repulsion & GasTurbine Engine propulsion forces can be used for obtaining Take-Off speed 275 kmph in 32 seconds for rolling distance, 2.440km incase of A320- 200 Aircraft4. But presently incase of trains, picking-up 300kmph in 2.25 minutes time duration5. Modifications to be done for this system suitable to A320-200 aircraft take-off speed.b) Detachable and Attachable Wheeled-Carrier for Take-Off & Landing Wheeled-Carrier with TurboShaft Engines requires less rolling distance will be carrying the Aircraft with TurboJet engine and picks-up the Take-Off speed of 300kmph in 35seconds, after that Wheeled-Carrier & Aircraft will be separated. At the time of Landing both speeds will be matched and attached together, Wheeled-Carrier will be slowly braking.c) Landing on Constructed Hydraulic Reservoirs OR in Sea for Sea-Shore Cities Like in above cases, here Hydraulic reservoirs will be used for Take-Off & Landing purposes.Winglets: - Long Streamline Wire body at the trailing edge of the winglets to further reduce the Vortices.Fuselage:- Along the Fuselage longitudinal Fins, around circumference at specific pitch for guiding airflowin streamlines to improve it further aerodynamically effective by attracting air close to fuselage by avoidingair separation.Engines: - Engines with more Power to Weight Ratio; Instead of more Power rated & Heavy WeightTurbofan Engines, Less Weight & Power rated TurboJet Engines can be used. Reduces Weight of Aircraft,improves Aircraft Performance.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 15 of 641.3) Demand & Supply for proposed New-Aircraft1.3.1) Indian Economy and Aviation Industry Growth Study; Table-3: Indian Economic Survey 2009-10 Key Indicators Data Categories & Components Units 2004-05 2005-06 2006-07 2007-08 2008-09 2009-101. GDP & Related Indicators Rs. 5574449 6164178 GDP (Current Market Prices) 3239224 3706473 4283979 4947857 Crore QE AE Growth Rate % na 14.4 15.6 15.5 12.7 10.6 Rs. 4154973 4453064 GDP(factor cost 2004-05 prices) 2967599 3249130 3564627 3893457 Crore QE AE Growth Rate % na 9.5 9.7 9.2 6.7 7.2 % of Savings Rate 32.2 33.1 34.4 36.4 32.5 na GDP % of Capital Formation Rate 32.7 34.3 35.5 37.7 34.9 na GDP Per Cap.Net National Income Rs 24095 27183 31080 35430 40141 43749 (factor cost at current prices)2. Production Mn Food Grains 198.4 208.6 217.3 230.8 233.9 a na tonnes Index of Industrial Production % 8.4 8.2 11.6 8.5 2.6 na Growth Electricity Generation Growth % 5.1 5.2 7.3 6.3 2.7 na3. Prices % Inflation (WPI) (52-week average) 6.5 4.4 5.4 4.7 8.4 1.6 b Change % Inflation CPI (IW) (average) 3.8 4.4 6.7 6.2 9.1 11.4 b Change4. External Sector % Export Growth (US$) 30.8 23.4 22.6 29 13.6 (20.3) c Change % Import Growth (US$) 42.7 33.8 24.5 35.5 20.7 (23.6) c Change Current Account Balance (CAB) % -0.4 -1.2 -1 -1.3 -2.4 (3.3) d GDP US$ Foreign Exchange Reserves 141.5 151.6 199.2 309.7 252 283.5 e Bn. Average Exchange Rate Rs/US$ 44.93 44.27 45.25 40.26 45.99 47.94 f5. Money & Credit % Broad Money (Ma) (annual) 12 16.9 21.7 21.4 18.6 16.5 g Change Scheduled Com. Bank Credit % 27 30.8 28.1 22.3 17.5 13.9 g
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 16 of 64 (growth) Change 6. Fiscal Indicators (Centre) % of Gross Fiscal Deficit i 3.9 4 3.3 2.6 5.9 h 6.5 j GDP % of Revenue Deficit i 2.4 2.5 1.9 1.1 4.4 h 4.6 j GDP % of Primary Deficit i 0 0.4 -0.2 -0.9 2.5 h 2.8 j GDP 7. Population Million 1089 1106 1122 1138 1154 1170 AE - Advance Estimates of GDP figures for 2009-10; QE - Quick Estimates na - not yet available/released for 2009-2010 a - for 2008-09 the figures are the 4th advance estimates as on July 21, 2009. b - Average Apr. - Dec.2009. c - Apr. - Dec.2009 d - CAB to GDP ratio for 2009-10 is for the period Apr.-Sept. 2009 e - as of December 31. 2009. f - Average exchange rate for 2009-10 (Apr.-Sept.2009) g - As on January, 2010. h - Fiscal indicators for 2008-09 are based on the provisional actual for 2008-09. i - Fiscal indicators are as per revised GDP at current market prices based on National Accounts 2001-05 series. j - Fiscal deficit, revenue deficit and primary deficit were envisaged at 6.8, 4.8 and 3.0 per cent of GDP 6 respectively at the time of presentation of the 2009-2010 .1.3.2) India’s Economic Outlook by IMF and Global Insight• India’s GDP of over US $1.21 trillion makes it one of the 12 largest economies in the world, 4th largest in terms of purchasing power parity.• The 20-year India economic Gross Domestic Product (GDP) forecast at 6.5 percent per year is the second highest in the world for large-GDP nations and is over double the world GDP forecast of 3.1 percent.• One of the fastest growing economies in the world - growing at over 7% per year for the last 10 years• India’s economy growth of 6.7% for 2008/09 exceeded expectation and the World Bank has projected its economic expansion for 2010 at 8%220.127.116.11) International Air Transport Association (IATA) ReviewFor the first time since 2000, in 2007 the Global Airline Industry turned profitable. Asian carriers have seenminor drops in profitability but robust traffic growth to and within Asia to partially insulate carriers from theimpact of the crunch. The decrease in fuel prices helped operating profits. For the three months ending inDecember 2009, Airlines spent nearly 32%-33% of operating revenues on fuel. Last year, the companies hadspent about 38%- 48% of operating revenues on fuel.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 17 of 64India’s airlines, more than the rest of the world, suffered severe losses with massive deliveries of aircraft andfalling yields following the economic slowdown. Hope seems to be on hand as airlines start to narrow lossesand come close to returning to 2007 figures. According to a survey carried out by the International AirTransport Association (IATA), Airline Business confidence was up, though it did not necessarily mean areturn to profit8. • Global Airline Industry loss of $9.0 billion forecasted for 2009, slightly lower than the $10.4 billion loss in 2008, first quarter 2009 loss of more than $3.0 billion. • Passenger demand is expected to contract 8%, cargo demand to fall 17% and revenue to decrease 15% compared to 2008. • 2009 fuel cost is expected to fall back to $106 billion from a high of $165 billion in 2008. However, this reduction will be more than offset by $80 billion (15%) revenue decline. • The trend away from premium seats to more affordable economy seats, and budget carriers, is global. • While the full service carriers (FSCs) are scaling back and consolidating, their LCC rivals are expanding and gaining market share18.104.22.168) Economic Growth during 2008-09a) Overall GDP Growth, The overall growth of GDP at factor cost at constant prices in 2008-09, as per revised estimates released by the Central Statistical Organisation (CSO) (May 29, 2009) was 6.7 per cent. This is lower than the 7 per cent projection in the Mid-Year Review 2008-09 (Economic Division, Department of Economic Affairs (DEA), December 2008) and the advance estimate of 7.1 per cent, released subsequently by CSO in February 2009. The growth of GDP at factor cost (at constant 1999- 2000 prices) at 6.7 per cent in 2008-09 nevertheless represents a deceleration from high growth of 9.0 per cent and 9.7 per cent in 2007-08 and 2006-07 respectively; The deceleration of growth in 2008-09 was spread across all sectors except mining & quarrying and community, social and personal services. The manufacturing, electricity and construction sectors decelerated to 2.4, 3.4 and 7.2 per cent respectively during 2008-09 from 8.2, 5.3 and 10.1 per cent respectively in 2007-08. The slowdown in manufacturing could be attributed to the combined impact of a fall in exports followed by a decline in domestic demand, especially in the second half of the year. The rise in the cost of inputs during the beginning of the year and the cost of credit (through most of the year) reduced manufacturing margins and profitability. The growth in production sectors, especially manufacturing, was adversely affected by the impact of the global recession and associated factors. The electricity sector continued to be hampered by capacity constraints and the availability of coal, particularly during the first half of the year. As long as the coal sector remains a public sector monopoly (the only remaining nationalized sector), it could remain a bottleneck for accelerated development of the power sector.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 18 of 64 The construction industry consists of different segments like housing, infrastructure, industrial construction, commercial real estate, etc. While the industry went through a boom phase with growth as high as 16.2 per cent in 2005-06 and continued to grow thereafter (albeit with moderation), the increase in the costs of construction due to a rise in the prices of inputs like steel and cement and interest costs had started impacting the industry. In certain segments of the industry, there was an excessive price build up in the form of a speculative bubble, related to limited supply of urban land for those segments. The rise in interest rates and the slowdown in housing loans also moderated demand. The double squeeze on the costs, as well as the demand side, and the fall in the liquidity in mid-September 2008 precipitated a sharp downturn in this sector. There followed a period (in the second half of the year) when demand had already moderated, but costs remained high.b) SUMMING-UP, The fallout of the global financial crisis on the Indian economy has been palpable in the industry and trade sectors and has also permeated the services sector. While some segments, especially the export-oriented industries, suffered during the second half of the year, the Indian economy has withstood the adverse global economic situation and posted a growth rate of 6.7 per cent in 2008-09. The economy continues to face wide-ranging challenges— from improving its social and physical infrastructure to enhancing the productivity in agriculture and industry and addressing environmental concerns. Meeting these challenges will be critical for improving India’s social and human development indicators and the quality of life. At the same time, the Indian economy has shock absorbers that will facilitate early revival of growth. First, the banks are financially sound and well capitalized. The foreign exchange reserves position remains comfortable and the external debt position has been within the comfort zone. The rate of inflation has since abated and provides a degree of comfort on the cost side for the production sectors. Agriculture and rural demand continue to be strong and agriculture production prospects are normal. While there are indications that the economy may have weathered the worst of the downturn, in part, due to the resilience of the economy and also various monetary and fiscal measures initiated during 2008-09, nevertheless, the situation warrants close watch on various economic indicators including the impact of the economic stimulus and developments taking place in the international economy. Taking policy measures that squarely address the short and long-term challenges would help achieve tangible progress and ensure that the outlook for the economy remains firmly positive10.1.3.5) Centre for Asia Pacific Aviation (CAPA) ReviewThe Centre for Asia Pacific Aviation (CAPA), a Sydney-based consulting firm, also estimates a 15% increasein passenger volume in 2009. IATA had earlier predicted that Airline net losses will halve from $11 billion in2009 to $5.6 billion in 2010. In the four years to March 2010, CAPA estimates Indian Carriers will have
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 19 of 64accumulated operational losses of in excess of INR.260 billion, of which the three large Airline groups (AirIndia, Jet Airways and Kingfisher Airlines) account for almost INR230 billion. It says losses for the currentfinancial year will be around INR 65 - 70 billion. Although it might take longer to get over total accumulatedlosses, India’s private domestic airlines are expected to make a combined profit of $250million by the end ofthe fiscal year ending in March 2011, says a recent report by CAPA.The profitable and privately owned airline, budget carrier Indigo, is expected to have a higher profit (around$17.6 million in 2009) than in previous years. The carrier is said to have the best on-time performance record-82% for the year. Even national carrier Air India, which releases limited financials and operating metrics,posted a net loss of $318 million, a 9.7% improvement from the October-December quarter in 2008. The risein traffic to 43.8 million passengers carried last year on Indian carriers was up from 42.8 million in 2007,contributed to the improving financial state of the three listed Indian airlines. They benefited from an increasein passenger traffic in the December quarter as well. Year-On-Year, Kingfisher flew 2.74 million passengers,an increase of 4%, while Jet Airways carried 3.41 million passengers, a growth of 33%. SpiceJet’s passengertraffic also reached 1.5 million during this year’s fiscal third quarter from nearly 1 million in the year-agoperiod. Air India posted a 24.8% year-over-year increase in passenger numbers to 3.17 million and a 14.4-point surge in load factor to 69.7%22.214.171.124) ACEXC (Aviation Center of Excellence India) ReviewIndia is starting to see a more favourable environment as the Economy appears to be recovering earlier thanexpected, with GDP growth of 7.9% in the last quarter, ahead of expectations. The World Bank projects anannual growth of 8% per annum from 2011 to 2014, says Kapil Kaul CEO, Indian subcontinent & MiddleEast; CAPA. Indian Economy maintained its momentum of good growth. With positive indicators such as astable 8 to 9 % annual growth, rising foreign exchange reserves, a booming capital market and a rapid rise inFDI in the last year, India has emerged as the second fastest growing major economy in the world.2007 was a memorable year for the Indian Aviation in many ways; The Industry continued to witness stronggrowths despite rising Aviation Turbine Fuel (ATF) prices, Infrastructure bottlenecks, shortage of Pilots andQualified Manpower. Indian carriers continued placing sizeable aircraft orders and expanded their domesticand international networks. The first non-stop flights to the US by Air India and the first international flightsto US and Canada by Jet Airways were a welcome connectivity to both the national traveler as well as thelarge Indian diaspora in North America. Carriers remained optimistic to turn profitable, with increasedoperational efficiencies, cost management and, for some, synergies that would be derived throughconsolidation. For the first 7 months of the fiscal year 2007-08, April - October 2007, the overall passengertraffic stood at 65.57 million, with Domestic at 49.35 million and International at 16.22 million respectively.The total cargo traffic recorded 989 thousand tones, with Domestic at 325 thousand tonnes and Internationalat 664 thousand tonnes in the same period. The total aircraft movement numbers were 736,703 with Domesticat 599,346 and International at 137,357 during the same period.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 20 of 64New Aviation Policy paved the way for improved Infrastructure, better Connectivity, an increased number ofAviation Carriers and new Regional Airlines and Freighters taking off into the Indian skies. The airlinesmuch-awaited SOPs from the government on the ATF prices; Airport development policy directives forGreen field and Merchants Airport Projects. Travelers’ looking forward for cheap airfares, on-time arrivalsand departures, new in-flight entertainment, retailing and internet connectivity in the skies12.How far thesewill be fulfilled remains to be seen, with crude oil prices not showing signs of any let-up, and airlines morefocused on returning value to their shareholders. Along with the other players in the Industry, Realty andInformation Technology companies will benefit greatly by participating in the development of the IndianAviation Industry.1.3.7) Indian Aviation IndustryThe Indian Aviation Industry is one of the fastest growing aviation industries in the world with PrivateAirlines accounting for more than 75 per cent of the sector. With a CAGR at 18 per cent and 454 airports, ofwhich 16 are designated as international airports, Union Civil Aviation Minister Praful Patel has stated thataviation sector will witness revival by 2011. With an increase in Traffic movement during December 2009and increase in revenues by almost US$ 21.4 million, the Airports Authority of India seems to accrue bettermargins this fiscal, as per the latest estimates released by the Ministry of Civil Aviation. This is beingprimarily attributed to increase in the share of revenue from Delhi International Airport Limited (DIAL) andMumbai International Airport Limited (MIAL) along with increase in airport charges.The Hyderabad International Airport has been ranked amongst the World Top Five in the annual Airport sService Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing.The Hyderabad International Airport is managed by a Public-Private joint venture consisting of the GMRGroup, Malaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and AirportsAuthority of India (AAI).Airports Authority of India (AAI) is also spending US$ 427.5 million on developingthe airports in Kolkata and another US$ 384.7 million on Chennai airport. The AAI is also looking atupgrading and modernising Non-Metro Airports. Both Chennai and Calcutta airports will be completed bynext year. In addition to actual Airport Infrastructure, the government is also looking at building infrastructurein the air in terms of Air Traffic Control (ATC) and CNS systems. Safety and surveillance is another hugearea being worked upon. The Civil Aviation ministry has prepared a blueprint to convert Delhi airport into aninternational hub for passenger airlines with effect from August 2010 to help the airport, which is beingexpanded by a GMR-led consortium, utilise large amounts of additional capacity that will be ready by July2010.Under the plan, NACIL will set up its hub in Delhi (Delhi currently serves as the hub for domestic operationsand Mumbai for international operations).The Government is also planning to make Delhi a regional hub toconnect South-East Asia to Europe by capitalising on the capital’s strategic mid-point location, according toministry sources. State governments too are taking interest in setting up special economic zones (SEZs) forthe Aerospace Industry.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 21 of 64Investment Policy, with the draft FDI compendium being finalised in end of March 2010, changes areexpected in the aviation policy too.• Foreign equity participation in Airport Infrastructure is permitted upto 74 per cent with automatic approvals and upto 100 per cent in special permission.• FDI upto 40 per cent is permitted in Domestic Air-Transport Services.• Foreign investors are allowed to have representation (upto 33 per cent in Domestic Airline companies).The Road Ahead, Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$80 billion in new Aircrafts and US$ 30 billion in development of Airport Infrastructure, according to theInvestment Commission of India.• Indian aerospace companies are growing too. Hindustan Aeronautics Limited (HAL) was ranked 40th in Flight International list of the top 100 Aerospace Companies last year. s• Aircraft manufacturing major, Boeing is in the process of setting up the US$ 100 million proposed Maintenance Repair Overhaul (MRO) facilities in Delhi. Air India is also in the process of launching Cargo Hub in Nagpur while Deccan Aviation has already started one from the city.• North India first private sector Greenfield international airport, Aerotropolis, will soon come up near the s industrial hub of Ludhiana in Punjab. Aerotropolis will be built with an allocation of almost US$ 3.77 billion covering an area of 3000 acres by Messrs Bengal Aerotropolis which has partnered Changi International Airport of Singapore.• Punjab will also become the first state in the country to set up a Maintenance, Repair and Overhaul (MRO) hub at Ropar, 45 km from Chandigarh, for the Civil Aviation sector at a cost of US$ 6.4 million.• The country first SEZ dedicated to the Aerospace, Hattaragi, 37 km from Belgaum, in Karnataka was s also inaugurated. The SEZ is spread over 300 acres of land and will come up with an investment of US$ 32.06 million in November 2009. An Aerospace and Precision Engineering Special Economic Zone with a proposed investment of US$ 641.2 million has also come up at Adibatla, Hyderabad, Andhra Pradesh. Exchange rate used: 1 USD = 46.79 INR (as on December 2009)126.96.36.199) Aircrafts & Parts MarketIndia’s new draft Civil Aviation Policy puts greater emphasis on private sector participation to ensurepromotes investment in this sector. It also aims to woo foreign investors. The proposed new civil aviationpolicy will open up vast Indian market for aircraft, Avionics equipment and other related businesses forforeign investors. The Global giants of Aviation Industries, Gulfstream, EuroCopters, Airbus, Bombardier orBoeing, all are flocking towards the Indian market. They were all likely to be seen at the Indian Aviation2010 show. Their motive of attending the show was to display their products, sell their products, do corporate
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 22 of 64marketing and search for the prospective clients along with the curiosity to know about the prospering Indianeconomy. Aviation market in India has shown humongous growth in the last 10 years and in the next 20 yearsit is expected to fulfill the demand of around 1000 aircrafts as most of the aviation giants are projecting Indiafor their requirements. The market has been able to pump in $100 million from American manufacturers to setup an MRO facility in Nagpur. Airbus is also expected to peg $138 billion in Indian market for themanufacture of 1032 aircrafts. Same is expected from other aircraft giants14.a) GE Aviation to spend $300 mn in India, Commercial and military jet engine maker GE Aviation, a unit of General Electric Co., plans to spend some $300 million (around Rs1, 368 Crore) in India ahead of deadline to fulfill its obligations for engine purchases by flag carrier Air India, said country director Nalin Jain. The so-called offset obligation is part of an order placed by Air India for 111 Airbus and Boeing aircraft in 2005 and 2006, valued at $11 billion at list prices. GE Aviation is the key engine supplier for these aircraft together with CFM International, it’s 50:50 joint venture with France’s Snecma SA. GE Aviation undertook to source aircraft engine components from Indian suppliers and invests in India part of the value of the deal to the tune of $300 million in offsets. The timeline is till 2020, Jain said in an interview on the sidelines of the India Aviation 2010 air show in Hyderabad earlier this month. Jain said GE had tied up with a dozen manufacturing firms, including Godrej Group and state-owned military plane maker Hindustan Aeronautics Ltd, to source Aeronautical components for engines to meet the offset obligations. These include parts for CFM engines15.b) Indigenous Development & Manufacturing, The National Aerospace Laboratories (NAL), Bangalore, has prepared Rs.12 billion preliminary proposal to build technologies for a 50-70-seater regionalaircraft designed to suit India specific needs. According to NAL projections, the market for a s 50-70 seater Turboprop Aircraft, RTA-70 in the country would increase over the next two and a half decades, with an overall requirement building up for nearly 200 aircraft of all various sizes over the next 5 years. To date, NAL has developed the two-seater trainer aircraft, HANSA, presently being used by a dozen flying clubs in the country, as well as the SARAS, a multi-role light transport aircraft development started in 1990, which has already completed 100 flight tests and is expected to go into commercial production by 2008, but still to date is in Proto Type-2 is in testing. For very light aircraft (2-19 seats) India is in the process of establishing a domestic industry with both Indigenous production and manufacture through collaborations with mainly European manufacturers. For aircraft engines, players include GE Aircraft Engines, Pratt and Whitney of USA and Rolls Royce from the UK, Snecma from France, & EuroJet from Germany.1.3.9) Partnerships & MergersWhile many international companies expressed interest and are evaluating options to forge alliances withIndian Aviation companies, many inked varied deals this year. Among them were:• ATR and Deccan to set up new Flight Training Centre at Bangalore.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 23 of 64• L&T and EADS for exploring joint opportunities in aerospace and defense Indian formed an alliance with CFM international, GMR - Hyderabad International Airport, Airbus, and Jupiter Aviation for an MRO centre.• Jet Airways signed a MoU with Lufthansa Technik AG for its Aircraft Maintenance, and a Code-share agreement with Brussels Airlines and American Airlines.• Hawker Beechcraft signed a sales and services agreement with InterGlobe Aviation, owners of IndiGo.• Kingfisher signed a frequent flyer partnership programme with Continental Airlines.• Air India was invited to join the Star Alliance group of Airlines, which will give Air India an access to a network of 17,000 daily flights to 897 destinations in 160 countries.• HAL tied up with CAE to set up helicopter simulator training centre in Bangalore, going to have Joint venture with Rolls-Royce, UK, for Civil Aircraft Engines.• Boeing along with Air India is to set up a MRO in Bangalore.• Punj Llyod and New York-based private investment firm Global Technology Investment firm picked up a stake in Air Works Engineering, an organization involved in aircraft maintenance, to expand their aviation infrastructure and services started at aerospace manufacturing site of TAAL, Hosur.The year marked three major mergers in Indian Aviation history: Air India, the national carrier, and Indian(formerly Indian Airlines), the state owned domestic carrier, creating a unified, public-owned entity under thename National Aviation Company India Ltd (NACIL).The merger will create an airline that will have over125 new-generation aircraft by 2010. Its fleet size would also see the merged entity break into the top 30airlines in the world, and amongst the top 10 in Asia. It will also become India first airline with a fleet of sover 100 aircrafts.Private Carriers: Jet Airways and Air SaharaJet Airways bought over its smaller rival, Air Sahara, for Indian Rupees 14.50 billion ($363m), at a discountof 34% from the earlier agreed price of Indian Rupees 22.00 billion, after clearance by a three-memberarbitration panel, ending months of animosity and legal dispute. Air Sahara was renamed to JetLite.Air-Deccan, India first Low Cost Carrier (LCC), with Kingfisher Airlines, the high profile Airline spromoted by the liquor baron, Mr.Vijay Mallya; Kingfisher Airlines (a company of parent United BreweriesHoldings Ltd) acquired 26% of Air Deccan parent, Deccan Aviation Ltd, and subsequently made an offer toacquire an additional 20% of Deccan priced at the same price of Indian Rupees 155 ($3.82) per share. Thecombined fleet of 71 aircraft consisting of A320 family and ATR aircraft will operate 537 flights to 69 Indiancities.1.3.10) AirportsThere was heightened interest in airports during the year, and a collective effort by the government togetherwith private participation to develop and improve the infrastructure that is so sorely needed by the industry
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 24 of 64for its future growth. The airport modernization programme took wing in Delhi and Mumbai, and the twoGreenfield Airports of Bangalore and Hyderabad were completed in March 2008, though with some degree oftrepidation at Bangalore. The anticipated long commute over the inadequate approach road to the newBangalore International Airport (BIAL) appears to have been omitted from the development plan, raisingprotests from potential users.Modernisation and expansion of Chennai and Kolkata are projected to begin in the first half of 2008;besides, as many as 35 non-metro airports are planned to be modernised at an estimated cost of about IndianRupees 50 billion. These are expected to be complete by March 2010. The target is to upgrade all 35 airportsby 2012, according to Praful Patel Minister of Civil Aviation, answering a query in Rajya Sabha. Newairports are also being constructed and developed at Vishakhapatnam in Andhra Pradesh; Shimoga, Bijapur,Gulbarga, Hassan and Karwar in Karnataka, Kannur in Kerala; Chennai in Tamil Nadu; Itanagar and Tawangin Arunachal Pradesh; Chiethu in Nagaland; Kokrajhar in Assam; Greater Noida and Agra in Uttar Pradesh;Ajmer (Kishangarh) and Kota in Rajasthan; Halwara in Punjab; Surankote and Kishtwar in Jammu &Kashmir; Durgapur in West Bengal; Sindhudurg, Shirdi and Chakan in Maharashtra, also given an‘inprinciple’ approval for setting up new Greenfield Airports at Navi Mumbai, Sindhudurg in Maharashtra,Mopa in Goa, Bijapur, Simoga, Hassan and Gulbarga in Karnataka, Pakyong in Sikkim, Durgapur in WestBengal and Datia/Gwalior in Madhya Pradesh. International Airports at Bagdogra and Mohali, Secondaryairports at Sriprembadur near Chennai, Noida near Delhi, Merchant Airports or Small, Private Airportsdeveloped and owned by private players, are all the subject of interest and discussion. Several players, bothIndian and International, have evinced interest in participating in the airport development program, alsoMobile Airports coming soon to India.Airports Authority of India (AAI) plans to incur expenditure of Rs.12434 Crores for modernisation ofAirports and Air Traffic Services across the country during XIth Five Year Plan period (2007-2012).TwoGreenfield Airports each at Bangalore and Hyderabad with an investment of Rs. 2400 Crores and Rs. 2920Crores have been made operational in 2008 under Public Private Partnership. Besides, development of IGIAirport, New Delhi and CSI Airport, Mumbai with estimated cost of Rs. 8975 Crores and Rs. 9802 Croresrespectively has been undertaken under PPP.1.3.11) Government Role sTo benchmark international standards and practices, the government brought out an amendment to theAircraft Act 1934.With the objective of creating a level playing field and fostering healthy competitionamongst all airports, and regulation of tariffs of aeronautical services, the government has decided to set up anAirport Economic Regulatory Authority (AERA), The government also increased the entry barriers forthe industry by raising the minimum equity base needed to start an airline from the current requirement ofINR.100 million to INR.200 million for smaller aircraft, and INR 500 million from INR 300 million for largeraircraft with takeoff weight of more than 40,000 kgs.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 25 of 64In order to expand air connectivity to Tier-II and Tier-III cities and to promote regional air connectivity, aseparate category of permit, Scheduled Air Transport (Regional) Services, has been introduced by thegovernment. Three airlines, one from the South, Star Aviation, and two from the North, Jagson and MDLRAirlines, have been granted the No Objection Certificate to operate scheduled transport services. To meet thegrowing demand of pilots, the government has tied up with leading Canadian aviation firm, CanadianAviation Electronics (CAE) Inc, to set up a flight-training institute at Gondia in Maharashtra, and to manageoperations at Indira Gandhi Rashtriya Udaan Academy (IGRUA) in Rae Bareilly.Air Services Agreements; The government also did their bit to sustain the growth of Indian Aviation.Taking forward the policy of liberalization, the government signed Air Services agreements and enhancedtraffic rights with the USA, Singapore, Cambodia, Jordan, UAE (Abu Dhabi, Dubai, Sharjah), Kuwait,Uzbekistan, Malaysia, Chile and Hong Kong, leading to more flights and better connectivity between thesecountries and India. Also the government opened up the Gulf sector to private carriers by granting JetAirways the traffic rights to the Gulf and Middle East routes.International Airlines; Recognising the potential of the Indian market, various international airlinesincluding Air Arabia, Qatar Airways, Continental Airlines, Oman Air, Emirates, Egypt Air, Silk AIR, TigerAirways, China Eastern, Srilankan Airlines, Malaysian Airlines and Finnair, boosted and expanded their Indiaoperations. British Airways listed India as their second largest market next to US.Air-Cargo; Air Cargo experienced renewed interest demonstrated by government and private companies. InAugust, India Post launched its freight operations from Kolkata to Guwahati, Agartala and Imphal. Air Indialaunched dedicated cargo services to Europe, and signed a wet lease pact with GATI for domestic operations.Several players, SAFEX, AVICORE and Quick Jet are said to be planning a foray into the domestic airfreightmarket which is currently dominated by BlueDart Aviation. First Flight, which launched its freighteroperations in July 2006 and retreated from operations this year, has announced its plan to re-enter the marketwith Boeing 737-300 freighters. Deccan Chronicle promoted Flyington Freighters is expected to launchInternational Operations in the coming year. The Government also succeeded in reducing cargo dwell times atairports from five to three days. Logistics Services are also on the growth path in line with Globaldevelopments. Courier Companies like DHL, BlueDart, Elbee, and SkyPak are expanding their infrastructurealong with expansion of their markets both within and outside India.Business Jets; According to a new analysis from Frost & Sullivan on World Business Jets Markets, both thedemand for business jets and the increase in corporate profits rise in tandem. Our India Inc illustrates thisinsight very well. The Aircraft Acquisition Committee of the Ministry of Civil Aviation has provided its NoObjection Certificate the Mukesh Ambani-promoted Reliance Commercial Dealers Private Ltd., for the toimport of a Boeing Business Jet (BBJ), one Global XRS and two Falcons. GVK Aviation Private Ltd. hasbeen permitted to import three aircraft including one Global 5000, one Learjet 45 and one BombardierChallenger 604.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 26 of 64Other companies buying such planes for business and private use include Sun TV Network Ltd., Taj Air,Emaar MGF Land Pvt. Ltd, Bharat Forge Ltd., Raymonds Ltd., VRL Logistics Ltd., Hindustan ConstructionsLtd., DS Constructions Ltd., and Punj Lloyd Ltd. The Air Charter market is also growing, with demand forrenting out of aircraft growing in the recent years. Invision Projects Pvt. Ltd. has signed a contract for 18Phenom 100 and two Phenom 300 executive jets at the Dubai Air Show 2007.Fuel Prices; Fuel prices continued to zoom to staggering heights. As per a report compiled by theFederation of Indian Airlines (FIA), “Improving the financial health of India Airline Industry through sreduction in the cost of ATF”, the estimated annual fuel bill for the industry, based on the September 2006rates (INR.43, 989 per kilolitre) is around $1.7 billion. The cost of ATF in India remains the highest in theAsia–Pacific region. According to a report released by ASSOCHAM, Domestic aircraft operators pay overeight times more taxes on Aviation Turbine Fuel (ATF). The fuel used by Jetliners is loaded with various taxlevies, as a result of which Domestic Airlines pay a total of 66% tax on ATF, compared with the 8% paid byInternational Airlines that fuel ATF in India. The largest component of operating expenses for airlines, ATFaccounts for almost 35 to 40% of the total Operating Costs.Online Travel Booking; The growing online travel booking is driven by easy access and convenience. Theadded benefit is that it is cheaper to book air tickets online. According to a recent media report, the onlinetravel segment is expected to grow at a rate of 30% and reach INR.70 billion by the end of 2007-08 Onlineportals like makemytrip.com, yatra.com, ixigo.com, cleartrip.com and ezeego1.com, among others, are allenjoying strong, positive growths coupled with stiff competition, and enabling wider choice and quality ofservice to the increasing internet audience.1.3.12) Forecasts for Aviation MarketACMG; A forecast by the Air Cargo Management Group (ACMG) projects that the Global Freighter fleetwill be more than double in size from 1,801 units now to 3,883 units in 2026.Airbus Inc.; With orders for over 300 aircraft from Airlines like Kingfisher Airlines, Air Deccan, IndiGo,GoAir, Indian Airlines and a Freighter company, European aircraft major Airbus has projected that India willneed 1,000 new planes over the next 20 years16.Boeing Inc.; Though it has orders worth $275 billion for supplying 3,700 aircraft to various airlines acrossthe world, taking at least five years for the company to meet the demand. Boeing is eyeing up $20 bn indefence orders from India. Bullish about India’s growing aviation market, Boeing sees a $20 billionopportunity in the defence sector alone over the next decade. The company is also eyeing $105 billion worthof orders for over 1,000 commercial airplanes from various Indian carriers over the next 20 years. Indian hasdefence orders pending worth $15-$20 billion for F/A-18 Super Hornet combat jets, P8I maritimesurveillance aircraft and Apache combat helicopters. Air India has purchased airplanes worth $25 billion
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 27 of 64during last three years. Boeing already has collaborations with Hindustan Aeronautics Limited, BharatElectronics Limited, the Tatas and other companies for manufacturing aerospace components. Boeingrecently entered into a $500 million joint venture with the Tatas to manufacture aerospace components on theback of a $1 billion tie-up with Hindustan Aeronautics Limited in the same sphere.Heavy Maintenance MRO Facility Delhi; During 2008, Air India announced its intention to set up aheavy maintenance facility in Delhi. In a joint venture with European Aeronautic Defence and SpaceCompany (EADS) they are to set up an Aircraft’s Maintenance, Repair and Overhaul (MRO) centre in Delhi,the state-owned carrier’s Airbus aircraft. The Centre, which was planned to start operations from early 2009at the India Gandhi International Airport, will become a member of the Airbus MRO Network. TheGovernment’s National Aviation Company of India Ltd (NACIL) owns Air India, while Airbus is an arm ofEADS. The two firms will initially be 50-50 equity partners in the joint venture, but possibly, a third Airbusnetwork partner, a local EADS affiliate company, will join later. The total Project Cost has been estimated at$40 million spread over five years.As per the agreement, the joint venture will initially undertake Airframe Maintenance and Repair of NACIL’sAirbus aircrafts. Later, the facility will service other types of aircraft like the ATR, Aircrafts of other Airlines,and Aircrafts outside the Airbus family, as well as entering the Component Maintenance Business. NACIL iscurrently in the process of inducting 43 new A320 aircrafts from Airbus into its fleet. The induction program,which started last year, will continue till early 2010. Currently, it operates 74 Airbus aircraft. EADS officialssaid the MRO facility would also cater to the markets in South Asia region and neighbouring countries. By2013, over 100 single-aisle aircraft and around 10 wide body aircraft would be maintained and the centrewould employ 250 to 300 Indian technical personnel.Aircraft MRO at Nagpur; Air India said the airline was setting up four MROs in the next couple of years.Another MRO, TATA Group joint venture with Boeing is under progress at Nagpur. Air India, which placedorders for 111 aircraft in 2005, will also set up MROs for engines and components. The aircraft will beinducted in a phased manner by 2012. Aircraft maker Boeing signed a land lease agreement with MaharashtraAirport Development Co. (MADC) for setting up a $100-million maintenance, repair and overhaul (MRO)facility. The state-run MADC will provide land for the project. Boeing chose Nagpur for setting up thefacility as there is ample availability of manpower and land. The city also provides favourable climaticconditions for the facility. All this makes India an exception. While Boeing announced that it would slash10,000 jobs worldwide, demand in India, makes that location the exception to the rule. Up to now, IndianCarriers got their aircraft serviced at MRO facilities in the US, Europe and West Asia. India is expected tohave over 500 aircraft by 2010.Air Works MRO at Hosur; Air Works with Taneja Aerospace Aviation Ltd, at Hosur started servicessuch as line and base maintenance, aircraft painting, component and structural repairs as well as cabin andavionics upgrades. Air Works also became India first DGCA approved independent Airline MRO in s
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 28 of 64November 2008 for its commercial operations in Hosur (near Bengaluru). Air Works is among the country sleaders in the Air Transport Services sector. With an extensive and skilled work force of over 450 employeesacross 10 airports in the country, Air Works manages India largest aviation technical staff and provides scomprehensive services for fixed and rotary wing aircrafts. India’s first aircraft overhauling facility is alreadystarted at Hosur.Mumbai-based Aviation Service provider, Air Works has begun commercial operations of its MRO(Maintenance, Repair and Overhauling) facility at Hosur near Bangalore, eventually employing over 300Aircraft Engineers. No other MRO facility has come up yet in India so far. An opportunity exists to hire goodaircraft engineers now, while there is so much chaos in the aviation sector elsewhere, owing to GlobalEconomic slowdown. M/s.Air Works is also in the process of bidding for setting up an Original EquipmentManufacturer (OEM) facility at the Delhi and Mumbai airports, and has tied up with Zurich-based JetAviation, an MRO service provider for Business Jets and other Small aircraft. At present, Air Works plans toinvest upward of $50 million for setting up the infrastructure to support the commercial MRO initiative.Initially, Air Works will provide services for ATR 42/72 mid-sized aircraft; currently, India has 80 suchaircraft. In the first year, the company handled 12 aircraft, mostly ATR types, and expects to earn $50 millionin the next two years. M/s.Air Works provides a broad range of aviation related services covering three mainverticals:• General Aviation Maintenance, Repair & Overhaul (GA MRO); Full-line maintenance and modifications for fixed and rotary wing business and general aviation aircraft.• Airline Maintenance, Repair & Overhaul (A MRO); India first independent Airline MRO with initial s capabilities for line, base and AOG support for ATR 42/72, B737 series and A320 series.• Aircraft Sales, Management & Charters; Aircraft Sales (Gulfstream & Pre-owned), Aircraft Operational Management Services, Aircraft Charters, Flight Support Services17.Sukhoi Inc., Moscow-based Russian Aircraft, an arm of United Aircraft Corporation, expects to sell 100 ofits Ilyushin series of aircraft, IL114, in India over the next 3 years. The company, through its marketingagency Hindavia Aeronautical Services Limited, is talking to scheduled Regional Carriers across the countryto sell the TurboProp aircraft which can seat 44-64 people. The Low-Flying Aircraft (around 7000 metres)can fly at its best efficiency up to 1000 km. "These aircraft are best suited to Short-hauls and most suitable toRegional Airlines. Mr.Pavel Melnikov spoke at Indian Aviation 2008 Expo, according to him, the market forsuch small aircraft in India is 500 airplanes over the next 3 years. The older versions of IL series, which willcompete with ATR twin TurboProp Aircraft, have so far been deployed in Russian Airliner Viborg andUzbekish Airlines18.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 29 of 641.4) Air-Traffic Projections, Demand and Supply1.4.1) Air-Traffic StudyDomestic traffic is bouncing back to previous levels though yields continue to take a beating. The country’smajor airlines – SpiceJet, Kingfisher Airlines and Jet Airways released their quarterly earnings for threemonths ending December 2009. Jet Airways led in market share at 26.9% for the main line carrier and JetLitecombined. It posted a profit of $23 million, up 149% from the same period last year. Kingfisher Airlinescaptured a market share of 20.8% and recorded a loss of $91 million widened by a marginal loss of 2%,compared with the third quarter of fiscal 2008. SpiceJet garnered a market share of 12.9% and registered a netprofit of $24 million, up from a net loss of $3.8 million in the same quarter year-ago period.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 30 of 64Passenger numbers through India’s Airports have trebled in just six years from 40 million in 2001/02 toalmost 120 million in 2007/08.While International Traffic has more than doubled; the driver for thisphenomenal growth has been the deregulated Domestic market which has seen demand more than triple to 87million passengers. Delhi and Mumbai are by far the country’s busiest airports with a similar mix ofinternational and domestic traffic. Last year Mumbai passed 23 million passengers, enabling it to rank in theTop 15 of Asia/Pacific airports for the first time19.According to a forecast by National Council of Applied Economic Research, about 200 million householdswill be able to afford air travel by 2010. By 2005 Indian airports are estimated to handle 60 millioninternational passengers; 1.2 million tonnes of international cargo; and 300,000 tonnes of domestic cargo.Over next 7-10 years from 1999, Growth in domestic passenger traffic is estimated to grow by 12.5 percentper annum. Growth in international passenger traffic during this period is expected to be around 7 percent perannum. Domestic cargo traffic is estimated to grow at 4.5 percent per annum. Growth in international cargotraffic is estimated at 12 percent. Air-Cargo traffic is rapidly increasing in India. A number of majorinternational air carriers including Lufthansa, KLM, and British Airways have increased their cargo capacitiesfrom India20. Table-4 : Air-Traffic Projections International Domestic Passengers Increase Year Passengers Increase (in %) (in million) (in %) (in million)1996 -97 (Actual) 12.00 10.5 10.8 7 1997-98 13.26 10.25 11.6 7 1998-99 14.65 10.5 12.4 7 1999-2000 16.2 10.5 13.3 7 2000-01 17.57 10.5 14.1 7 2001-02 19.06 8.5 14.9 6 2002-03 20.68 8.5 15.8 6 2003-04 22.44 8.5 16.8 6 2004-05 24.35 8.5 17.8 6 2005-06 25.05 7 18.8 5.5 2006-07 27.87 7 19.8 5.5 2007-08 29.82 7 20.9 5.5 2008-09 31.91 7 22.1 5.5 2009-10 34.15 7 23.3 5.5 2010-11 36.54 7 24.6 5.5 2011-12 39.09 7 25.9 5.5
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 31 of 64 2012-13 41.44 6 27.2 4.9 2013-14 43.93 6 28.5 4.9 2014-15 46.56 6 29.9 4.9 2015-16 49.35 6 31.4 4.9 2016-17 52.32 6 32.9 4.9 21SourceAirlines fly to Smaller Cities for Growth in Passenger Traffic; India’s Airlines are charting new routes toconnect neglected, smaller cities that have some tourist or business potential, as the economy brightens andpassenger numbers rise. Airlines saw a spurt in passenger traffic, growing by 5.45% to 39.96 million betweenJanuary and November, according to the regulator Directorate General of Civil Aviation (DGCA).Thenumber had contracted as much as 4.84% to 42.85 million in 2008.Kingfisher Airlines Ltd and regionalairline Jagson Airlines Ltd are among those planning to harness the potential of smaller Airports. “The biggerairlines have a focus on Category-I (Metro) routes by default, but category-II routes like smaller capital citiesmake a lot of sense,” said M/s.Jagson CEO, Mr.Koustav M. Dhar. It will connect Srinagar to Leh with a dailyflight starting. So far, only Air India has a weekly flight between the two cities.“Those (Connecting State Capitals and Smaller Cities) are the sectors to be in and they are consistent all yeararound at Rs.4000 - 4500 (Average Fare),” said Dhar, comparing the average fare on the Delhi-Mumbai route,which can drop below Rs.3000 due to competition. “(However), if you put 180 seats on category II, they arenot viable.” Jagson will also connect New Delhi to Shimla and Dharamshala, and operate flights to Ranchiand Patna in summer on alternate days. Kingfisher Airlines has also started flights between Chennai and theindustrial town, Salem in Tamil Nadu, and Jharkhand’s capital Ranchi and Chhattisgarh’s capital Raipurrecently. It has also received permission to start services to Uttarakhand’s Pantnagar from New Delhi. Also onthe cards are flights to the hosiery and garments hub of Ludhiana in Punjab from New Delhi. A Kingfisherofficial said the airline is waiting for regulatory clearances before it can take off to Pantnagar and Ludhiana.“Since these are new airfields, DGCA is still to clear them,” he said. National carrier Air India already fliesbetween several small towns in the country22.Indian Domestic Growth Momentum continues in Oct-2009; The Indian market has rebounded in thesecond half of this year, as the domestic Economy remained strong. Despite some improvement in airlineyields, domestic Indian air traffic continued its very powerful recovery in Oct-2009, with India’s Ministry ofCivil Aviation (MoCA) reporting 27% growth in domestic passengers to 4.0 million in Oct-2009.
Commercial Aircraft Manufacturing: A Business Case Analysis in the Indian Context. Supervisor: - Dr. M. Jayadev Author: - Venkateswara Rao.G Date:-15/11/2010 Page 32 of 64 India Domestic Passengers and Growth: Oct-2008 to Oct-2009The market, which contracted for 12 consecutive months to Jun-2009, is showing signs of recovery off thelower base levels in the 2008 period. Traffic growth bottomed out in Dec-2008, when passenger numbersslumped 22%. Indian Carriers Domestic Market Share: Oct-2009Among the LCCs, IndiGo had the highest domestic market share, at 13.6%, followed by SpiceJet (12.4%) andGoAir (5.4%), while a combined Jet Airways/JetLite, whose passenger levels fell last month due to its pilotstrike, had a combined 27.7% Market share, followed by Kingfisher Airlines followed at 20.7%. Air Indiaalso gained market share in the month, to 18.6 %.