With more roads, less density, rising incomes it is not surprising that vehicle numbers are increasing
Give latest data from RITES – 44% of locations examined by RITES traffic exceeds capacity and in another 19% it was verging on exceeding capacity
Metro (Underground) – Rs. 3.5 billion per km (44 kms)Metro (Elevated) – Rs. 1.5 billion per km (104 kms)Mono Rail – Rs. 1.5 billion per km (40.3 kms)BRT – Rs. 0.2 billion per km (394.9 kms)
Controlling DemandDiffusing DemandManaging assets working more efficiently.
A possible explanation could be that road is perceived as a better option compared to rail in terms of level of service and service quality.
An Act to make better provision for the control of the manufacture, possession, use, operation, sale, import and export of aircraft
At the time of Independence, Nine Air Transport Companies were operational. Later the number reduced to eight when the Orient Airways shifted its base to Pakistan. The then operational airlines were Tata Airlines, Indian National Airways, Air Service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. These airlines were operating within and beyond the frontiers of the company, carrying both air cargo and passengers.As the need for more air travel facilities became paramount, permission was given to almost anyone wanting to start an airline. This resulted in a profusion of quick start airlines, which competed with each other perhaps by cutting fares and downtime for maintenance. Soon enough the situation became untenable.
Major imbalance in payments of loans.International Monetary Fund (IMF) demanded for economic reforms in return of aid. Prime Minister NarasimhaRao and Finance Minister Manmohan Singh took initiative to bring Liberalization, Globalization and privatization.
2. These income groups drive the consumption pattern in India and are primarily concentrated in urban areas. NCAER analysis reveals that the middle income group population in 2010 stood at 160 million individuals i.e. 13.3% of the total population, which is expected to rise to 547 million in 2025 (i.e. 37.2% of the total population)25 .3, 62% of the population is in the working age group of 15-60 years and this proportion is set to increase in future indicating a larger employee base, greater business travel and greater economic activity.
4,Mckinsey Global Institute’s projections state that India’s urban population will be 590 million by 2030 i.e. about 40 percent of the total population of India. The number of million plus cities will increase to 68 by 2030 of which 13 cities will have more than 4 million and six cities will have more than 10 million persons.27 5. Low Cost Carrier (LCC) model which made air travel affordable for common man got established firmly in the domestic market since 2004. This stimulated the pent up demand for air travel. LCCs along with the LCC brand of Full Service Carriers (FSCs) constituted 63.3% of the market share in 2009. The domestic traffic is rapidly shifting towards the LCC model. Market sources suggest that this has crossed 67% during 2011-12. Also, the LCCs are reported to have displayed strong operational performance immediately after the recovery witnessed in 2010. This leads us to believe that Low Cost Operations in a price sensitive market like India appear to be a more sustainable business model
Opening up of the airport infrastructure to private sector participation fuelled the growth of the air traffic in India. 29. Airports Authority of India (AAI) continued its unparalleled role in creating air connectivity across the nation, incurring an expenditure30 of around Rs 12,500 crores during the 11th Plan period. Rapidly expanding air transport network aided by massive investments in the airport infrastructure could be cited as one of the key reasons for the surge in air passenger traffic in India. 7.In line with the trend observed in growth of India’s GDP, the tourism sector has displayed stellar performance during the last decade. During the period from 2001 to 2010, the average annual growth rate of foreign tourist arrivals in to India and Indian National departures from India grew by 9.2% and 11.5% respectively. Domestic tourism was not to be left behind. Domestic Visits within India stood at 740.2 Million for the year 2010.31 In fact the average annual growth rate of Domestic Tourist visits within India for the decade ending 2010 is estimated to be 13.5%. The number of foreign tourist arrivals in India stood at 5.6 Million in the year 2010 as against 3.46 Million in 2004 and 2.54 Million in 2001. Similarly, the number of Indian National departures from India stood at 12.1 Million in 2010 as against 6.21 Million in 2004 and 4.56 Million in 2001. 9
. The air traffic density can be measured by linking Urban Per capita income with air passengers. Taking 1000 passengers per Million Urban Capita32, a recent study has arrived at a comparative picture. Air traffic density in India using this measure is very low at 72 as compared to China (282), which is 4 times higher; Brazil (231), which is 3 times higher; Malaysia (1225) is 17 times higher, U.S.A. (2896) is 40 times higher and Sri Lanka (530), which is 7 times higher as exhibited in Graph 6. This indicates the untapped market potential given the projected burgeoning young population and rising disposable income levels in future. GGreater economic activity and the consequent greater integration of businesses globally would mean greater business travelers across national boundaries. Also, the growing trend of outbound Mergers and Acquisitions (M & A) i.e. Indian firms acquiring International firms in order to capture markets and resources abroad, where the M & A transaction value for the year 2010 touched almost $ 50 billion34 and is set to grow further in future implies greater business related travel
There is no question that all the airlines in India are having financial difficulties.These depressing financial conditions can lead only to two types of outcomes for the airlines2007 became a landmark year in the industry because of the major consolidations that took place during the year.
The following are the major examples of consolidation in the Indian aviation industry. What is striking about these consolidations is that two of them are between carriers which have made heavy losses!
Infrastructure and aviation - Business environment
• PRE-COLONIAL PERIOD (Upto
• BRITISH RULE
INDIA’s ECONOMIC HISTORY DIVIDED INTO 3 Eras
Indus valley civilization flourished between 2800 B.C. and 1800 B.C.
Evidence of well planned Streets, Drainage systems and water supply
Indicative of their knowledge and understanding of Urban Planning
This included world’s first Urban Sanitation system
Infrastructure development explicitly recognized during Emperor Sher
Shah’s rule (1540-1545)
The famous Grand Trunk Road linking the East and West extremities
of India was completed during this period
Other major irrigation and road projects were undertaken during his
British rule brought with it major developments like
Though, these contributed strictly and largely to their colonial expansion
Such an infrastructure laid foundation to India’s development story beginning in
The planning commission broadly defines Infrastructure
development as Transport and Telecommunications development
Thus it includes the following:
Roads & Road Transport
Communications & Broadcasting
• The Union Budget 2012-13 stated that
investment in infrastructure is to go up to
Rs 50 lakh crores with half of the total
investment expected from private sector.
• More sectors proposed to be added as
eligible sectors for Viability Gap Funding
under the scheme- Support to PPP in
• Tax free bonds of Rs
60000 crore to be
allowed for financing
projects in 2012-13.
• The Union Budget
list of infrastructure
sector approved by
• National Manufacturing
Policy announced with the
objective of raising the
share of manufacturing in
GDP to 25 per cent and
creating of 10 crore jobs.
• Coal India Limited was
advised to sign fuel
supply agreements with
power plants, having
long-term PPAs with
DISCOMs and getting
commissioned on or
before 31 March 2015.
• External Commercial Borrowings (ECB) to
be allowed to part finance Rupee debt of
existing power projects
The Union Budget 2012-13 proposed an
increase of allocation of the Road
Transport and Highways Ministry by 14 per
cent to Rs 25360 crore . ECB proposed to
be allowed for capital expenditure on the
maintenance and operations of toll
systems for roads and highways, if they are
part of original project.
The budget permitted direct import of
Aviation Turbine Fuel for Indian carriers.
The budget also stated that the ECB is to be
permitted for working capital requirement of
airline industry for one year subject to a total
ceiling of US $ 1 billion. Proposal to allow
foreign airlines to participate upto 49 per cent
in the equity of an air transport undertaking
under active consideration of the government
was also made.
“Expanding investment in infrastructure can play
an important counter cyclical role. Projects and
programmes [are] to be reviewed in the area of
infrastructure development, including pure public
private partnerships, to ensure that their
implementation is expedited and does not suffer
from [the] fund crunch.”
Mr. Manmohan Singh, Indian Prime Minister,
NETWORK OF ROADS IN INDIA - 33.2 lakh km.
On the basis of nature & surfacing - 1.Metalled (pucca)- 57%
2. Unmetalled (kuchcha) -43%
On the basis of construction & maintenance –
(a.) Golden Quadrilateral Super Highway :
(i) NHDP Phase- I :- 5,846 km., six lane,
CONNECTING-Delhi ,Mumbai, Chennai and Kolkata
(ii) NHDP Phase- II :- 7300 km.
* NS Corridors – Srinagar to Kanyakumari
* EW Corridors – Silchar(Assam) to Porbandar(Gujarat)
(iii) Port connectivity and other projects - 1,157 km.
(iv) NHDP Phase – III:- 4,015km., 4 lane ,
-National Highway Authority of India (NHAI) is the implementing agency for NHDP programme.
-NHAI is implement 4 laning of 603km. Special Accelerated Road Development Programme in the
North Eastern Region (SARDP-NE) ,
(b.) NATIONAL HIGHWAYS -- As on March 31,2006 - 65,569 km.
2% of the total length of the road network
CPWD constructs and maintains National Highways.
35%-single lane, 53%-2lane & 12%-4 lane or more.
(c.) STATE HIGHWAYS -- 1.28 lakh km. 97%of the length of state highway
The State Highways are constructed and maintained by State
(d.) DISTRICTS ROADS – 4,70,000 km.
Districts authorities constructs and maintain the District Roads
(e.) OTHER ROADS - mostly kuchcha roads, 26,50,000 km.
(f.) BORDER ROADS - Border Road Development Board , World’s highest
Roads from Manali (H.P.) to Leh of Ladakh (J&K)
ROAD DENSITY - The lowest density – 10 km.per 100 sq.km in J.&K.
The highest density – 375 km.per 100 sq.km. in Kerala
The national average of road density – 75 km. per 100 sq. km.
As of June 30th 2009 more than 6.0 million vehicles were registered in Delhi,
equivalent to the total number in Kolkata, Mumbai and Chennai.
Source: Transport Department, GNCTD
Cars and two-wheelers together drive less than 20% of its people -- and yet roads
are choked. (Source: CSE)
• Population per sq. km in Delhi is
less compared to other cities like
Hong Kong, Seoul and Paris (City)
which are more densely populated.
• Road space as percentage of total
land area is 21% in Delhi.
– Present road length- 28,000 Kms
with limited expansion
Hong Kong Seoul Paris (City) Delhi (Urban) Delhi (Whole) Tokyo
Delhi Tokyo Munich Hong Kong Paris Bangkok
Road Space as Percentage of Total Area
Delhi is developing urban sprawl
Delhi Vs. Other World Cities
World Cities - Population per sq. km.
GNCTD commissioned study in 2005 which identified 43 corridors (575 km)
with Peak Hour Peak Direction Traffic (PHPDT) exceeding 5,000, assuming
the following exist:
― Metro Phase I & II
― Ambedkar Nagar-Delhi Gate BRT
― Phase I IRBT corridors (2 nos.)
PHPDT Length (in Kms) No. of Corridors Choice of Mode*
>25,000 93 4 Metro
20,000-25,000 57 4 Elevated LRT
15,000-20,000 131 8 At grade LRT
10,000-15,000 179 13 At grade BRT / Elevated Monorail
5,000-10,000 115 14 At grade BRT
Total 575 43
* Based on World Bank and other studies
Demand-wise Number and Length of Corridors
• DIMTS, on behalf of Transport Department, commissioned “Transport Demand Forecast
Study” in 2008.
– To develop a Transport Demand Forecast Model and Identification of a Road cum
Public Transport Network to meet the city demand by 2021 & beyond.
– The study identified a total length of 583.4 kms for the development of different
public transport systems:
• Choice of mode depends mainly on demand level on a corridor, capacity of the mode and
the available Road/Right Of Way (ROW).
– Other considerations are the land-use along the corridor, the location of building
lines, and the potential for increasing the ROW .
Mode Length (Kms) Budget (in Rs.)
Metro – Phase I 65.1 Kms Rs. 105. 7 billion
Metro – Phase II 128.0 Kms Rs. 190.0 billion*
BRT – First Corridor 14.5 Kms Rs. 2.0 billion
* Inclusive of Civil work of Airport Express line.
Source: Delhi Metro
Investment focus on one mode of public transport and minor
investment in other modes.
<TRAKO PIS Chirag Delhi>
423ACDN – 28 mins
Info by DIMTS
Mobile user needs to send simple
(You will instantly receive a SMS
response: Next Bus at Bus Stop
for Route Number expected in ‘X’
Automated Fare Collection System
Delhi Government is also planning to create an Integrated Multi-Modal Ticketing
system, comprising DTC, Private Buses and Delhi Metro.
Delhi Transport Corporation
AFCS implemented on Dwarka
Circular Sewa, inter-connecting key
destinations in Dwarka sub-city such
as metro stations, shopping centres,
The system is operational in 6 low-
floor A/C buses.
• Transport Department is planning to cover
Autorickshaws and Taxis under the ambit
of a Vehicle Tracking System.
• A separate call centre will be setup for
booking and the despatch of
• A similar service will be launched in other
cities including Ahmedabad, Pune,
Chandigarh and Chennai.
Transport Department, GNCTD will install GPS-based Vehicle Tracking System in all
55,000 auto rickshaw in the city and will establish a call-centre facility.
In 1947 rail network of about 53000 km
Added only 11000 km of network in last 65
Investment of Rs. 57630 cr the year 2011-
12 for the development, highest ever by
Indian railways in any financial year
-Target of laying 1075 km of new lines in
-800 km of gauge conversion
-700 km of Doubling of lines
High speed rail travel
Raising the speed of regular passenger trains
from 100-130 khph to 160-200 kmph
To develop 50 world class stations which can
be recognized internationally
Segregating passenger and freight tracks
Mega infrastructure project of USD 90
To connect Delhi & Mumbai through road
and railway network of 1483 km
Delhi, U.P., Haryana, Rajasthan, Gujarat,
Maharashtra this states will be connected
to form a corridor of international
1. The total length of railway network as on March, 2002 was 63028 km.
(i) Broad Gauge (1.67 metre) - 45622 km. (70%)
(ii) Metre Gauge (1 metre) - 14364 km. (24.6%)
(iii) Narrow Gauge(0.77 metre) - 3136 km. (5.36%)
As on March, 1951 – 53596 km. - 18% increase
2. Additional Lines on the already existing busy routes– total running track had
increased from 59,315 km. to 1,07,969 km. in 2001.
3. Electrification of route – By March,2006 the Indian railways had got 17500 km. of
railway route electrified.(26% of total route)
Purposes of Electrification –(i) relieves railways from steam engines.
(ii) ensure more speedy movement.
(iii) Clean and pollution free travel.
4. Container Service - Provides door to door service for goods & commodities by CCI.
5. Computerised reservation & more and more coaches and sleepers.
6. METRO Railway - Kolkata, Delhi, Mumbai & Chennai
7. Super fast Trains
Pipelines have become a major means of transport and are used in transporting crude
oil, petroleum product and natural gas from the oil and natural gas fields to refineries,
fertiliser factories and big thermal power generation plants.
Major categories of pipeline transportation in India :-
1. upper Assam Oil fields to Kanpur via Guwahati, Barauni and Allahabad
2. Salaya (Gujarat) to Jalandhar (Punjab) via Viramgam, Mathura, Delhi and Panipat.
3. Hazira (Gujarat) to Jagdishpur (U.P.) via Bijapur (M.P.) –the longest pipeline in India
4. Mumbai HIGH with Mumbai – Pune
PROPOSED PIPELINES –
(I) Between Kandla and Panipat
(II) Between Kandla and Bina
(III) Between Mumbai and Manmad
(IV) Between Vishakhapatanam to Vijaiwada
(V) between Mangalore to Chennai via Bangalore
India has a large number of perennial rivers and a very long coastline of 6100 km.
Types of waterways:- (a.) Inland water transport
(b) Ocean water transport
National Waterways :-
1.The Ganga river - Allahabad to Haldia - 1620 km.
2. The Brahmaputra river - Sadiya TO Dhubri - 891 km.
3. The West Coast Canal - Kollam to Kottapuram - 14 km.
4. The Champakara Canal – Kerala -13 km.
5. Udagmandalam Canal - Kerala -22 km.
Major Sea Ports :- At the time of Independence - 5 sea ports
Sea ports at West Coast Seaports at East Coast
1. Kandla 1. Tuticorin
2. Mumbai 2. Chennai
3. Nhova Sheva (Jawahar Lal Nehru) 3. Ennore
4.Mormugao 4. Vishakhapatnam
5. Mangalore 5. Paradip
6. Kochi 6. Haldia
Air travel is the fastest, most comfortable and prestigious mode of transport.
Civil Aviation Department of controls and supervises the activities of airlines and
gives guidelines for safe operations of the airlines.
AIR SERVICES :- 1. Air India - 26 Air Craft
2. Indian Airlines - 54 Air Craft
3. Pawan Hans Helicopters
4. Private Air Lines (Scheduled & Non-scheduled)-70
International Airports :- 14 1.Delhi 8.Kochi
3.Chennai 10. Guwahati
4. Kolkata 11. Bangalore
5. Amritsar 12. Thiruvananthapuram
6. Ahmedabad 13. Srinagar
7. Panaji 14. Pune
Airports are managed by Airports Authority of India.
Cargo airlines :Blue Dart Aviation ltd is
Operating scheduled cargo services in
A project to upgrade, rehabilitate and widen major highways to a higher standard
Implemented under the leadership of Atal Bihari Vajpayee
Managed by National Highways Authority of India (NHAI)
Proposed investment for this project amounts to US $ 71 billion
This project will be completed in 7 phases
Most important of these being PHASE I and II
PHASE I : Golden Quadrilateral project
PHASE II : North-South & East-West corridor
An autonomous agency of Government of India
NHAI was created through the promulgation of the National Highways Authority
of India Act, 1988
The authority was made autonomous in 1995
Responsible for development, maintenance, management and operation of
National highways totaling around 76,818 KM
INDIAN ROAD NETWORK
National Highways (Already 4/6 laned) 16,000 KM
National Highways (Being laned) 25,000 KM
State Highways 1,54,522 KM
Major and other district roads 2,577,396 KM
Rural & Other roads 1,433,577 KM
Total (Approx.) 4,245,429 KM
Represents the PHASE I of the NHDP, launched in 2001
Launched by Shri Atal Bihari Vajpayee, it was planned to complete in January,
It is highway network connecting many of the major industrial, agricultural and
cultural centers of India
This project seeks to improve the connectivity of four major cities in India
It is the largest highway project in India and 5th longest in the world
GQ project would greatly impact urban and rural growth of Indian
GQ project has led to improvements in both urban and rural areas of non-nodal
districts located 0-10 KM from the GQ
Represents the second phase of the NHDP
Consists of building 7300 KMs of 4/6 lane expressways
It connects Srinagar, Kanyakumari, Porbandar and Silchar
The proposed cost for this project is Rs. 42,000 crores
As of date : - October 31, 2013
Segment NS – EW Corridor
Total Length 7,142 KM
Length Completed 6,177 KM
Under Implementation 593 KM
Length to be Awarded 372 KM
% Completed 86.48 %
The projected economic benefits of these highway projects are:
Establishing faster transport networks between major cities and ports
Providing an impetus to smoother movement of products and people within
Enabling industrial and job development in smaller towns through access to
Providing opportunities for farmers, through better transportation of products
from the agricultural hinterland to major cities and ports for export, through
lesser wastage and spoils
Driving economic growth directly, through construction as well as through
indirect demand for cement, steel and other construction materials
Giving an impetus to Truck transport throughout India
PREMISE OF THE CASE:
Large infrastructure projects have
major implications for achieving
low-carbon development goals
DFC project signifies a major transition in the freight transport sector through increased sharing
of rails, which are
• More energy efficient
• Environment friendly
• Less Carbon intensive mode of transport
3 scenarios are taken into consideration here
• Business-as-Usual (Without DFC)
• Business-as-Usual (With DFC)
• Low Carbon (With DFC)
Here Low carbon path development assumes a number of supply-side interventions that lead to
further improvements in energy efficiency as well as decarbonisation of electricity at the
generation stage. This is different from the BAU scenarios
DEC 1910: Team of mechanics and aviators,
led by Capt. WG Windham land in India.
Show case their airplanes for business
Exhibition at Exhibition Grounds in Allahabad
ROUTE: Karachi to New Delhi
Indian State Air Services
and Imperial Air
1932: JRD Tata formed Tata Airlines
JRD Tata was the first Indian to get A license
First Indian commercial carrier to transport mail and
passengers within India
The company was based out of a small hut with a
palm thatched roof at Juhu Airstrip in Bombay
JRD flew the first leg of the inaugural Karachi-Madras (Chennai) journey
himself, taking mail from Karachi to Bombay via Ahmedabad using a
single-engine De Havilland Puss Moth
In its first year, Tata Airlines flew 160,000 miles, carrying 155 passengers
and more than 10 tonnes of mail.
The Indian Air Force
in British India as an
auxiliary air force of
the Royal Air Force
commissioned its first
squadron , No.1
four Westland Wapiti
Biplanes and five
Indian pilots in 1933
1924: Construction of civil airports began in India.
Construction began at Dum Dum in Calcutta, Bamrauli
in Allahabad and Gilbert Hill in Bombay
1937: The Aircraft Act, 1934 was promulgated
1940: Hindustan Aeronautics Limited (HAL) was set up
by Walchand Hirachand in association with the then
Mysore Government at Bangalore.
1941: India’s first aircraft, the Harlow trainer was rolled
out for test flight in July 1941
1946: Tata Airline becomes Air India
At the time of independence, nine air transport companies
were carrying both air cargo and passengers.
1948: Government of India takes 49% of the company
Government of India established a joint sector company, Air
India International Ltd in collaboration with Air India (earlier
Tata Airline) with a capital of Rs 2 crore and a fleet of three
Lockheed Constellation Aircrafts
All airlines nationalised
Eight formerly independent domestic airlines: Deccan
Airways, Airways India, Bharat Airways, Himalyan Aviation,
Kalinga Air Lines, Indian National Airways, Air India, Air
Services of India were merged.
Air India International took over the international traffic
Indian Airlines Corporation handled the domestic operations
1953: Civil helicopters introduced for the first time in the
The commercial use of helicopters in India was limited to
small Aviation companies who were involved in
communication and crop spraying roles.
1985: Pawan Hans Helicopters Limited (PHHL) and Indira
Gandhi Rashtriya Uran Academy (IGRUA) in Fursatganj, Rai
Bareli in Uttar Pradesh for training of pilots were established
The National Airports Authority [NAA] established
in 1986 for the management of all domestic airports
and Air Traffic Management of the entire Indian
airspace and adjoining oceanic areas
The BCAS was under the Ministry of Civil
Aviation and set up as a sequel to the Kanishka
Tragedy in June 1985. The main responsibility of
BCAS are lay down standards and measures
in respect of security of civil flights at
international and domestic airports in India
Liberalization - Private Players
Direct import of ATF - Regulation
FDI – domestic Services Sector
Airports control - Airports Authority of India (AAI)
Green Field Airport
The Air Corporation Act, 1953 repealed
Opening up of the domestic sector
Disinvestment of the two public sector airlines
New privately owned domestic airlines
Allow foreign airline of any country or ownership to land at
any port on any number of occasions and with unlimited seat
Foreign Direct Investment
Up To 49% Of Foreign Equity & 100% Of NRI investment is
allowed Pertaining to the Domestic Air Transport Services
Private Carriers permitted to operate scheduled services –
75% share in domestic aviation.
Entry of low cost carriers
City side development of non-metro airports
Allowing Indian carriers to compete on international routes
Reduction in Landing charges.
Fleet expansion plans of Air India
Restructuring of Delhi and Mumbai airport and development
of Greenfield airports at Bangalore and Hyderabad
Up gradation/ expansion/ development of airports
undertaken depending upon traffic potential, requirement of
airline operators and need of air passengers.
With the liberalization of the Indian aviation sector, aviation
industry in India has undergone a rapid transformation.
Indian aviation industry is now dominated by privately owned
full service airlines and low cost carriers.
1991, September 20: Sahara Airlines started its operations.
1993, May: Jet Airways started its operations.
1995: India’s six private airlines accounted for more than 10%
of domestic traffic. Many foreign airlines started providing
international services. In 1995, 42 airlines operated air
services to, from, and through India.
1995, April 1: Airport Authority of India was constituted by
merging the International Airport Authority of India with
National Airports Authority.
1997: Policy on Airport Infrastructure of India was developed
for the use and development of airport infrastructure.
1999, June 10: CIAL Airport was the first airport in India
which was built with public-private participation and was
made operational. The process for development of CIAL
as a private airport began in 1993.
2000, October 2: Sahara Airlines was rebranded as Air
2003: Entry of low cost carriers. Air Deccan started its
2004: Government approved setting up of private
Greenfield airports at Hyderabad and Bangalore.
2004, June: Low Cost Carrier – GoAir started it operations.
2004, December: Indian Scheduled carriers with a
minimum of 5 years of continuous operations and a
minimum fleet size of 20 aircraft, were permitted to
operate scheduled services to international destinations.
2005: Indian Airlines was rebranded as Indian. The
Government designated Air India, Indian Airlines, Jet Airways
and Air Sahara to operate international services.
2005, May: Kingfisher Airlines (Full Service Carrier) and Spice
Jet (Low Cost Carrier) commenced operations.
2006, August: Low Cost Carrier – Indigo started its
2006: The government approved the restructuring and
modernisation of Mumbai and Delhi brownfield airports
through the public-private partnership model.
2007: The Regional Airlines Policy was announced wherein
licenses were given for operation of airlines within a
2008, April 24: The path breaking Greenfield Airport Policy of
the Government was announced.
2008, August: Simplify Deccan was renamed as Kingfisher Red.
2009, May 12: AERA was established to regulate the economic
aspects of airports. It is an autonomous body set up by an Act
2010: Airport Economic Regulatory Authority Appellate
Tribunal (AERAAT) was established.
At present, India is the 9th largest aviation market in the world
with 90 operational airports, 1,180 aircrafts, 303 helicopters,
11 operational scheduled airlines and 133 non-scheduled
operators. It is envisaged that by year 2020, India will be
among top 3 Civil Aviation Markets in the world and will
handle about 300 million passengers.
Year Passenger Carried (in millions)
Domestic International Total
1990-91 7.5 6.3 13.8
1995-96 12.2 9.4 21.6
2003-04 15.7 14.6 30.3
2010-11 53.9 37.9 91.8
Source: DGCA, AAI; Analysis: MoCA
Rising domestic Gross Domestic Product (GDP)
GDP - 5.7% in the period 90-91 to 2003-2004 which then rose to
8.6% during 2004-05 to 2010-11.
Growing economic activity resulted in increase in business travel
and greater leisure travel
Expanding middle-income group
middle income group population in 2010 stood at 160 million
individuals i.e. 13.3% of the total population, which is expected to
rise to 547 million in 2025 (i.e. 37.2% of the total population)
62% of the population is in the working age group of 15-60 years -
indicating a larger employee base, greater business travel and
greater economic activity.
Low Cost Carrier (LCC) model which made air travel
affordable for common man got established firmly in the
domestic market since 2004. This stimulated the pent up
demand for air travel.
The domestic traffic is rapidly shifting towards the LCC model.
Market sources suggest that this has crossed 67% during
This leads us to believe that Low Cost Operations in a price
sensitive market like India appear to be a more sustainable
Investments in Airport and related infrastructure
Total investment made by private airport operators in the last
five years was to the tune of Rs 30,000 crores spread across
Greenfield development of Hyderabad and Bengaluru
international airports and modernization of Delhi and
Mumbai international airports
2001 to 2010-the average annual growth rate of foreign
tourist arrivals in to India and Indian National departures
from India grew by 9.2% and 11.5% respectively.
The number of foreign tourist arrivals in India stood at 5.6
Million in the year 2010 as against 3.46 Million in 2004 and
2.54 Million in 2001. Similarly, the number of Indian National
departures from India stood at 12.1 Million in 2010 as against
6.21 Million in 2004 and 4.56 Million in 2001.
Untapped market potential
Air traffic density in India using this measure is very low at 72 as
compared to China (282), which is 4 times higher; Brazil
(231), which is 3 times higher etc. indicates the untapped market
Global integration of businesses
Greater economic activity and the consequent greater
integration of businesses globally would mean greater business
travellers across national boundaries. Also, the growing trend of
outbound Mergers and Acquisitions (M & A) and is set to grow
further in future implies greater business related travel
Airlines in India are having financial difficulties.
Even Jet Airways has seen its market share and profits
decline and stock price plummet by 40% since 2005.
Inability of the airlines to reduce costs
“Irrational” pricing that set in after the advent of LCCs. They
have chased market share, i.e., revenue maximization and
forced the incumbents to match their low prices.
Either some of them go bust in a market shake-out or they
merge/get acquired by other airlines or business groups.
These two national carriers enjoyed monopoly power in the
industry until the Air Corporations Act was repealed.
intense competition from private carriers - main reason for
steep decline in their market share and profits.
Indian Airlines - monopoly on domestic services until
1994, market share decline from 100% to 17% since.
Air India and India Airlines merged in 2007 (NACIL was
formed) in order to recover their losses and work efficiently
PROBLEMS- no clear ownership and mismanagement by
poor execution of plan and improper strategy along with
massive misuse of funds
Sub-optimal aircraft utilisation: Air India’s fleet utilisation is
very poor with only around 100 operational aircraft out of a
total registered fleet of 127 aircraft
Fleet issues: The B777-200LR, B747-400 and the A319 aircraft
are poorly matched with the mission requirements of its
international and domestic routes
Business model needs to be reworked: Air India requires a
comprehensive review of its business model. At present there
are fundamental weaknesses in each of its key domains.
Government intervention: In addition to these huge
challenges, the management of Air India has to deal with
excessive intervention by the Ministry of Civil Aviation and
After the liberalization of Indian Economy in 1993, two new
airlines, Jet Airways and Air Sahara entered in the domestic
15 years later, in 2008, Air Sahara was acquired by Jet
Airways and renamed as JetLite.
Now Jet Airways and JetLite together share 23.8 % of the
domestic market in India and this airline remained the
market leader in Indian Domestic Sector for many years
until recently toppled by Indigo to number 2 spot.
It is basically a full-service carrier, but also offers low-cost
services under the name of JetKonnect.
India's first low-cost carrier, Air Deccan, reported a $43
million loss for the fourth quarter ending June 2007.
To keep afloat, Air Deccan sold 26% of stake in May 2007 at
$136 million to liquor baron Vijay Mallya's then two-year-
old Kingfisher Airlines
This stake was later increased to 46%. The business models
of these two airlines seemed to be as diametrically opposite
- ran as separate entities. Kingfisher and Kingfisher Red
plan to improve performance and save money by sharing
facilities and staff.
The King of Good Times, liquor barren, Vijay
Mallya, gifted this airline to his son on his 18th birthday
as a birthday gift in 2005, it was deemed that the
passengers would fly in the sky with a style.
For next six years, it indeed treated its customers in
style. Even the airlines served on-board meals on its
low-cost wing Kingfisher Red, against the trend.
the dream collapsed somewhere in the sky and
today, the aviation regulator has cancelled the flying
license of the Kingfisher Airlines.
Due to its poor financial health, the airline is unable to
pay its dues to the banks and salaries to the employees
Indigo uses a fleet of 150 aircrafts
from AIRBUS – A 320
The advantage of using a single type of
aircraft shows in their profit making
ability in this competitive aviation
Jet uses a mix of wide
bodied boeing 777 and
narrw bodied 737’s as
well as slightly wider