A Comprehensive Project on Indian Civil Aviation

A
Comprehensive Project Report-I
On
“A Study on Indian Civil Aviation Industry”
SUBMITTED TO:
S. V. INSTITUTE OF MANAGEMENT, KADI
KADI SARVA VISHWAVIDYALAYA UNIVERSITY, GANDHINAGAR
Under the guidance of
Prof. Bhavik Panchal
SUBMITTED BY:
NO. NAME EXAM NO. BATCH
1. Bhavik Parmar 75 2016-18
2. Devang Modh 69 2016-18
3. Harish Parmar 76 2016-18
4. Ghanshyam Sarasariya 94 2016-18
5. Sujeet Thakur 106 2016-18
Submitted in the partial fulfilment for the
requirement of the award of the degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)
(2016-2018)

I
STUDENT’S DECLARATION
We, Bhavik, Devang, Harish, Ghanshyam and Sujeet, hereby declare that the Comprehensive
Project Report – I entitled “A study on Indian Civil Aviation Industry” is a result of our own work
and our indebtedness to other work publications, references, if any, have been duly acknowledged.
Date: - ________________
Place: - ________________
Students Name Signature
Bhavik Parmar _______________________
Devang Modh _______________________
Harish Parmar _______________________
Ghanshyam Sarasariya _______________________
Sujeet Thakur _______________________

II
INSTITUTE’S CERTIFICATE
Certified that this Comprehensive Project titled “A Study on Indian Civil Aviation Industry” is the
bono-fide work of Bhavik, Devang, Harish, Ghanshyam and Sujeet (75, 69, 76, 94 and 106), who
carried out the research under my supervision. I also certify further, that to the best of my knowledge
the work reported herein does not form part of any other project report or dissertation on the basis of
which a degree or award was conferred on an earlier occasion on this or any other candidate.
Dr. Bhavin Pandya, Prof. Bhavik Panchal
Professor & Head of department Project Guide, Assistant Professor
S.V. Institute of Management – Kadi S.V. Institute of Management – Kadi

III
PREFACE
Industrial activity plays an important role in economic development of our country. The knowledge
of present market scenario is very much essential and keeping that in view, our college gave us a very
good opportunity of industrial interaction in terms of Comprehensive Project-I.
As a part of Our Academic requirement of MBA program, we have selected INDIAN CIVIL
INDUSTRY as the industry to be analyzed under the subject named CP-1. The reason to choose
Airline Industry is very obvious. One, that industry has very interesting history and background. It is
concerned with basic Infrastructure development as well as continuous changing advanced
technology.
Secondly, it has opportunistic future and directly impact on economy. Industry has a very rich area of
analyzing. Through this kind of Industry Analysis, we can have good exercise of learning and also
help us to understand current trend of industry with its all-possible dimensions.
The report covers all the landmark changes in Airline industry and competitive markets being driven
by globalization and Internet technology. It would also provide you the idea of analyzing, crafting,
formulating, evaluating, implementing and executing business strategies related to the Airline Industry
in today’s volatile markets.

IV
ACKNOWLEDGEMENT
The feeling of accomplishment and exhilaration that escorts the successful completion of task would
be incomplete without the gratitude of the people who made it possible.
We are thankful to our Head of the Department Dr. Bhavin Pandya (S.V. Institute of Management)
for giving this opportunity.
We are gratified to Prof. Bhavik Panchal, Assistant Professor of S.V. Institute of Management, Kadi
who created this opportunity to work on the project by giving us very good direction and suggestions
and all other Faculty members for guiding and providing us support in the preparation of this project
report.
We are sincerely thankful to our friends and our family members for giving us valuable suggestions
and advices throughout the execution of the project.

V
EXECUTIVE SUMMARY
The purpose of this comprehensive project is to enable us to study an industry in its totality and
appreciate the use of an integrated approach in understanding the environmental issues and problems.
The civil aviation industry in India has emerged as one of the fastest growing industries in the country
during the last three years. India is currently considered the third largest domestic civil aviation market
in the world.
Firstly, we start our study from what is aviation industry? And how many types of aviation industry
and how each differs from another. We also brief about history and what research methodology we
used in this report.
Further we analyzed global market and Indian market of civil aviation industry which includes global
scenario, Indian scenario, list of corporates and countries and Top 10 civil aviation industry in Indian
and milestone of aviation industry. Further, we analyzed growth civil aviation industry in India.
We also define product profile of civil aviation industry in which In-flight service and On ground
services includes and also about core products and supplementary services provided by the civil
aviation industry.
We also discuss about classification of civil aviation industry in which scheduled flight, non-scheduled
And about cargo aircraft we discussed. Further we discussed about how price decides in airline
industry, about promotion methods, distribution channel of airline industry.
This report analyses an Indian civil aviation industry in detail. For the depth study of Indian civil
aviation industry, we have used the various models for the analysis purpose like BCG Matrix. Strategic
Group Mapping and porter ‘s five force analysis. We have also done PESTEL analysis of civil aviation
industry.
Apart from above model we also discussed about current trends in civil aviation and the financial
analysis of top three civil aviation industry like IndiGo, Spice Jet and Jet Airways.
Lastly we did opportunities and threat analysis of civil aviation industry and also future outlook of
airline industry we discussed in detail in this study.

TABLE OF CONTENT
SR NO. PARTICULAR PAGE NO.
Student Declaration I
Institute’s Certificate II
Preface III
Acknowledgement IV
Executive summery V
Chapter 1 : Introduction About Industry
1.1 Introduction About Aviation Industry 1
1.2 History of Aviation 2
1.3 Milestone of Aviation 4
1.4 Types of Aviation 9
Chapter 2 : Research Methodology
2.1 Objectives of Study 12
2.2 Information Needs 12
2.3 Research Design 12
2.4 Data Collection Methods 13
2.5 Analysis Plan 13
2.6 Limitations 13
Chapter 3 : Study of World Market
3.1 Global Scenario of Industry 14
3.2 Characteristics of Global Industry 16
3.3 List of Corporate and Countries 17
3.4 Global Trends in Aviation Industry 20
Chapter 4 : Study of Indian Market

4.1 History of Civil Aviation Industry in India 22
4.2 Indian Scenario of Aviation Industry 24
4.3 Growth of Civil Aviation Industry in India 25
Chapter 5 : Product Profile
5.1 Product Profile 28
5.2 Classification of Civil Aviation 30
Chapter 6 : Demand Determination of the Industry
6.1 Price 31
6.2 Income of Targeted Customer 32
6.3 Penetration Level 32
6.4 Promotion Schemes 33
Chapter 7 : Players in the Industry
7.1 Top 10 Companies in Civil Aviation 36
Chapter 8 : Distribution Channel of Civil Aviation Industry 39
Chapter 9 : Key Issues and Current Trends
9.1 Service Quality/Technology 41
9.2 Promotion 42
9.3 Segmentation and Positioning 43
9.4 Seasonality Pattern 44
Chapter 10 : PESTEL Analysis
10.1 Political Factors 45
10.2 Economic Factors 46
10.3 Social Factors 47
10.4 Technological Factors 48
10.5 Environmental Factors 49

10.6 Legal Factors 49
Chapter 11 : Porter’s Five Force Model
11.1 Intensity of Rivalry Among Competitors 52
11.2 Threat of New Entrants 54
11.3 Bargaining Power of Suppliers 56
11.4 Threat from Substitute Products 58
11.5 Bargaining Power of Buyers 59
Chapter 12 : Other Portfolio Model
12.1 BCG Matrix 61
12.2 Strategic Group Mapping 63
12.3 Key Success Factors 64
Chapter 13 : Financial Analysis
13.1 Financial Analysis 66
13.2 Ratio Analysis 66
Chapter 14 : OT Analysis
14.1 Opportunities 71
14.2 Threats 72
Chapter 15 : Future Outlook 74
Chapter 16 : Conclusion 75
Bibliography 77

CHAPTER #
1
INTRODUCTION ABOUT
INDUSTRY
CHAPER CONTENT
1.1 Introduction About Aviation Industry
1.2 History of Aviation
1.3 Milestone of Aviation
1.4 Types of Aviation

S.V. INSTITUTE OF MANAGEMENT, KADI (BATCH 2016-18) 1
Birds have been doing it since the dawn of time. They have been flying carefree. It is only in recent
times that man has truly learnt to fly with the help of machines in what is known as the science and
art of aviation.
What is aviation?
The dictionary defines aviation as having the capacity to fly, from one perspective, such as a bird’s
capability to fly. From the human angle, aviation is defined as the operation of aircraft and it can also
extend to design and development of aircrafts. In the early days of flying the pilot was known as an
aviator because he could fly in a craft that was heavier than air. Today, one uses the term pilot to
designate an aviator.
Man has always been fascinated with the art of flying and has tried several methods over the centuries
to take to the air. One such development in aviation was the hot air balloon, a lighter-than-air device
followed by the Zeppelin. Since these made use of gas filled balloons, they were unsafe and prone to
fire and explosions. Work on fixed wing flying aircrafts was initiated as far back as 1799 and it was
the Wright Brothers who demonstrated the ability of a heavier than air craft to fly. The rest is history.
Interestingly many people tried to add on wings and glide through the air and aviation can also be
applied to the art of paragliding.
Aviation of any kind is subject to international and national laws for safety and other reasons and there
are strict regulations that apply to any individual who wishes to become an aviator.
Aviation, whether it involves flying as a pilot, or manufacturing an aircraft, is perceived as being
highly glamorous but it involves deep dedication and commitment to safety and other features, as well
as knowledge of sophisticated fly by wire systems that go into the making of modern aircrafts,
especially for pilots.1
There are probably no people who would deny the importance of aviation in today’s fast moving
world. The question is how much do we really know about aviation? The airline industry is
characterized by intense competition with strong price pressure that entails a continuous requirement
1
http://www.fstc.in/what-is-aviation.html
1.1 INTRODUCTION ABOUT AVIATION INDUSTRY

to enhance efficiency. In parallel, this is an industry that continues to grow with more passengers who
travel more often.
Since the start of commercial air traffic, the airline industry has been marked by high growth compared
to the GNP trend and continuous productivity increases. The industry has been gradually liberalized,
which has contributed to new business models, such as low cost carriers (LCCs), arising since the
1990s. Even if a number of new LCCs have contributed to total market growth, existing network
airlines have continued to fly with unchanged or slightly rising volumes. Technical developments,
new business models and efficiency enhancements have helped absorb inflation which, in combination
with raised living standards, have enabled more people to fly. Average annual traffic growth was 5.8%
from 1980 to 2014. Globally, more than 3 billion passengers are expected to travel with commercial
airlines in 2014. IATA expects global traffic to grow during the year by slightly more than 6% and
capacity to increase by about 5.5%. Growth is expected to continue moving forward and the aircraft
manufacturer Airbus forecasts continued healthy annual traffic growth until 2023 of about 5.2% and
annual traffic growth of 4.2% from 2023 to 2033. 2
On December 17, 1903, Orville and Wilbur
Wright capped four years of research and
design efforts with a 120-foot, 12-second
flight at Kitty Hawk, North Carolina - the
first powered flight in a heavier-than-air
machine. Prior to that, people had flown
only in balloons and gliders.
The first person to fly as a passenger was
Leon Delagrange, who rode with French
pilot Henri Farman from a meadow outside
of Paris in 1908. Charles Furnas became the first American airplane passenger when he flew with
Orville Wright at Kitty Hawk later that year.
2
http://www.sasgroup.net/en/market-overview/
1.2 HISTORY OF AVIATION

The first scheduled air service began in Florida on January 1, 1914. Glenn Curtiss had designed a
plane that could take off and land on water and thus could be built larger than any plane to date,
because it did not need the heavy undercarriage required for landing on hard ground. Thomas Benoist,
an auto parts maker, decided to build such a flying boat, or seaplane, for a service across Tampa Bay
called the St. Petersburg - Tampa Air Boat Line. His first passenger was ex-St. Petersburg Mayor A.C.
Pheil, who made the 18-mile trip in 23 minutes, a considerable improvement over the two-hour trip
by boat. The single-plane service accommodated one passenger at a time, and the company charged a
one-way fare of $5. After operating two flights a day for four months, the company folded with the
end of the winter tourist season.
These and other early flights were headline events, but commercial aviation was very slow to catch
on with the general public, most of whom were afraid to ride in the new flying machines.
Improvements in aircraft design also were slow. However, with the advent of World War I, the military
value of aircraft was quickly recognized and production increased significantly to meet the soaring
demand for planes from governments on both sides of the Atlantic. Most significant was the
development of more powerful motors, enabling aircraft to reach speeds of up to 130 miles per hour,
more than twice the speed of pre-war aircraft. Increased power also made larger aircraft possible.
At the same time, the war was bad for commercial aviation in several respects. It focused all design
and production efforts on building military aircraft. In the public's mind, flying became associated
with bombing runs, surveillance and aerial dogfights. In addition, there was such a large surplus of
planes at the end of the war that the demand for new production was almost non-existent for several
years - and many aircraft builders went bankrupt. Some European countries, such as Great Britain and
France, nurtured commercial aviation by starting air service over the English Channel. However,
nothing similar occurred in the United States, where there were no such natural obstacles isolating
major cities and where railroads could transport people almost as fast as an airplane, and in
considerably more comfort. The salvation of the U.S. commercial aviation industry following World
War I was a government program, but one that had nothing to do with the transportation of people. 3
3
https://www.avjobs.com/history/index.asp

New Era of Aviation
With the first flight over, it marked the era of
heavier-than air flight. Till now, propellers were
being used to power planes but the introduction
of the jet engine made planes much more
efficient and comfortable to fly.
(Jet Engine)
Modern Aviation
When World War II ended, passenger transport
became faster and more comfortable. Jet planes
were immediately introduced. The first jet
aircraft was the De Havilland Comet. As the
years went by, jet engines became better and
better. Now, the present day giants are Boeing
and Airbus.
From the Wright brothers' pioneering airplane to the refined aircraft of the digital era.
Follow this interactive timeline and discover the greatest flight milestones (and a few significant
losses) over the last century.
1.3 MILESTONES OF AVIATION

1903 > The Wright brothers flew it four times on December 17, 1903 at Kitty Hawk, in
North Carolina, US. They made the first controlled, powered and sustained human
flight in History
1908 > Thomas E. Selfridge was the first person to die in a crash of a powered airplane. He
was a passenger on the Wright Flyer piloted by Orville Wright in an exhibition.
Selfridge was not wearing any headgear and died three hours after the crash. Wright
was only wearing a cap and he survived.
1909 > Louis Blériot became world famous for making the first flight across the English
Channel in his Type XI monoplane, winning the prize of £1,000 offered by
the Daily Mail newspaper. The flight, from Calais (France) to Dover (UK), took 36
minutes and 30 seconds.
1914 > The first scheduled air service was operated on a Benoist XIV flying boat and
crossed the Tampa Bay (in Florida, US), from St. Petersburg to Tampa. It took 23
minutes and the only passenger was Abram C. Pheil, former Mayor of St.
Petersburg, who paid $400 for the privilege.
1918 > Aircraft started to be used on a large scale in World War I. Ace fighter pilots became
popular heroes. The most feared and respected was German pilot Manfred von
Richthofen, a.k.a. the RedBaron.
Credited with 80 air combat victories, he became leader of the Jagdgeschwaderunit,
better known as the "Flying Circus". Richthofen was shot down and killed near
Amiens (France) in the spring of 1918, during one of the last German offensives in
World War I.
1920 > KLM the oldest carrier still in operation today. Founded in 1919, it was one of the
world's first commercial airline companies.
In 1920, it started operating scheduled flights between London and Amsterdam,
which continue to this day
1926 > The "Plus Ultra" was a Dornier Do J flying boat that departed from Palos de la
Frontera (Spain) on January 22 and arrived in Buenos Aires (Argentina) on
February 10.

This 6-stage journey was completed in 59 hours and 39 minutes of total flying time,
covering 6,381 miles. The flight of the "Plus Ultra" followed the route taken in 1922
by the Portuguese aviators Cabral and Coutinho, in the first aerial crossing of the
South Atlantic (from Lisbon to Rio de Janeiro).
1927 > Charles Lindbergh won the $25,000 prize offered by a businessman to the first pilot
to fly directly across the Atlantic Ocean between New York and Paris.
Lindbergh completed the first solo nonstop transatlantic flight in history, covering
3,610 miles in 33 hours and 30 minutes with a Ryan NYP monoplane called "Spirit
of St. Louis". He became a world hero
1928 > Juan de la Cierva was a Spanish aeronautical engineer who invented the autogyro,
the world's first successful rotary-wing aircraft and the forerunner of the modern
helicopter. In 1928 De la Cierva made the first flight of a rotorcraft across the
English Channel, piloting himself the experimental autogyro model Cierva C.8and
carrying a french journalist as a passenger.
1937 > The American heroine Amelia Earhart was the first female aviator to fly solo across
the Atlantic Ocean in May 1932, emulating Charles Lindbergh's achievement.
She died five years later. During her round-the-world flight's attempt with Fred
Noonan both disappeared over the central Pacific Ocean near Howland Island,
almost halfway between Hawaii and Australia.
1938 > Seaplanes were used for transatlantic flights in the 1930s. In 1938 a Focke-Wulf Fw
200 "Condor" operated by Lufthansa flew non-stop from Berlin to New York in
about 25 hours, proving that landplanes could be used to carry passengers across
the ocean. A regular Lufthansa transatlantic service was planned but then World
War II started.
1939 > The German-made Heinkel He 178 was the world's first practical aircraft powered
with a jet engine. It first flew in 1939, piloted by Erich Warsitz.
Germans also built the first operational jet-powered fighter aircraft,

Messerschmitt Me 262, first tested in 1942. Capable of flying at a maximum speed
of 900 km/h, it was faster than any Allied fighter. However, design problems
delayed its introduction until mid-1944, too late to have a significant impact on the
course of the war
1947 > The first manned supersonic flight was piloted by US Air Force captain Charles
"Chuck" Yeager. He flew a Bell X-1 which Yeager had christened "Glamorous
Glennis" for his wife.
The airplane was drop launched from a modified B-29 bomber and reached Mach
1.06 peek speed (1,299 km/h, 807.2 mph). Following burnout of the engine, the
plane glided to a landing on the Mojave Desert of southern California
1952 > The world's first jetliner (analogous to most of today's commercial aircraft) was a
De Havilland Comet, operated by the British state-owned airline BOAC.
In 1952 BOAC inaugurated its scheduled service from London to Johannesburg
with that modern aircraft powered by jet engines, which quickly started to replace
piston engines in commercial aircraft after the huge success of the De
Havilland Comet.
1968 > The Tupolev Tu-144, the world's first commercial supersonic transport aircraft,
marked the Soviet Union's greatest milestone in the history of aviation.
The prototype first flew at the end of 1968, two months before the first flight of
the Concorde.
1976 > he Lockheed SR-71 was a long-range, strategic reconnaissance aircraft, operated
by the US Air Force and NASA from 1964 to 1999. It was designed to fly at high
speeds and altitudes to outrace missiles.
In 1976 the SR-71 set an absolute speed record of 2,193 mph (3,530 km/h),
approximately Mach 3.3
1986 > The Rutan Voyager's flight was the first successful aerial nonstop, non-refueled,
complete circumnavigation of the Earth.

Piloted by Dick Rutan and Jeana Yeager, the Voyager took off from a US Air Force
base in the Mojave Desert on December 14, 1986, and landed on the same place 9
days, 3 minutes and 44 seconds later.
1988 > The Antonov An-225 is a military transport aircraft, originally designed in Ukraine
to transport the Buran reusable spacecraft.
Powered by six turbofan engines, the An-225 is the longest and heaviest airplane
ever built:
length: 84 m
wingspan: 88.4 m
max. weight: 640 tonnes
1995 > No major progress has been made in flight speeds or distances over the last three
decades. Instead we saw the spreading of the digital revolution both in flight
avionics and in aircraft design.
In 1995 the Boeing 777 became the first entirely computer-aided designed
commercial aircraft. It also has "fly-by-wire" computer-mediated controls.
2007 > The Airbus A380 is a four-engine jet airliner manufactured in France, Germany,
Spain and the United Kingdom.
The A380 is the world's largest passenger airliner and one of biggest aircraft ever
built:
length: 72.73 m
wingspan: 79.75 m
max. weight: 575 tonnes4
4
https://www.bbvaopenmind.com/en/interactive-timeline-the-history-of-aviation/

There are many types of aviation, and it's important that you know the difference. Which is explain in
detail as below:
1. Civil Aviation: -
Civil Aircraft is a rather big group of aircraft. It
refers to all non-military flights and activities in
aviation.
2. General Aviation: -
General aviation refers to all civil flights other than scheduled airline flights, both private and
commercial. General aviation flights range from gliders and powered parachutes to large, non-
scheduled cargo jet flights. Because of the huge range of activities, it is difficult to cover general
aviation with a simple description — general aviation may include business flights, private aviation,
flight training, ballooning, parachuting, gliding, hang gliding, aerial photography, foot-launched
powered hang gliders, air ambulance, crop dusting, charter flights, traffic reporting, police air patrols,
forest fire fighting, and many other types of flying.
3. Private Aviation: -
Private aviation is the part of general
aviation that involves flying not for hire. In
a private flight, the pilot is not paid, and the
aircraft owner/operator does not receive
money for the flight (other than rent from
the pilot, in some cases). In many
countries, private aviation operates to less
strict standards than commercial aviation.
Private pilots normally are not required to
demonstrate the same level of proficiency on their flight tests, and take fewer and less rigorous medical
examinations. Many small aircraft are private planes.
1.4 TYPES OF AVIATION

4. Military Aviation: -
Military aviation is the use of aircraft and other
flying machines for the purposes of conducting
or enabling warfare, including national airlift
(cargo) capacity to provide logistical supply to
forces stationed in a theatre or along a front. The
wide variety of military aircraft includes
bombers, fighters, fighter bombers, transports,
trainers, and reconnaissance aircraft. These
varied types of aircraft allow for the completion
of a wide variety of objectives. Many automatic devices assist the crews in obtaining results not
achievable by human means. Machines can carry out many tasks including locating, tracking, and
destroying targets.
Types of Military Aviation:
 Bombers are typically larger, heavier, and less manoeuvrable than fighter aircraft. They
are capable of carrying large payloads of weapons. They are used for ground attacks and
are usually not fast or agile enough to take on enemy fighters. Some bombers
have stealth capabilities that keep them from being detected by enemy radar.
 Fighters are fast, highly manoeuvrable, and capable of destroying enemy aircraft and
ground targets. Their main role is air-to-air combat, offensive or defensive. Escorting
bombers or other non-attack aircraft is also a common task. They are capable of carrying a
variety of weapons, including machine guns, cannons, rockets, guided missiles, and bombs,
depending on the mission. Some fighters, called fighter-bombers, are able to carry
conventional or nuclear weapons far behind enemy lines to strike priority ground targets.
Many fighters can attack enemy fighters from a great distance, before the enemy even sees
them.
 Reconnaissance aircraft are primarily used to gather intelligence. They are equipped with
photographic, infrared, radar, and television sensors. These aircraft may be specially
designed or may be modified from a basic fighter or bomber type. Some are equipped with

special electronic gear for detecting submarines, such as sonar, and others can give early
warnings of enemy approach.
 Transport aircraft are primarily used to transport troops and war supplies. Cargo also may
be discharged from flying aircraft on parachutes, eliminating the need for landing. The
aerial tanker can refuel fighters, bombers, and helicopters while in flight. This means that
an aircraft can go to any point on the globe without landing even once.
 Helicopters may be used to transport troops, attack targets, provide support, deliver
supplies, and search and rescue. One very popular helicopter is the AH-64D Apache. The
manoeuvrability of helicopters gives them the option to land in areas fixed wing air craft
would not be able to access. This can be important in remote areas.
 Experimental aircraft are designed in order to test advanced aerodynamic, structural,
avionic, or propulsion concepts. These are usually well instrumented, with performance
data telemetered on radio-frequency data links to ground stations located at the test ranges
where they are flown. 5
5
http://lotsofaviation.wikifoundry.com/page/Types+of+Aviation

CHAPTER #
2
RESEARCH METHODOLOGY
CHAPER CONTENT
2.1 Objectives of Study
2.2 Information Needs
2.3 Research Design
2.4 Data Collection Methods
2.5 Analysis Plan
2.6 Limitations

PRIMARY OBJECTIVE:
 To study the macro environment factors affecting Aviation industry.
SECONDARY OBJECTIVE:
 To study political, economic, social and technological factors affecting Aviation industry
 To study opportunities and threats for the Aviation industry
 To find out the global trends in Aviation industry
 To identify the level of competition between different players in Aviation industry
 To find out the key success factor in Aviation industry
We need the following information:
 Global Scenario of Industry
 Characteristics of Global Industry
 Political, economic, social and technological factors
 Study of Indian Market
 Product Profile
 Demand determination of the Industry
 Players in the Industry
 Key Issues and Current Trends
 Michel Porter’s Five Force Model
 Opportunities and threats
 We have used exploratory research design.
2.1 OBJECTIVES OF STUDY
2.2 INFORMATION NEEDS
2.3 RESEARCH DESIGN

We have obtained the secondary data from various sources like reports, magazine, journals and
different websites.
We have used the following models in Aviation industry analysis:
 PEST Analysis
 Michel Porter’s Five Force Model
 BCG Matrix
 Strategic Group Mapping
 Driving Forces
 Key Success Factors
 Value Chain Analysis
 The whole study is based on secondary data
 It is assumed that whole data is authenticated and on that basis conclusion is derived.
 The level of reliability may be less as it is based on secondary data.
2.4 DATA COLLECTION METHOD
2.5 ANALYSIS PLAN
2.6 LIMITATIONS

CHAPTER #
3
STUDY OF WORLD MARKET
CHAPER CONTENT
3.1 Global Scenario of Industry
3.2 Characteristics of Global Industry
3.3 List of Corporate and Countries
3.4 Global Trends in Aviation Industry

The global aviation system changes rapidly and continuously, fulfilling a unique mandate as a
facilitator of social mobility and development and as a cornerstone of economic growth at the global,
regional and local levels.
Air transportation services have evolved into a crucial building block for the world's socioeconomic
growth. In the last four decades, the air travel across the world has grown by more than 1000% and
the air freight has increased by over 1400% while the national economies have grown only three to
four times. This phenomenal growth is due to a combination of three key global drivers, namely,
increase in disposable incomes, accelerated globalization and deregulation of the aviation industry.
The international airline industry provides service to virtually every corner of the globe, and has been
an integral part of the creation of a global economy. The airline industry itself is a major economic
force, both in terms of its own operations and its impacts on related industries such as aircraft
manufacturing and tourism, to name but two. Few other industries generate the amount and intensity
of attention given to airlines, not only among its participants but from government policy makers, the
media, and almost anyone who has an anecdote about a particular air travel experience.
During much of its development, the global airline industry dealt with major technological innovations
such as the introduction of jet airplanes for commercial use in the 1950s, followed by the development
of wide-body “jumbo jets” in the 1970s. At the same time, airlines were heavily regulated throughout
the world, creating an environment in which technological advances and government policy took
precedence over profitability and competition. It has only been in the period since the economic
deregulation of airlines in the United States in 1978 that questions of cost efficiency, operating
profitability and competitive behaviour have become the dominant issues facing airline management.
With the US leading the way, airline deregulation or at least “liberalization” has now spread to much
of the industrialized world, affecting both domestic air travel within each country and, perhaps more
importantly, the continuing evolution of a highly competitive international airline industry.
Today, the global airline industry consists of over 2000 airlines operating more than 23,000 aircraft,
providing service to over 3700 airports. In 2006, the world’s airlines flew almost 28 million scheduled
flight departures and carried over 2 billion passengers. The growth of world air travel has averaged
3.1 GLOBAL SCENARIO OF INDUSTRY

approximately 5% per year over the past 30 years, with substantial yearly variations due both to
changing economic conditions and differences in economic growth in different regions of the world.
Historically, the annual growth in air travel has been about twice the annual growth in GDP. Even
with relatively conservative expectations of economic growth over the next 10-15 years, a continued
4-5% annual growth in global air travel will lead to a doubling of total air travel during this period.
In the US airline industry, approximately 100 certificated passenger airlines operate over 11 million
flight departures per year, and carry over one-third of the world’s total air traffic – US airlines enplaned
745 million passengers in 2006. US airlines reported over $160 billion in total revenues, with
approximately 545,000 employees and over 8,000 aircraft operating 31,000 flights per day. The
economic impacts of the airline industry range from its direct effects on airline employment, company
profitability and net worth to the less direct but very important effects on the aircraft manufacturing
industry, airports, and tourism industries, not to mention the economic impact on virtually every other
industry that the ability to travel by air generates. Commercial aviation contributes 8 percent of the
US Gross Domestic Product, according to recent estimates.6
Passenger growth
Figure:- 1
Generally, it has observed that the air transport grows at twice the rate of GDP growth. The
international passenger growth has been growing at CAGR of over 14% and domestic growth has been
6
http://web.mit.edu/airlines/analysis/analysis_airline_industry.html

an impressive 22% for last 6 years. The passenger growth trends for the past 8 years is indicated in
ﬁgure 1.
India is one of the fastest growing economies of the world with an average GDP growth of over 8.9
percent in last ﬁve years. For India to sustain its economic growth story it has to strengthen its
infrastructure sector and in particular, critically improve its transportation infrastructure. Aviation is
an important part of national infrastructure and one of the prime movers for economic growth and an
important strategic element of employment generation. Aviation sector in India has been transformed
from an over regulated and under managed sector to a more open, liberal and investment friendly
sector since 2004. Adoption of global standards has made aviation a safer way to travel.7
 Internationalization:
An empty seat is a full cost for the airline. To minimize empty seats, airlines have enrolled in
Global Airline Alliances (GALs) such as One world, Star Alliance, and so on to at least make
the carrier portion of the revenue for that passenger and monetize that seat. Today the airlines
that participate in GALs transport more than two-thirds of all international traffic. Basically,
unable to innovate their core offering, airlines have figured out a way to innovate in the way
costs are allocated.8
 Technology Adoption:
In current era every player can adopt new technology because of they can’t adopted that so
they can’t survive into the market, so everybody company can ready to adopt new technology.
 Managing Change:
The ability to make quick, well-informed decisions is absolutely crucial. With changing
trading conditions and slim margins, there is no luxury to procrastinate on cost issues.
Airline managements are required to move their expensive aircraft resources around the
global as quickly as possible to either control losses or seize new opportunities. Routes
7
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/industries/in-india-services-sector-ges-
2017-noexp.pdf
8
https://hbr.org/2016/05/the-reason-air-travel-is-terrible-and-so-few-airlines-are-profitable
3.2 CHARACTERISTICS OF GLOBAL INDUSTRY

may need to be opened and closed, and the aircraft and crews may need to move from one
country to another quickly.
 Flexibility to strategy:
Lead times can run to years when ordering new aircraft and evaluating how and where to use
them. When so much can happen at short notice, there is a big need to be able to juggle things
quickly. Changes to fleet and flexibility around a long-term plan are essential.
 Attention to detail:
So many aspects in an airline need to be gathered and must fit together for the all-important
on-time departure, safely, dozens of times each day across the world, attention to detail and
process is critical. The airline commercial strategy, sales, maintenance, crew management,
operational support services are all part of the same jigsaw.
 Working with people:
The airline industry is a people business, both in terms of customers served and the staff
engaged in delivering functions. This, in itself, poses challenges, given the need to work
across many different national cultures and languages. Currently, the industry is going
through a phase of consolidation and, regardless of what the numbers or "synergies" have
shown, many mergers have succeeded or failed on how well management has handled the
"people" aspects. Similarly, the need to cut costs has created numerous management and
workforce tensions. Some have been resolved harmoniously, while others have created
bitter strikes.9
1. American Airlines Group:
American Airlines Group, Inc. is an American publicly traded airline holding company headquartered
in Fort Worth, Texas. It was formed December 9, 2013, in the merger of AMR Corporation, the parent
company of American Airlines, and US Airways Group, the parent company of US Airways. The
airline groups together form the largest airline in the world, with more than 6,700 daily flights to 336
locations in 56 countries worldwide, about $40 billion in operating revenue, over 100,000 employees,
9
https://www.linkedin.com/pulse/airline-industry-success-failure-under-constant-global-shafiq-hamid/
3.3 LIST OF CORPORATE & COUNTRIES

and plans to take delivery of 607 new aircraft, including 517 narrow body aircraft and 90 wide body
international aircraft.
2. Delta Air Lines:
Its headquarters and largest hub at Hartsfield–Jackson Atlanta International Airport in Atlanta,
Georgia. The airline along with its subsidiaries and regional affiliates operate over 5,400 flights daily
and serve an extensive domestic and international network that includes 319 destinations in 54
countries on six continents, as of October 2016.
3. United Continental Holdings:
It is a publicly traded airline holding company headquartered in the Willis Tower in Chicago. It was
estimated that United shareholders owned 55% of the merged entity and Continental shareholders
owned 45%. The company or its subsidiary airlines also have several other subsidiaries. Once
completely combined, United became the world's largest airline, as measured by revenue passenger
miles. United is a founding member of the Star Alliance.
4. Deutsche Lufthansa
It is the largest German airline and, when combined with its subsidiaries, also the largest airline in
Europe, in terms of fleet size, and the second largest airline in terms of passengers carried during 2016.
It operates services to 18 domestic and 197 international destinations in 78 countries across Africa,
the Americas, Asia, and Europe, using a fleet of more than 270 aircraft. Lufthansa is one of the five
founding members of Star Alliance, the world's largest airline alliance, formed in 1997.
5. Air France–KLM
It is a Franco-Dutch airline holding company incorporated under French law with its headquarters
at Charles de Gaulle Airport in Tremblay-en-France, near Paris. The group has offices in Montreuil,
Seine-Saint-Denis, Paris, and in Amstelveen, Netherlands. Air France–KLM is the result of the merger
in 2004 between Air France and KLM. Both Air France and KLM are members of
the SkyTeam airline alliance. Air France–KLM Airlines transported 87.3 million passengers in 2014.
6. International Consolidated Airlines Group
It is an Anglo-Spanish multinational airline holding company with its operational headquarters
in London, England and its registered office in Madrid, Spain. It was formed in January 2011. It is the

sixth-largest airline company in the world, producing €22.567 billion revenue in 2016. The company
is listed on the London Stock Exchange and the Madrid Stock Exchange.
7. Southwest Airlines Co.
It is a major U.S. airline and the world's largest low-cost carrier headquartered in Dallas, Texas. As
of January 2016, Southwest is the largest operator of the Boeing 737 worldwide, with over 700 in
service, each averaging six flights per day. The airline has more than 53,000 employees as of October
2016 and operates more than 3,900 departures a day during peak travel season. As of 2014, it carried
the most domestic passengers of any U.S. airline. As of September 2017, Southwest Airlines has
scheduled services to 101 destinations in the United States and eight additional countries, with service
to Turks & Caicos beginning on November 5, 2017.
8. China Southern Airlines Company Limited
It is an airline headquartered in Baiyun District, Guangzhou, Guangdong Province, China. Established
on 1 July 1988 following the restructuring of the Civil Aviation Administration of China that acquired
and merged a number of domestic airlines, the airline became one of China's "Big Three" airlines
the world's fourth-largest airline measured by passengers carried and Asia's largest airline in fleet size,
revenue and passengers carried.
9. China Eastern Airlines Corporation Limited
It is an airline headquartered in the China Eastern Airlines Building, on the grounds of Shanghai
Hongqiao International Airport in Changning District, Shanghai, China. It is a major Chinese airline
operating international, domestic and regional routes. China Eastern Airlines is China's second-largest
carrier by passenger numbers. China Eastern and its subsidiary Shanghai Airlines became the 14th
member of SkyTeam on 21 June 2011.
10. All Nippon Airways Co., Ltd.
ANA, is the largest airline in Japan. Its headquarters are located at Shiodome City Center in
the Shiodome area of Minato, Tokyo, Japan. It operates services to both domestic and international
destinations and had more than 20,000 employees as of March 2016. ANA is also the largest
shareholder in Peach, a low-cost carrier joint venture with Hong Kong company First Eastern

Investment Group. In October 1999, the airline became a member of Star Alliance. On 29 March 2013,
ANA was named a 5-Star Airline by Skytrax. 10
 Continued Technological Advancement
Radical improvements in operating efficiency, advanced avionics and impressive interior cabin
designs and noise reduction capabilities are all driving increased customer demand. But the wider use
of composites, advanced manufacturing technology requirements and conversion to new
electrical systems are also rapidly changing the way aircraft are manufactured and creating challenges
across the supply chain as the supply base struggles to make the changes necessary to keep up with
aircraft OEM demands. New, more advanced platforms are already in production. 11
 Creative Competitive Positioning
The once clear-cut competitive landscape in the commercial airline industry continues to evolve. Low-
cost carriers (LCCs) and ultra-low-cost carriers (ULCCs) are still gaining market share from the
dominant full-service carriers (FSCs). But the differences between the models are shrinking.
The black-and-white version of the no-frills ULCC is starting to go gray, as more and more of these
carriers and LCCs offer optional, pay-as-you-go upgraded services to their customers. This hybrid
approach is particularly effective in emerging markets where passengers are becoming more
sophisticated and demanding in terms of service. Similarly, some FSCs (including United Airlines and
American Airlines) are tweaking their models by offering more and more ULCC-like basic services
to cater to value-based customer segments. And some carriers are operating separate but clearly
segmented airlines under their corporate umbrella.12
10
https://en.wikipedia.org/wiki/World%27s_largest_airlines
11
http://www.industryweek.com/supplier-relationships/5-key-trends-impacting-aerospace-sector-and-what-
they-mean-growth
12
https://www.strategyand.pwc.com/trend/2017-commercial-aviation-trends
3.4 GLOBAL TRENDS IN AVIATION INDUSTRY

 Digital marketing capabilities to stand out in a crowded market.
Carriers cannot afford to focus solely on ticket sales, leaving other companies to pick up the ancillary
revenue — including lodging, rental cars, entertainment, and personalized itineraries — that surrounds
the flight. Fully embracing this mode will make it more profitable than the half-hearted approaches
they have employed up until now, but airlines will have to build extensive digital marketing
capabilities, integrating the reams of customer data they collect into a complete view of the traveler,
transforming the insights yielded by this data into compelling offers (“We know where you and the
kids have stayed at Disney World the past five years; would you like a discounted hotel room there
this year?”), and constructing an interface and apps that make them stand out in a crowded market.
At the same time, airlines need to use digitization to enhance and optimize operations — to reduce
costs while improving service. They need to put technology to work in predicting and preventing
equipment failures, in optimizing processes and productivity on the ground, and in providing better
and timelier information to employees.
 The Digitization Dilemma
Digitization is top-of-mind throughout the commercial airline industry, but moving beyond buzzwords
like AI and IoT to actual applications can be difficult. Rather than getting bogged down in the “shiny
object” aspect of technology trends, think more practically: Specifically, think in business terms about
what digital technologies enable; what opportunities they offer to grow the top line and reduce
operating costs simultaneously.13
13
https://www.strategyand.pwc.com/trend/2017-commercial-aviation-trends

CHAPTER #
4
STUDY OF INDIAN MARKET
CHAPER CONTENT
4.1 History of Civil Aviation Industry in India
4.2 Global Scenario of Aviation Industry
4.3 Growth of Civil Aviation Industry in India

OVERVIEW:
Civil Aviation in India traces its origin back to 1911, when the first commercial civil aviation flight
took off from Allahabad for Naini.
Air India is India's national flag carrier after merging with Indian (airline) in 2011 and plays a major
role in connecting India with the rest of the world.[2] IndiGo, Jet Airways, Air
India, Spicejet and GoAir are the major carriers in order of their market share. These airlines connect
more than 80 cities across India and also operate overseas routes after the liberalisation of Indian
aviation. Several other foreign airlines connect Indian cities with other major cities across the globe.
However, a large section of country's air transport potential remains untapped, even though
the Mumbai-Delhi air corridor was ranked 10th by Amadeus in 2012 among the world's busiest routes.
India is the fourth largest civil aviation market in the world having a potential of becoming third largest
aviation market by 2020. It recorded an air traffic of 131 million passengers in 2016, of which 100
million were domestic passengers. The largest airline by international passenger traffic was Jet
Airways which transported over 10 million passengers in and out of India in 2016, followed by Air
India and AI Express (8.8 million). In third place was Emirates (5.46 million), which is the largest
foreign airline operating in India.
HISTORY:
Civil Aviation in India traces back to 18 February 1911, when the first commercial civil aviation flight
took off from Allahabad for Naini over a distance of 6 miles (9.7 km). During the Allahabad
Exhibition, Henri Pequet, a French aviator, carried 6,500 pieces of mail on a Humber biplane from the
exhibition to the receiving office at Allahabad. This is the world's first official airmail service. On 15
October 1932, J.R.D. Tata flew a consignment of mail from Karachi to Juhu Airport. His airline later
became Air India.
In March 1953, the Indian Parliament passed the Air Corporations Act. India's airline industry was
nationalised and the eight domestic airlines operating independently at that time, Deccan
4.1 HISTORY OF CIVIL AVIATION INDUSTRY IN INDIA

Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National
Airways, Air India and Air Services of India were merged into two government owned entities. Indian
Airlines focussed on domestic routes and Air India International on international services. The
International Airports Authority of India (IAAI) was constituted in 1972 while the National Airports
Authority was constituted in 1986. The Bureau of Civil Aviation Security was established in 1987
following the tragic crash of Air India Flight 182. Pushpaka Aviation operated scheduled international
passenger flights from Bombay to Sharjah, as an associate carrier of Air India from 1979 to 1983.
East-West Airlines was the first national level private airline to operate in the country after the
government de-regularised the civil aviation sector in 1991. The government allowed private airlines
to operate charter and non-scheduled services under the ‘Air Taxi’ Scheme until 1994, when the Air
Corporation Act was repealed and private airlines could now operate scheduled services. Private
airlines like Jet Airways, Air Sahara, Modiluft, Damania Airways and NEPC Airlines among others
commenced domestic operations during this period.
Air India placed orders for more than 68 jets from Boeing for US$7.5 billion in 2006
while Indian placed orders for 43 jets from Airbus for US$2.5 billion in 2005. Jet Airways invested
millions of dollars to increase its fleet, but was later put on hold due to the recent economic
slowdown. IndiGo announced orders for 100 Airbus A320sworth US$6 billion during the Paris Air
Show, the highest by any Asian domestic carrier. Kingfisher Airlines became the first Indian air carrier
on 15 June 2005 to order Airbus A380 aircraft worth US$3 billion.
More than half a dozen low-cost carriers entered the Indian market in 2004–05. Major new entrants
included Air Deccan, Air Sahara, Kingfisher Airlines, SpiceJet, GoAir, Airways and IndiGo. But
Indian aviation industry struggled due to economic slowdown, rising fuel and operation costs. This
led to consolidation, buy outs and discontinuations in the Indian airline industry. In 2007, Air
Sahara and Air Deccan were acquired by Jet Airways and Kingfisher Airlines respectively. Paramount
Airways ceased operations in 2010 and Kingfisher shut down in 2012. Etihad Airways agreed to
acquire 24% stake in Jet in 2013. AirAsia India, a low cost carrier operating as a joint venture
between Air Asia and Tata Sons launched in 2014. As of 2013–14, only IndiGo and GoAir were
generating profits.14
14
https://en.wikipedia.org/wiki/Civil_aviation_in_India

India is the fourth largest civil aviation market in the world having a potential of becoming third largest
aviation market by 2020. It recorded an air traffic of 131 million passengers in 2016, of which 100
million were domestic passengers. The market is also estimated to have 800 aircraft by 2020.
In 2015, Boeing projected India's demand for aircraft to touch 1,740, valued at $240 billion, over the
next 20 years in India. This would account for 4.3 per cent of global volumes. According to Airbus,
India will be one of the top three aviation markets globally in the next 20 years. Airbus is expecting
an annual growth rate of over 11 per cent for the domestic market in India over the next ten years,
while the combined growth rate for domestic and international routes would also be more than 10 per
cent.
As per the IATA, the air passengers to grow at a compound average growth rate (CAGR) of 3.7 per
cent to double from 3.8 billion air passengers in 2016 to 7.2 billion air passengers by 2035.
India's air cargo is estimated to grow at 9 per cent over the next few years, according to Mr Ashok
Gajapathi Raju, Minister for Civil Aviation, Government of India.
India has become the world’s fastest growing domestic travel market for the 22nd time in a row,
recording a 26.6 per cent year-on-year growth in January 2017, according to the IATA.
India has replaced Japan to become the third largest domestic aviation market globally, recording a
total of 100 million domestic flyers in 2016, as compared to 97 million flyers in Japan during the same
period, according to Centre for Asia Pacific Aviation (CAPA).
According to CAPA, domestic air traffic is expected to grow 25 per cent and cross 130 million in
financial year 2017-18. The number of departures from India increased 20 per cent year-on-year to
touch 131 million in 2016, according to the data by the IATA.
CAPA estimates that India’s airlines reported a combined profit of US$ 122 million in fiscal 2016.15
There are three modern airports in India in the sense with parallel runways in
Hyderabad, Bengaluru and Delhi.
While there are 346 civilian airfields in India - 253 with paved runways and 93 with unpaved runways,
only 132 were classified as "airports" as of November 2014. Of these, the state owned Chhatrapati
15
https://www.ibef.org/industry/indian-aviation.aspx
4.2 INDIAN SCENARIO OF AVIATION INDUSTRY

Shivaji International Airport, Mumbai handle more than a half of the air traffic in the country. The
operations of the major airports in India have been privatised over the past 5 years and this has resulted
in better equipped and cleaner airports. The terminals have either been refurbished or expanded.
India also has 33 "ghost airports," which were built in an effort to make air travel more accessible for
those in remote regions but are now non-operational due to a lack of demand. The Jaisalmer Airport in
Rajasthan, for example, was completed in 2013 and was expected to host 300,000 passengers a year
but has yet to see any commercial flights take off. Despite the number of non-operational airports,
India is currently planning on constructing another 200 "low-cost" airports over the next 20 years.
The civil aviation sector in India, which till now was dependent on foreign countries for maintenance,
repair and overhaul (MRO) services, is planning to have indigenous facilities. The Government of
India is planning to develop a sustainable air network in over 400 tier-2 cities across India with an
estimated expenditure of ₹50 crore(US$7.8 million). With a view to aid in modernization of the
existing airports to establish a high standard and help ease the pressure on the existing airports, 100%
FDI under automatic route has now been allowed in Brownfield Airport projects. This move would
also serve in further developing the domestic aviation infrastructure. Further, FDI limit for Scheduled
Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service has
been raised from 49% to 100%, with FDI up to 49% permitted under automatic route and FDI beyond
49% through Government approval. For Non-Resident Indians (NRI's), 100% FDI will continue to be
allowed under automatic route. However, foreign airlines would continue to be allowed to invest in
capital of Indian companies operating scheduled and non-scheduled air transport services up to the
limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy.
Increasing the FDI limit for these aviation services shall not only encourage competition by lowering
prices but shall also accord choice to consumers. 16
India is one of the fastest growing economies of the world with an average GDP growth of over 8.9
percent in last ﬁve years. For India to sustain its economic growth story it has to strengthen its
infrastructure sector and in particular, critically improve its transportation infrastructure. Aviation is
an important part of national infrastructure and one of the prime movers for economic growth and an
important strategic element of employment generation. Aviation sector in India has been transformed
16
https://en.wikipedia.org/wiki/Civil_aviation_in_India
4.3 GROWTH OF CIVIL AVIATION INDUSTRY IN INDIA

from an over regulated and under managed sector to a more open, liberal and investment friendly
sector since 2004. Adoption of global standards has made aviation a safer way to travel.17
India is the 9th
largest aviation market in the world with a size of around US$ 16 billion. India aviation
industry carries huge growth potential due to large and growing middle class population, its rising
aspirations, rapid economic growth and higher disposable incomes.
India’s aviation sector recorded the highest growth of about 20.3 % in FY 15 over FY 14, as per
statistics shared by IATA (International Air Transport Association). Also India is expected to be the
3rd
largest aviation market by 2020.
The Indian aviation market grew by 27.4% in 2015-16 over 2014-15 taking the total passenger
throughput at 184 million,1making it the fastest-growing aviation market in the world according to
data released by the International Air Transport Association (IATA).
Passenger throughput is expected to reach around 370 million by 2020, with domestic traffic
constituting around 80% of the total.
The Indian air transport (including air freight) attracted FDI of US$ 931 million between April 2000
and March 2016, according to data released by the Department of Industrial Policy and Promotion
(DIPP).
Passenger Growth
According to the DGCA (Directorate General of Civil Aviation) and MOCA (Ministry of Civil
Aviation), the Indian domestic air traffic is expected to cross 100 million passengers by 2017 from 81
million passengers in 2015. Indian domestic airlines also carried 23 million passengers in during the
period of January-March 2016 as compared to 18.5 million during the same period last year. This
period thereby registered a growth of 24.03%.18
Government Initiatives
GOVERNMENT INITIATIVES The country aims at becoming the 3rd
largest aviation market by the
year 2020. It is a vision that is fast becoming a reality due to aspects such as increasing disposable
incomes, fall in prices of aircraft turbine fuel (ATF), visa reforms and subsequent increase in foreign
17
Indian Aviation Scaling New Heights
18
http://www.makeinindia.com/article/-/v/make-in-india-sector-survey-aviation

tourist arrivals. The government has changed regulations and undertaken significant initiatives to
bolster the growth of this sector.
These include:
 MoCA unveiled the Civil Aviation Policy 2016 with the mission of providing safe, secure,
sustainable and affordable air travel for passengers and air transportation of cargo with access
to various parts of India and the world.
 Under the National Civil Aviation Policy 2016, 5/20 rule, which stated ‘for an airline to
commence international operations, it should have operated for atleast 5 years in the domestic
market and should have a fleet of minimum 20 aircrafts’ is scrapped.
 The new rule states; “all airlines can commence international operations provided that they
deploy 20 aircraft or 20% of total capacity (in term of average number of seats on all departures
put together), whichever is higher for domestic operations.”
 The introduction of various proposals for maintenance, repair and overhaul (MRO) operations
for aircrafts in the Union Budget 2016-2017. These also include customs and excise duty
exemption for tools and toolkits used in MRO works as well as simplification of import
procedures.
 Plans by the Airport Authority of India (AAI) to revive and operationalise around 50 airports
in India over the next ten years to improve regional and remote air connectivity.
 Proposal for development 200 low-cost airports by 2035, along with an investment of USD
1.3 billion for upgradation/ improving of non-metro airports by 2017.
 Permitting the foreign aircraft brought into India for MRO work to now stay up to six months
or as extended by aviation regulator DGCA. Such foreign aircraft would also be permitted to
carry passengers on the flights at the start and end of its period of stay in India.
 Giving site clearance to Delhi Mumbai Industrial Corridor and Development Corporation
(DMICDC) for setting up of a Greenfield airport for public use near Bhiwadi in Alwar district
of Rajasthan and granting 'in-principle' approval to 13 other Greenfield airport projects.19
19
http://www.makeinindia.com/article/-/v/make-in-india-sector-survey-aviation

CHAPTER #
5
PRODUCT PROFILE
CHAPER CONTENT
5.1 Product Profile
5.2 Classification of Civil Aviation

The product offered by airlines is essentially a service, although it can be supplemented by a number
of physical products too. The services offered are:
1. In-flight services:
Inflight these are the services company provides to its customer like foods, entertainment, Wi-Fi,
internet facility, on board medical support, special meals and many more. And these are the
services also divided according to first class, Business class, premium economy class and economy
class.
The services provided inside the flight include the core service of travel, crew, ambience and
comfort, in-flight entertainment etc. This is highly variable across competitors as per brand and
different classes of travel
2. On ground services
The on-the-ground services include a convenient airport with car parking facilities, waiting
lounges, duty free' shopping quick and efficient checking of baggage, efficient service at
reservation counter, transport to the airplane, etc. Although the physical infrastructure part of the
on ground services are usually maintained by the airports authority but airlines like Kingfisher
have gone a step ahead to make separate lounges for their customers to make them feel special.
CORE PRODUCT AND SUPPLEMENTARY SERVICES:
 Core Product
The core product of the airlines industry is the service of transporting passengers and goods to
different destinations. This is supplemented by various other services mentioned ahead
5.1 PRODUCT PROFILE

 Supplementary Services
Information up to date information regarding flight schedules, ticket fares, promotion schemes,
new policies and systems, etc. are available to customers.
 Consultation
Airlines are suggesting and designing products like packaged tours to the customer. Also,
providing the customer with various options regarding the route of flight, in-flight cuisine &
benefits asks them to play a role of consultant.
 Order taking
The order taking procedure is essentially the booking procedure of the airlines. The important
aspect to be noted here is that the procedure should be smooth, easily understood and fast. Also
provision of instantly updated information about availability of seats and fares is required.
 Hospitality & Caretaking
With the increased competition today hospitality has emerged as a key-differentiating factor. It is
tested right from the time of booking till the post flight help extended. It also includes safeguarding
the baggage
 Billing & payment
Billing options available to the customer are plenty including credit card & travellers cheque.
Airlines use the open account system with their corporate clients. Frequent fliers are also given
special payment privileges. It is now being positioned between a full service and low cost carrier.20
20
https://www.slideshare.net/105Prutha/core-product?qid=19d6e7d3-8386-408d-8e33-
fd9700121df7&v=&b=&from_search=28

 Scheduled Flight
Scheduled services (revenue) are flights scheduled and performed for remuneration according
to a published timetable, or so regular or frequent as to constitute a recognizably systematic
series, which are open to direct booking by members of the public; and extra section flights
occasioned by overflow traffic from scheduled flights.21
 Non Scheduled
Non-scheduled or charter flights these are reserved usually through tour companies, and often
as part of a package. You pay for all the seats in them and enter into contract with the company
which includes plane and fuel charges.22
 Cargo Aircraft
A cargo aircraft also known as freight
aircraft, freighter, airlifter or cargo jet.
A cargo aircraft is a fixed-wing aircraft that is
designed or converted for the carriage
of cargo rather than passengers. Such aircraft
usually do not incorporate passenger amenities and generally feature one or more large doors
for loading cargo.23
21
https://www.icao.int/Meetings/STA10/Documents/Sta10_Wp007_en.pdf
22
https://www.quora.com/How-does-scheduled-and-non-scheduled-flights-differ
23
https://en.wikipedia.org/wiki/Cargo_aircraft
5.2 CLASSIFICATION OF CIVIL AVIATION

CHAPTER #
6
DEMAND DETERMINATION OF
THE INDUSTRY
CHAPER CONTENT
6.1 Price
6.2 Income of Targeted Customer
6.3 Penetration Level
6.4 Promotion Schemes

Pricing is the value perceived by the customer. Pricing decisions cannot be made in isolation of
product. Product and pricing decisions are made together. Deregulation in airline pricing has given
the companies an edge to charge fares.
Pricing environment
With the advent of sophisticated systems for managing the sale of seats it is easier to develop sound
pricing policies. Seats are sold on first-come first-serve basis, so passengers get cheaper fares by
booking earlier. Airlines adjust prices as per demand and there is no difference in conditions.
Selecting the price objective
When Airlines put in capacity (seats) and frequency (flights) between any two points, they market
research the route in order to arrive at the total potential for that segment. Size of the market is
determined to decide the price. Pricing or fare levels are arrived at after taking into consideration
various factors like type of aircraft, configuration of aircraft (number of seats), density of route,
competitor activity and minimum breakeven cost.
Premium pricing
The airlines may set prices above the market price benefited by its ‘brand-image’ to reflect the quality
of their service. Example: Jet Airways, Kingfisher, Indian Airlines, etc. charge a premium price for
providing frills and extra comfort to the customer. They provide options like first class, executive and
economy. A trip from Mumbai to New Delhi will cost anywhere between Rs 6000 to Rs 23000
depending on the class and time of flight.
Value for money pricing
Low Cost Airlines like Air Deccan, Spice jet, Indigo, Go air, etc. go for value for money to charge
lower by operating cost cuts. Low cost carrier model goes for dynamic pricing strategy. They follow
low and simple fare structure. They point-to-point links between primary and secondary airports with
6.1 PRICE

high frequency. The airlines provide basic services and just one class. The objective here is to undercut
the competition and price is used to trigger the purchase immediately. Unit profits are low, but overall
profits are achieved by volume. Prices are as low as Rs 4000 which includes mostly the tax component.
Determining demand
This industry is highly price sensitive. With the development of Global Distribution Systems, the
customer can assess all the tariffs; they shop on internet where it is easy to compare ticket price, flight
time and number of stops in route. In case of recessionary periods when supply exceeds demand,
airlines find it difficult to fill seats and pricing becomes extremely important to gather market share.
For example, for a flight leaving to a business destination on a Monday morning, very few seats will
be sold at low prices. Almost all the tickets will be sold at high fares and bookings sold at relatively
shorter time.
Airlines usually practice differential pricing. There are three classes:
 The First Class
 The Executive or Business Class
 The Economy Class
Prices for each class are different since the facilities provided and the comfort and luxury level is
different in each class. Though all the passengers get the same tangible product features but the
intangible features like flexibility is different. This justifies differential pricing.24
“India’s penetration of 0.08 annual domestic seats per capita is low relative to other developing
markets like Brazil, Turkey, Indonesia and China, where penetration rates are between 0.35 and 0.65
annual seats per capita,” a report by ICICI Direct said last month. “Hence, we expect strong growth
24
https://www.slideshare.net/105Prutha/core-product?qid=19d6e7d3-8386-408d-8e33-
fd9700121df7&v=&b=&from_search=28
6.2 INCOME OF TARGETED CUSTOMERS
6.3 PENETRATION LEVEL

in penetration of air travel over the next decade, which will be mainly driven by sustained growth of
per capita income, increased affordability accorded by healthy competition and potential upgrading
by the vast user base of Indian Railways.”
The number of airline passengers in India grew at a compounded annual rate of 9% between 2010 and
2015, from 45.4 million passengers to nearly 70 million in 2015. Airbus, the world’s second-biggest
aircraft maker, predicts that India will be one of the fastest growing airline markets between 2017 and
2031, with an annual growth rate of 9.5%.25
Advertising should be done keeping in my mind the quality and nature of the target audience as well
as level of expectations. Advertisement slogans, message and campaigns need to be proactive. Air
India has been facing the image problem but advertising may be efficacious in transmitting the facts
and removing the image problem.
Sales Promotion
Many domestic low cost carriers (LCC) like Indigo, Go-Air mainly advertise the low base ticket prices
and promote advance bookings to avoid poor occupancy. Also to improve the brand recall,
promotional incentives are given out e.g. Indigo has a crazy assortment of gifts being handed out
which includes LCD TVs, Refrigerators, laptops, mobile handsets, etc.
25
https://qz.com/612084/finally-indias-beleaguered-aviation-sector-is-seeing-a-ray-of-hope/
6.4 PROMOTION SCHEMES

Public Relations
Strengthening public relations activities is essential to promote the business airlines or airways. The
Public Relations Officer, Receptionists, Travel Agents, Travel Guides, Media people are some of the
important people who publicize the business. But, the most crucial point in this is the co-operation of
media as it directly affects the brand image manifold.
Telemarketing
Booking counters, enquiries, reception counters, users’ complaints cell, announcers are found playing
an incremental role in promoting the air business because most of the travelers make an impression
about the airlines depending upon the tele-support that they get while using the airlines service.

In-Flight Advertising
This concept which is originated overseas has recently been identified as an effective promotion
medium in which audience is hundred percent captive. This is achieved through airing advertisements
during entertainment programs on television sets installed on the aircraft. Other than advertising via
television screens, advertisers hop on board and communicate through latest ad films inside and
outside the aircraft. Kingfisher Red, formerly Air Deccan had partnered with Cutting Age Media to
effectively communicate through this non-traditional niche media.

CHAPTER #
7
PLAYERS IN THE INDUSTRY
CHAPER CONTENT
7.1 Top 10 Companies in Civil Aviation

1. Indi Go
IndiGo is a well-known Indian Low-cost airline company. This enjoys top position in the list with
best customer feedback in almost all sections. IndiGo is having top priority for On-time
performance. The airline company headquartered at Gurgaon, India.
According to market share, this is the largest airline in India with a share of 35.8%. They offer 633
daily flights connecting to 38 destinations and this includes flights to 5 international destinations.
IndiGo works with fleet of 97 aircraft belonging to the Airbus A320 family. The company founded
in 2006. Its primary hub is at Indira Gandhi International Airport (Delhi).
2. Spice Jet
SpiceJet founded in 2005 and Commenced operations from 18 May 2005. This airline company
have primary hubs at Chennai International Airport (Chennai), Indira Gandhi International
Airport (Delhi) and Rajiv Gandhi International Airport (Hyderabad).
The term SpiceJet MAX used for their frequent flyer programme. SpiceJet works with fleet
of 34 aircraft to 41 destinations. Company Slogan is “We Do It With All Our Heart”. This is
the country’s fourth largest airline by number of passenger carried. The company operates more
than 270 daily flights.
3. Jet Airways
Jet Airways founded in 1 April 1992 and they commenced operations
from 5 May 1993. Chhatrapati Shivaji International Airport (Mumbai) is the primary hub of this
airline. Their focus cities list includes: - Cochin International Airport (Kochi), Sardar Vallabhbhai
Patel International Airport (Ahmedabad), Chaudhary Charan Singh International Airport
(Lucknow), Rajiv Gandhi International Airport(Hyderabad) and Abu Dhabi International
Airport (Abu Dhabi).
Jet Privilege is the name for their frequent flyer program. Jet Lite is the subsidiary of Jet Airways.
This major Indian airline based in Mumbai and one of the best in terms of market share and
7.1 TOP 10 COMPANIES IN CIVIL AVIATION

passengers carried. They have 300 flights daily to 74 destinations worldwide. Secondary hubs of
Jet Airways located at Delhi, Kolkata, Chennai, Bengaluru.
4. Air India
Air India is a well-known flag carrier airline of India owned by Air India Limited (AIL). This is
one of the largest airline in India in domestic market share. Company operates a fleet size of 107
aircraft (Airbus and Boeing aircraft) excluding subsidiaries. The company founded on July 1930
as Tata Airlines and commenced operations from 15 October 1932.
Their primary hubs are Indira Gandhi International Airport and Chatrapati Shivaji International
Airport. Flying Returns is the name for the flyer program. Air India offers flights to 85
destinations. “Your Palace in the Sky” is the company slogan. Air India was once the largest
operator in India. Indifferent financial performance and service, labour trouble pushed this down
to 4th place.
5. Air India Express
Air India Express is a famous airline in India founded on May 2004 and commenced operations
from 29 April 2005. They have operating bases at Calicut (International
Airport (Kozhikode), Cochin International Airport (Kochi) and Trivandrum International
Airport (Thiruvananthapuram). This is the low-cost airline subsidiary of Air India with HQ in
Cochi. They operate services to the Middle East and Southeast Asia. The airline manages about
175 flights per week.
6. Go Air
This is another top most Indian Low cost carrier based in Mumbai. GoAir founded on 2005
beginning and commenced operations in November 2005. Their primary hub is at Chhatrapati
Shivaji International Airport(Mumbai). The company offers domestic passenger services to 22
cities with over 140 daily flights. They also have approximately 975 weekly flights. Focus cities
of this airline includes: - Kempegowda International Airport (Bangalore) and Sardar Vallabhbhai
Patel International Airport (Ahmedabad).

7. Jet Konnect
JetKonnect is another famous low-cost brand of Jet Airways. The company is based in Mumbai,
India and owned by Jet Airways. The airline founded on 1991 (as Sahara Airlines). Indira Gandhi
International Airport (Delhi) is the primary hub of this airline. “Jet Privilege” is the name for their
flyer program. The company have alliance with the Etihad Equality Alliance. “Emotionally
Yours” is the company slogan. JetKonnect have fleet size of 9 aircraft and offer services to 43
destinations.
8. Air Asia India
AirAsia India founded on 28 March 2013 and commenced its operations
from 12 June 2014. Kempegowda International Airport at Bengaluru is the primary hub of this
airline. “BIG” is the name of their frequent flyer program. AirAsia India packed with fleet size of
5 aircraft and offer services to 10 destinations. “Now Everyone Can Fly” is the company slogan.
9. Air Costa
Air Costa is another top rated Indian regional airline based in Vijayawada, Andhra Pradesh. The
company started operations at 5th October 2013. Their first flight was on October 2013. Air Costa
commenced scheduled operations using two Embraer E-170 aircraft.
Main operating hubs of Air Costa are at Vijayawada Airport and Chennai International Airport.
The airline company is a part of the LEPL Group. Company slogan is “Happy Flying”. They
have Fleet size of 4 (+50 on order) aircraft for 9 destinations.
10. Vistara Express
This is a well-known Indian airline located at New Delhi with its primary hub at Delhi-Indira
Gandhi International Airport. The company founded on 2013 and commenced operations
from 9 January 2015. Club Vistara is the term for their frequent flyer program. Vistara is a
famous joint venture between Tata Sons and Singapore Airlines airline
At present the airline operates 245 weekly scheduled passenger services across 10 domestic
destinations within India. The company equipped with a fleet of 6 Airbus A320-232 aircraft. This
is said to be the first airline in India to introduce premium economy seats on domestic routes.26
26
http://www.wlivenews.com/top-10-best-airlines-in-india.html

CHAPTER #
8
DISTRIBUTION CHANNEL OF
CIVIL AVIATION INDUSTRY

Airlines wishing to have more direct contact with their clients. Technology has provided the possibility
of a direct channel between the airline and its customers
 Direct
Direct distribution allows customers to come directly to your reservation system to book flights
providing you with a direct relationship with the public, travel agents and corporate customers.
The 2 advantages of a direct relationship are firstly that you have more control over the way you
market and sell your products to the end customer, and secondly you can reduce your distribution
costs by cutting out 3rd party charges.
 Sales offices
 Call centres
 Website
Usually access via the airlines promotional website the public internet booking engine
allows any customer to make a booking directly with the airline. Providing a very easy
to use booking process the web pages guide the customer through the booking from
requesting journeys with the passenger types required, selecting flights, and making
payments online.
 Corporate travel website
 Indirect
 Traditional travel agents
 On-line travel agents
 Travelocity, Expedia, Priceline.com, last minute.com, …
 On-line travel portals
- Orbitz in the US, Opodo in Europe, Zuji in Asia, Makemytrip in India.
 Tour operators and consolidators27
27
https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0ahUKEwimq
J-
uhtLWAhUBPo8KHbOMDmoQFgg8MAM&url=http%3A%2F%2Frevistas.ulusofona.pt%2Findex.php%2Frlcaeron
auticas%2Farticle%2Fview%2F2331%2F1838&usg=AOvVaw3JeAfFYqquvGjDCB5b9ftH
8.1 DISTRIBUTION CHANNEL OF CIVIL AVIATION INDUSTRY

Civil Aviation Distribution Channel

CHAPTER #
9
KEY ISSUES AND CURRENT
TRENDS
CHAPER CONTENT
9.1 Service Quality/Technology
9.2 Promotion
9.3 Segmentation and Positioning
9.4 Seasonality Pattern

Service Quality
Delivering high-quality service to passengers is essential for airlines survival. Service quality
conditions influences a firm’s competitive advantage by retaining customer patronage, and with this
comes market share, and ultimately profitability. The delivery of high-quality service becomes a
marketing requirement as competitive pressures increase on air carriers.
To deliver better service to passengers, airlines needed to understand passengers’ need and
expectations. Studies in other sectors suggest that customer satisfaction and service quality judgments
involve consumers comparing their prior expectations to actual service performance. Where customer
satisfaction and loyalty has been examined in the air transport context, factors such as service value
and corporate image are tended to be ignored. Such omission, however could cause problems of model
misspecification and weak predictive power.
To improve our understanding of air passengers’ decision-making processes, a model that considers
service expectation, service perception, service value, passenger satisfaction, airline image, and
behavioural intentions simultaneously is established.28
Technology
According to the 2014 PwC Global Airline CEO Survey, 60 percent of airline CEOs are developing
future strategies or have concrete plans for changes to their technology investment programs and 29
percent already have programs underway or completed. Advances in technology and the seemingly
disappearance of borders provides a truly global audience for many businesses, and the airline industry
is no exception. Right now, somewhere in the world, someone with a smartphone is shopping and
comparing airfares. How do you make sure your fares and offers are the ones they will select? How
do you make that experience consistent across all of your distribution channels? The right technology
is a big part of the answer.29
28
http://www.aviation.unsw.edu.au/downloads/papersWu/3_Jin_JATM_No1.pdf
29
http://www.pros.com/files/9314/4536/7070/Top-10-Airline-Industry-Challenges.pdf
9.1 SERVICE QUALITY / TECHNOLOGY

In order to connect and engage with ever more experienced, connected, and informed consumers, who
routinely ignore the commercials and ads thrown at them, airlines around the world are becoming
more sophisticated in their marketing activities and are finding new ways to break through the
advertising clutter. As such, we are witnessing the birth of many creative campaigns from airlines, be
it experimental, social, mobile, digital or traditional media initiatives.
By integrating Facebook Connect into the ticket purchasing process, industry was able to access the
likes, preferences, social activity and even the photos of their guests to create a completely unique
“Own board Magazine” with customized content from front to back.
When passengers boarded this special flight, they found a magazine in their seatback pocket that
featured a cover showing their face and their first name in big, bold letters.
Every single article, photo and advert in the magazine was geared towards the passenger’s personal
interests and life experiences. For example, the inside of the front cover showed the passenger’s name
turned into a colour, and one page showed a montage of interesting things that happened on the day
they were born.
The idea behind this initiative was to show passengers how much airline industry cares about them
and understands them. Furthermore, airline industry had previously observed that passengers spent
only around 3 percent of their time on board looking at the inflight magazine.30
Right now going trends in airline industry:
1. Social Media
2. E-Retailing
3. Discounted Prices
4. Distinctive Flight Perks
5. Loyalty Programs
6. Online Buying31
30
http://www.airlinetrends.com/category/marketing-advertising/
31
http://www.yourarticlelibrary.com/sales/sales-promotion-trends-top-9-trends-in-sales-promotion/48372/
9.2 PROMOTION

Segmentation:
Market segmentation means dividing the market into distinct groups that have common needs and will
respond similarly to marketing action. Each segment must be unique, have common needs, and
respond in a similar manner to marketing efforts.
Typically, we think that airlines will segment their customers by class of seating, such as economy
class, business class and first class. However, while this gives some indication as to the willingness to
pay for additional service and the consumers overall price sensitivity, it does not give us much insight
into the consumers’ needs and motivations in terms of their needs for airline travel.
In this market segmentation example for airlines, five distinct market segments are identified each
having quite distinct needs and different evaluation and purchase approaches. These five market
segments (as shown in the following diagram as well) are:
 We’re off again
 Loyal to loyalty
 Urgent travellers
 Business travellers
 Budget conscious32
Positioning:
Positioning refers to the image created in the minds of customer of its product or brand. It is a
perception created in the minds of the consumer relative to that of its competitors.
There are different ways in which the Airlines industry is segmented. The first form of segmentation
is the area served by the airlines. The "major" serve the entire country and even fly people
internationally, the "national" airlines serve the country and provide services to most parts of the
country, and the "regional" airlines provide services to single regions or among a limited numbers of
cities. Other segments of the industry are the carriers that provide cargo services. Their target market
32
http://www.segmentationstudyguide.com/understanding-market-segmentation/market-segmentation-
examples/market-segmentation-example-airlines/
9.3 SEGMENTATION AND POSITIONING

is those customers that provide cargoes. Within the airline industry currently the airlines can be divided
into low cost airlines and full service airlines. 33
Because the airline industry is seasonal and cyclical, our liquidity and earnings will fluctuate and be
unpredictable. Our operations primarily depend on passenger travel demand and seasonal variations.
Our weakest travel periods are generally during the quarters ending in March and December. The
airline industry is also a highly cyclical business with substantial volatility. Airlines frequently
experience short-term cash requirements. These requirements are caused by seasonal fluctuations in
traffic, which often reduce cash during off-peak periods, and various other factors, including price
competition from other airlines, national and international events, fuel prices, and general economic
conditions including inflation. Our operating and financial results are likely to be negatively impacted
by national or regional economic conditions.34
33
https://brainmass.com/business/marketing-strategy/airline-industry-segmentation-targeting-and-
positioning-508926
34
http://www.wikinvest.com/stock/Frontier_Airlines_Holdings_(FRNT)/Airline_Industry_Seasonal_Cyclical_Resul
ting_Unpredictable_Liquidity_Earnings
9.4 SEASONALITY PATTERN

CHAPTER #
10
PESTEL ANALYSIS
CHAPER CONTENT
10.1 Political Factors
10.2 Economic Factors
10.3 Social Factors
10.4 Technological Factors
10.5 Environmental Factors
10.6 Legal Factors

Overview:
“PEST analysis – an analysis of the political, economic, social and technological factors in the external
environment, which can affect industry’s activities and performance.”
PEST or PESTEL analysis is a simple and effective tool used in situation analysis to identify the key
external (macro environment level) forces that might affect an industry. These forces can create both
opportunities and threats for industry.
Therefore, the aim of doing PEST is to:
 Find out the current external factors affecting industry
 Identify the external factors that may change in the future
 To exploit the changes (opportunities) or defend against them (threats) better than competitors
would do.
Let us look at the PESTEL analysis of the Indian aviation sector:
In India, one can never over-look the political factors which influence each and every industry existing
in the country. Like it or not, the political interference has to be present everywhere. Given below are
a few of the political factors with respect to the airline industry:
 The airline industry is very susceptible to changes in the political environment as it has a great
bearing on the travel habits of its customers. An unstable political environment causes
uncertainty in the minds of the air travellers, regarding travelling to a particular country.
 Overall India’s recent political environment has been largely unstable due to international
events & continued tension with Pakistan. The demonetization, GST & the government’s
inability to control the situation have also led to an increase in the instability of the political
arena.
 Another aspect is that in countries with high corruption levels like India, bribes have to be paid
for every permit & license required. Therefore, constant lassoing with the minister & other
government official is necessary. The state owned airlines suffer the maximum from this
problem. These airlines have to make several special considerations with respect to selection
of routes, free seats to ministers, etc. which a privately owned airline need not do. The state
10.1 POLITICAL FACTORS

owned airlines also suffers from archaic laws applying only to them such as the retirement age
of the pursers & hostesses, the labour regulations which make the management less flexible in
taking decision due to the presence of a strong union, & the heavy control &interference of the
government. This affects the quality of the service delivery & therefore these airlines have to
think of innovative service marketing ideas to circumvent their problems & compete with the
private operators.35
 Other political factors:
 Open sky policy
 FDI limits: 100% for Greenfield airports
74% for the existing airports
100% through special permission
49% for airlines.36
Business cycles have a wide reaching impact on the airline industry. During recession, airline is
considered a luxury & therefore spending on air travel is cut which leads to reduce prices. During
prosperity phase people indulge themselves in travel & prices increase.
Airlines have to cope with declining passengers, high fuel prices, competition from low-cost airliners,
labour demands and soaring operating and maintenance costs. In addition, events such as the recent
Malaysian airline disappearance, is also adversely affecting the global airline industry.
The loss of income for airlines led to higher operational costs not only due to low demand but also
due to higher insurance costs, which increased after the WTC bombing. This prompted the industry to
lay off employees, which further fuelled the recession as spending decreased due to the rise in
unemployment.
 Contribution to the Indian economy-since the industry is operating in Indian economy,
the revenue generated by the company adds to economy
 Rising cost of fuel-the fuel price is rising because the subsidies government is providing
are being taken off.
35
https://www.ukessays.com/essays/tourism/analysis-of-airline-industry-in-india-tourism-essay.php
36
https://www.slideshare.net/gauravkardam/aviation-industry
10.2 ECONOMIC FACTORS

 Investment in the sector of aviation
 The growth of the middle income group family affects the aviation
 Sector-in today’s world with increasing income of middle class, people prefer to go by
air because it saves time at is all new a different experience.
The changing travel habits of people have very wide implications for the airline industry. In a country
like India, there are people from varied income groups. The airlines have to recognize these individuals
and should serve them accordingly. Air India needs to focus on their clientele which are mostly low
income clients & their habits in order to keep them satisfied. The destination, kind of food etc all has
to be chosen carefully in accordance with the tastes of their major clientele.
Especially, since India is a land of extremes there are people from various religions and castes and
every individual travelling by the airline would expect customization to the greatest possible extent.
For e.g. A Jain would be satisfied with the service only if he is served Jain food and it should be kept
in mind that the customers next to him are also Jain or at least vegetarian.
Another good example would be the case of South West Airlines which occupies a solid position in
the minds of the US air travellers as a reliable and convenient, fun, low fare, and no frills airline. The
major element of its success was the augmented marketing mix Page | 12 which it used very
effectively. What South West did was it made the environment inside the plane very consumer
friendly. The crew neither has any uniform nor does it serve any lavish foods, which indirectly reduces
the costs and makes the consumers feel comfortable.
 Development of cities leads to better services and airports-metro cities first had airports
but with development of the country new airports are being built up.
 Employment opportunities-the aviation sector provided a lot of employment opportunities
because the industry is so vast that a lot of people can be employed
 Safety regulations.
 The status symbol attached to a plane travel
10.3 SOCIAL FACTORS

A Comprehensive Project on Indian Civil Aviation

A Comprehensive Project on Indian Civil Aviation

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