This document discusses the Indian aviation industry. It notes that the industry accounts for 0.5% of India's GDP and supports 1.7 million jobs. Key points mentioned include that passenger traffic has grown to 159 million and the fleet size is projected to double to 1000 aircraft by 2020. It also summarizes the market structure, major players like IndiGo, Jet Airways, and SpiceJet, and developments in the industry.

1. GROUP 5
Rishi Malhotra
Rohit Ghosh
Arpit kulshreshtha
Sukhvinder Singh Deogan
Peeyush Mittal
INDIAN AVIATION
INDUSTRY

2. Industry Overview
Aviation industry in India accounts for
0.5% of the India’s GDP and supports
1.7 million jobs.
Indian civil aviation industry is amongst
the top 10 globally with a size of USD 16
billion.
India's current MRO market size is
estimated to be around USD 700 million.
Presently, there are about 437 airports
and 1091 registered aircrafts in India.

3. Growth of the Sector
Historical Growth
◦ India’s domestic aviation market has tripled in last five years posting
growth at 25.6%.
◦ Passenger traffic has increased to 159 million and cargo to 2.19 (MMT),
CAGR of 13 per cent and 10 per cent respectively over the period FY
2003–2013.
◦ The scheduled commercial fleet has grown from 119 aircraft in 2000 to
437 today, representing an investment of US$16 billion.
Projected growth
◦ Indian airport system is estimated to handle 336 million domestic and 85
million international passengers by 2020.
◦ Indian carriers are expected to double their fleet size by 2020 to 1000
aircraft.
◦ The non-metro airports presently account for only about 30% of the total

4. Passenger traffic in India
Total passenger traffic stood
at a 159.3 million during
FY13
Aircraft movement in India
Total aircraft movement recorded
CAGR of 8.4 per cent over FY06-13.

5. Market Structure
 Differentiated oligopoly.
 Large number of consumers both passengers and
cargos.
 Few firms who control significant share of the market
.
High cost barriers to market industry.
Regulatory barriers.
High degree of concentration within the industry
where India’s four firms hold more than 80% of market
share.

6. Leading Market Share
IndiGo is a low cost carrier and the largest
airline in India with a market share of 31.7% as
of May 2014. IndiGo is one of the fastest
growing low cost carriers in the world. With its
fleet of 80 new Airbus A320 aircraft, the airline
offers 528 daily flights connecting to 36
destinations.

7. Other Player’s with their Share
• Jet Airways
Jet Airways is a major Indian airline based in Mumbai. It is the second largest
airline in India, both, in terms of market share and passengers carried,
after IndiGo. Jet Airways (Jet+JetLite) had a market share of 24.6%.
• NACIL
NACIL is the aviation company of India which operates India’s oldest airlines i.e.
Indian Airlines, Air India and Air India Express with market share of 20.3%.
• SpiceJet
SpiceJet is another budget airline company in India with market share of 17%. It
was acquired by media king Kalanithi Maran with Rs. 750 crore.
• GoAir
GoAir is an Indian low-cost airline based in Mumbai. It commenced operations
in November 2005. It is the aviation foray of theWadia Group. As of January
2014, it is the fifth largest airline in India by market share with 10.1%.

8. Market Players Market Share
IndiGo 30
Jet Airways 24
NACIL 20
SpeiceJet 16
GoAir 10 IndiGo
30%
Market Share
Jet
Airways
24%
SpeiceJe
t
16%
GoAir
10%
NACIL
20%

9. Developments and Litigation
Case
 Bengaluru International Airport Limited (BIAL) has filed case Vijay Mallya-led
Kingfisher airlines for non-payment of user development and passenger
service fees.
 The spokesperson declined to divulge any further details relating to the
case.
 However, sources say the case is relating to payment of user development
and passenger service fee collected by airlines from its passengers
between 2008-12 to BIAL.
 Kingfisher collected Rs. 208 crore from 2008 to 2012 which was due to
BIAL.
King Fisher Jet Airways GoAir IndiGo
Recent Developments (Industry Competition)
High Operating Cost Low Operating Cost Low Operating Cost Low Operating Cost
Unprofitable Route Focused Routes Good Marketing Focused Routes
More turn around
More turn around
More turn around
More turn around
time
time
time
time
Diversified Aircrafts Standard Aircrafts Standard Aircrafts Standard Aircrafts

10. Effect of Industry Structure on
Output Price and Quantity
 A dominant firm may indulge in price discrimination by
charging different prices to different customers, do
overpricing in certain routes by taking advantage of
dominant position.
Cartelization:
 Firms may make an agreement to fix prices.
 Restricts level of production and output
 Eliminates fair competition.
 Results in artificially inflated prices.

11. Mergers:
 A merger with a large market share may indulge in
collusion to control price along busy routes by virtue of
control over time
 May also result in removal of vigorous competitor from
the market.
 Merger also raises the issues of predatory pricing.
 Predatory pricing may lead to Price wars.
Price Parallelism:
 Closer the time of the departure of the flights, greater is
the price parallelism.
 This may also lead to price collusion which may further
lead to overpricing.

12. Initiatives Taken by Competition
Commission of India or SEBI
 Commission concluded that since there are no
evidences on record to suggest that the airline
operators raise the air fares and/or withdrew their
promotional fares across all sectors because of
some agreement among them during the periods
under investigation, the proceedings in the case
to be closed.
 The Commission observes that fares of all
airlines generally move together and there would
be a case of price parallelism. However, the
Commission holds that this on its own cannot be
said to be indicative of any ‘practice’ being
carried.

13.  The practice of shifting seats to higher price bucket
rather than being an anti-competitive practice is a
business model of pricing which is followed not
only in India but internationally.
References
www.cci.gov.in
www.hindubusinessline.com
www.lakshmishri.com
www.airtrends.com
www.wikipedia.com