The presentation discusses the challenges facing the Indian aviation industry. It notes that while the industry grew rapidly over the last decade, it is now facing several issues. These include a large debt burden carried by the major airlines, excess capacity as new aircraft are delivered during an economic slowdown, high fuel costs, lack of adequate infrastructure and airport facilities, environmental and land acquisition clearances slowing expansion, and a shortage of trained technical personnel. Addressing these challenges will be key for the industry to sustain its growth in the future.

1. Presentation On“Challenges for Aviation Industry” Parminder Singh Grover

2. Aviation Industry (World Wide) 2,000 airlines, 23,000 aircrafts serve some 3,750 airports through a route network of several million kilometers 32 million jobs

3. India Aviation Industry (Intro.) Fastest growing aviation industry Dec, 1912 first domestic route AAI manages all airport Over 450 airports and 1091 aircrafts

4. Cont’d DGCA controlled every aspect Including granting flying licenses, pilots, certifying aircrafts for flight.

5. Indian Airline Sector K A and J A converted around half their capacity into low-cost services. Also govt. carrier Air India Launch LCS Has a Low cost Airline Air India Express

6. Cont’d First low cost airline Air Deccan in 2003 objective to increase their reach to a largely untapped middle class segment. Passenger traffic 96 million in 2007, compared 6 billion passenger by railway.

7. Current Scenario precipitated the boom for domestic and international passenger carriers. domestic passenger and cargo traffic recorded a growth rate of 44.6% and 8.7%. Intl. passenger and cargo traffic recorded growth rates of 15.8% and 13.8%

8. Cont’d Top 5 airports of country handle 70% pass. All airports handle 90.44 million pass. 2006 Growth of Aviation Industry is mostly due Low fares and schedules domestic services

9. Challenges Aviation industry facing major challenges like environmental clearances, acquisition of land and “obstructive” rules in developing its infrastructure. experts had asked the government and the environment agencies to give clearances

12. Cont’d urgent need of providing training to manpower industry is facing shortage of trained technical staffs and this should not be ignored.

13. Cont’d provide training to staffs to full fill goal Indian aviation industry expected to grow two to three fold by 2020 3,000 Crore would be needed for the development of airports Rs 8,000 crore would be required for airlines

14. Cont’d number of passengers is likely to increase to 400-450 million by 2020 but present 110 m. number of scheduled aircraft is estimated to go up to 1,000-1,500 from 600 at present

15. Some Challenges which faced by aviation industry in India

16. Regional connectivity Biggest challenges lack of airports

18. US $ 455 in Singapore

20. Declining yields LCCs and other entrants together now command a market share of around 46% Increasing growth prospects have attracted & new Players

21. Gaps in infrastructure Airport and air traffic control (ATC) infrastructure is inadequate to support growth. While a start has been made to upgrade the infrastructure, the results will be visible only after 2 - 3 years.

22. Trunk routes A matter of concern that the trunk routes, are not fully exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of genuine competition. The entry of new players would ensure that air fares are brought to realistic levels This in turn would stimulate demand and lead to growth.

23. Excess Capacity Several new aircrafts were bought within a short span of time Aircrafts ordered during good times are being delivered during recession. According to industry experts, around 17% of the current fleet are scheduled for delivery during the next 3 years.

24. Cont’d the industry grew above 40%, almost half of the growth was primarily stimulated due to low fares. Maintaining such low levels of fares will be difficult due to excess capacity, especially during the ongoing global slowdown.

25. Hugh Debt Burden Healthy profits and increasing passenger traffic saw airlines raising significant amount of capital from Financial Institutions and Banks The top three airlines are now carrying a cumulative debt burden of approximately $8 billion.

26. Cont’d Incidentally, this is almost equivalent to the losses of $8.5 billion posted by all global carriers. Restructuring this huge amount of leverage will be a challenge as resorting to equity capital will also be equally difficult during economic slowdown

27. Poor Infrastructure Infrastructure continues to be a major constraint for Indian Airline Industry has been aggravated further due to excess capacity created during good times.

28. Cont’d steps are being taken on this front to upgrade major airports in Mumbai, Delhi and Hyderabad, security concerns still remain to be addressed. Attracting investments from private sector will go a long way to develop and maintain the infrastructure

29. Air craft Noise Emissions The perception of people -its intensity, its frequency and the length of time they are exposed to it. Aircraft noise, including night noise, is associated with sleep disturbance, long – term adverse health effects and learning difficulties.

30. Shortage of Airport Facilities There are lot of problem at airports in India. There is no capacity to land two flight at same time.

31. Conclusion Indian Airline Industry was one of the fastest growing Airline Industry across the world during the last decade. However, skyrocketing fuel prices, economic slowdown, slashed corporate travel budgets over the last 3 years has forced all Indian Airlines to rethink their business model.

32. Cont’d Excess capacity build-up and poor infrastructure continue to plague the industry which is also experiencing a decline in passenger traffic at the same time.

33. Thank You! Parminder Singh Grover, Punjab