Air India’s Role and Its Fast Paced Growth of Aviation Industry in India: an Analytical Approach

Topics: Operating expense, Air India, Expense Pages: 10 (2936 words) Published: July 2, 2013
Air India’s Role and its Fast Paced Growth of Aviation Industry in India: An Analytical Approach T.Sujin. Ph.D Research Scholar, School of Management, Noorul Islam University. Dr .S. Edmund Christopher, School of Management, Noorul Islam University.

Indian Aviation Industry has been going through a turbulent phase over the past several years. By year on year more customers are using Air transport for moving one place to another. In Airline Industry Air India is playing major role in Air transportation. In the year 1999-2000 total operating revenue was Rs. 38,775.3 million and total expenses Rs. 47,178.9 million, in this year Air India earned Rs. 8,403.6 million incomes over than total expenses. In the year 2010-2011 total revenue was Rs. 142,551.1 million and total operating expenses Rs. 164952.0 million, in this year Air India lost Rs. 22,400.9 million. By year on year revenue is decreasing and it is going in loss nature. On 1999-2000 passengers carried by Air India 3194,000 Domestic and International, and passengers carried on 2010-2011 by Air India were 3843,000 in Domestic and International. Using of Air transportation by more people by year on year even though Air India is not earning more revenue. The main reason of loss is hike in fuel price. On 1999-2000 fuel and oil price was Rs.7,061.3 million, and on 2010-2011 it’s increasing up to Rs. 61,120.5 million. Between last ten years fuel price hike was very huge, by on 2010-2011 price hike up to 8.5 times than 1999-2000. Because of fuel hike, Air India is facing more expenses than revenue. The researcher going to analyze operating and total revenue, operating and total expenses of Air India for ten years, and correlation between fuel and oil expenses with passengers carried by Air India. Because of heavy competition Air India cant able to increase their fare and due to hike in fuel price and miss management Air India is facing heavy loss right now. Keywords: Operating Revenue, Total operating revenue, Operating Expenses, Total Expenses, Passengers carried, Fuel and Oil. Introduction:

The history of Air India is the history of Indian Aviation. It is one of the oldest and the largest airline of India. Air India was founded by J.R.D. Tata in July 1912 as Tata Airlines. Founded as a small, private, domestic carrier in 1932, Air India is now owned by Government. It operates only on International routes and has negligible presence in the domestic traffic. On 1999-2000 Air India’s total operating expenses was Rs 38,775.3 million, operating revenue was Rs 44,480.2 million, in the year 2010-2011 total operating expenses was Rs 164,922.0 million and operating revenue was Rs 139,743.9 million. From 1999-2000 to 2010-2011, year on year Air India’s operating revenue is decreasing and total operating expenses is increasing. However, in its overall performance, the airline would show losses, the sources said, adding that though Air India was still suffering losses, its performance has improved and it has returned some of the loans taken from banks. EBIDTA (earnings before interest, taxes, depreciation and amortisation) is an approximate measure of a company's operating cash flow. Air India has been suffering losses of Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 and Rs 7,853 crore in 2011-12.

The prime reasons for these losses are hike in jet fuel prices, its opaque pricing and VAT on it, increase in depreciation provision due to aircraft acquisition, high infrastructure cost, fall in premium traffic and a decline in ground handling revenue, the sources said. Air India's revenue also posted an increase of 6.5 per cent during April-September this year at Rs 4,757 crore, as against Rs 4,467 crore in the same period a year ago despite the 58-day long strike by its pilots.

For the first time since its 2007 merger, the airline made a cash surplus of Rs 48 crore during April-July 2012 as against a cash...

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