Airlines: Airline and Aviation Industry

Topics: Airline, Mergers and acquisitions, Low-cost carrier Pages: 4 (867 words) Published: March 11, 2014
INTRODUCTION:

Aviation industry plays a key role in economic development, growth of tourism and social development. The Indian Aviation industry has witnessed a turbulent phase over the last few years. In the recent years, the industry saw the emergence of the low cost carriers and liberalisation of government norms which impacted the global aviation industry. More recently, the global economic downturn of 2008 dealt a severe blow to the aviation industry the world over. The article gives a brief overview of the growth and trends in the industry. Importance to economy

The revenue of international airlines industry has increased from 476 billion USD in 2009 to 567 billion USD in 2011, a 9.3% year-on-year increase. This industry employs 56.5 million workers and accounts for US $2.2 trillion of the global GDP. Indian Aviation industry contributes to 0.5% of the India’s GDP and generates 1.7 million jobs. Technological Trends

Major cost items for airlines are fuel, labour and maintenance. Airlines are able to reduce the cost/increase profit by adopting innovations such as more fuel efficient planes, reducing turnaround time, extra charges for less cramped seats, excess luggage etc. and providing ticketing facilities online. Analyst View

The industry is facing major challenges in form of increasing fuel prices, depreciation in rupee value and high sales tax. But the passengers are going to increase in FY’14. However, the forecast for Indian aviation sector for FY 14 remains bleak. The Jet Etihad deal has reached next step. Foreign airlines entry will depend on the results of this deal. Government has planned to construct 50 low cost Airports. Delhi will be first among them. Mergers & Acquisitions

Due to high competition and slim profits there has always been an urge in the Aviation industry for mergers and acquisitions. Since it helps the airline to enhance its technology, expand its connectivity and infuse capital. But is merger and acquisition...
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