India-Airline Industry

Topics: Airline, Low-cost carrier, Indira Gandhi International Airport Pages: 12 (3932 words) Published: December 19, 2010
Table of Contents

Global Scenario and Trends5
History and the Current Scenario of the Indian Aviation Sector6 Challenges Faced by Airline Industry10
Future Trends11

The Airlines is one among the inventions that had changed the way how people live and experience the world. In due course of time it has now become impossible to imagine business and leisure travel without air travel. The airline industry exists in an intensely competitive market. In recent years, there has been an industry shakedown, which is expected to the trend towards expanding domestic and international services. The airline industry is classified into four categories: International, National, Regional and Cargo. Airlines industry facilitates economic growth, world trade, international investment and tourism and so plays a key role in globalization making it a large and growing industry. Air travel (both business and leisure) has grown by around 7% in the last decade. Business travel has grown as companies having global presence in terms of their investments, their supply and production chains and also their customers. Availability of aircrafts at affordable prices backed by increased tourism had led to rise in leisure travel. Overall in terms of regions in developed regions like Europe and North America a slower growth is seen when compared to developing regions like Asia Pacific. Airlines' profitability is closely tied to economic growth and trade. So based on the GDP growth the demand for airplanes and the air travel will increase. So during 1990-1995, the industry suffered from world recession and the air travels were further lowered by Gulf War. Thus financial difficulties impact airlines/aircraft industry. Deregulation is also stimulating competition, such as that from small, low-cost carriers. Some of the Key terms and ratios for airline industry are listed below. 1)Available Seat Mile = (total # of seats available for transporting passengers) X (# of miles flown during period) 2)Revenue Passenger Mile = (# of revenue-paying passengers) X (# of mile flown during the period) 3)Revenue Per Available Seat Mile = (Revenue) / (# of seats available) 4)Air Traffic Liability (ATL): An estimate of the amount of money already received for passenger ticket sales and cargo transportation that is yet to be provided. 5)Load Factor: Measures the percentage of available seating capacity that is filled with passengers. Analysts state that once the airline load factor exceeds its break-even point, then more and more revenue will trickle down to the bottom line. Airport capacity, technology used, structuring routes and costs to buy or lease the aircraft are very vital for the industry. In addition Weather, Fuel Cost and Labour also play an important role. The industry has to realise the need for a radical change to sustain and also ensure growth and prosperity for their survival. Currently many cost cutting measures are being adopted in the industry. Also to meet the requirements of customers and elevate to customer delight from mere customer satisfaction the industry players concentrate on the quality of service that they offer, both on the ground and in the air. The key challenge is to ensure meeting of customer requirements and at the same time make effective cost cutting measures and continuously being efficient and competitive and profit making. Nevertheless, the aviation industry is characterized by strong nationalist sentiments so in many places despite globalisation airlines will face limitations on where they can fly and restrictions on their ownership of foreign carriers Ten Aviation Myths

1)More runways are essential

2)Environmental organisations try their best to price people off planes

3)International agreements make the ending of aviation’s privileged tax free status (including tax-free fuel) become impossible

4)The external costs of the industry are met...

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