Competitive Analysis:
The aviation landscape in India has undergone considerable change ever since the liberalization of the sector in the early 1990s. A subsequent wave of low cost carriers entering the industry in 2003 further transformed the scenario.With over 10 carriers in operation the sector has become highly competitive. Customers are getting improved connectivity at more affordable prices. The extreme price competition together with high cost of operations has also resulted in the industry suffering losses over the past two years.Losses in FY2008 have been projected at around USD 1 billion.33 The large losses have meant that the industry has to consolidate to sustain operations. In 2007, the sector went through a bout of mergers that involved 6 players combining to form 3 large industry players. This ncludes the merger of the state-owned carriers, Indian Airlines and Air India to form NACIL. Jet Airways acquired Sahara Airlines and rebranded the airline as a value carrier. Kingfisher took ver Deccan Aviation to form a new airline that provides both premium and low cost services under a single umbrella. The combined share of the 3 carriers was around 74.5 percent. These mergers have,however, not prevented full service carriers from losing market share to the low cost operators.
The industry continues to suffer losses with Jet Airways being the only carrier that managed to make profits, primarily on account of customer loyalty, quality of service and efficient operations. The increase in share of LCCs is mainly due to their enhanced network in tier II and tier III cities. The LCCs have also been operating hopper flights (i.e. flights that touch down in more than two cities) that account for between 25 and 30 percent of the total services for smaller players.Meanwhile full service carriers have been focused on point to point services.
The underdeveloped air transport infrastructure has been imposing significant costs on the airlines with congestion, long delays and inconvenience to passengers. Government, in recent
years, has sought significant investments in development and modernization of airports to upgrade and expand facilities. This has provided private consortiums led by Indian nfrastructure developers such as GVK and GMR the opportunity to build and operate airports
in Mumbai and New Delhi respectively. The state-owned Airports Authority of India (AAI) plans to invest over USD 2.5 billion in the modernization of Chennai and Kolkata airports as well as 35
non-metro airports. The development of Greenfield airports and modernization of existing ones provide private Indian as well as foreign players opportunities to expand India. Global airport
operators such as Changi Airport and Partners, Hochtief Airport, Aeroports De Paris, Fraport AG, TAV Investment Construction Corp, Airports Company of South Africa, Malaysia Airport and Flughafen Munchen of Munich are some of the players that hope to participate in the development and modernization of airports in India. The Airports Authority of India (AAI), however, remains the dominant operator in the country.
The growth in the Aviation sector has also provided increased opportunities in the area of support services. Airlines and aircraft manufacturers such as Boeing have been investing in MRO services. Meanwhile, several local and global airlines are drawing expansion plans for the cargo services space.
The industry continues to suffer losses with Jet Airways being the only carrier that managed to make profits, primarily on account of customer loyalty, quality of service and efficient operations. The increase in share of LCCs is mainly due to their enhanced network in tier II and tier III cities. The LCCs have also been operating hopper flights (i.e. flights that touch down in more than two cities) that account for between 25 and 30 percent of the total services for smaller players.Meanwhile full service carriers have been focused on point to point services.
The underdeveloped air transport infrastructure has been imposing significant costs on the airlines with congestion, long delays and inconvenience to passengers. Government, in recent
years, has sought significant investments in development and modernization of airports to upgrade and expand facilities. This has provided private consortiums led by Indian nfrastructure developers such as GVK and GMR the opportunity to build and operate airports
in Mumbai and New Delhi respectively. The state-owned Airports Authority of India (AAI) plans to invest over USD 2.5 billion in the modernization of Chennai and Kolkata airports as well as 35
non-metro airports. The development of Greenfield airports and modernization of existing ones provide private Indian as well as foreign players opportunities to expand India. Global airport
operators such as Changi Airport and Partners, Hochtief Airport, Aeroports De Paris, Fraport AG, TAV Investment Construction Corp, Airports Company of South Africa, Malaysia Airport and Flughafen Munchen of Munich are some of the players that hope to participate in the development and modernization of airports in India. The Airports Authority of India (AAI), however, remains the dominant operator in the country.
The growth in the Aviation sector has also provided increased opportunities in the area of support services. Airlines and aircraft manufacturers such as Boeing have been investing in MRO services. Meanwhile, several local and global airlines are drawing expansion plans for the cargo services space.
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