indian aviation industry

Indian Aviation Industry

Indian Aviation Industry and Air India Crisis

History of Indian Aviation Industry

India made history on February 18, 1911 , when a French pilot Monseigneur Piguet flew , the first commercial flight from Allahabad to Naini , covering a distance of about 10 km in as many minutes.J. R. D. Tata set up Tata Services which become Tata Airlines and then Air India and spread its wings as Air India International. He ran it successfully until it was nationalized in 1953. There were 11 other domestic airlines at that period which were merged together to form Air India. For many years in India air travel was perceived to be an elitist activity. The view arose from the ‘Maharaja’ syndrome where , due to the prohibitive cost of air travel , the only people who could afford it were rich and powerful.


Civil aviation and economic growthAirport authority of India and Air Corporation ActTransition of Aviation Industry from Monopoly to Oligopoly Barrier to entry to open sky policy bilateral treaties. India had 180 bilateral treaties with different countries in 2002.


Civil Aviation Policy in India

The multiplicity of Airline , Airport operators and the possibility of oligopolistic practices made the need for civil aviation policy . The CAA was commissioned to take care of environment , safety , security and international standard. Also to promote efficient cost effective and orderly growth of air transport contributing to social and economic development of the country.

Private Sector Participation and Civil Aviation Policy

Private sector participation for promoting investment ,improving quality and efficiency and increasing competition.


Private sector investment in construction , up gradation and operation new and existing airport.Entry and operation of private airline and airport.

Security : Strict national civil aviation security program on account of safety , regulatory and efficiency of operation.

Maintenance : Private sector participation including 100% foreign equity JEOC and new maintenance facility.


Airport and Infrastructure Owned and Managed by central government or armed forces. Airport authority of India , Civil aviation ministry. 132 operational airport : 11 International , 94 civil and 27 civil enclaves at defense airfield. Encourage private sector participation

The Passenger Airlines – The Players

Air India : 62 aircraft ( 4 A300 , 41 Airbus A320 ,11 Boeing 737 , 2 Dornier D-228 and 4 ATR-42.Air Sahara : Started with 2 Boeing 737-200 , now also own Boeing 737-700 and Boeing 737-800 ,4 highly advanced helicopter.


Jet Airways : Started operation 4 Boeing 737-300 and presently with 55 aircraft , 12 no Airbus 330-200 , 14 no ATR 72-500 , 13 no Boeing 737-700 , 34 no Boeing 737-000 , 2 no Boeing 737 – 900 , 10 no Boeing 777- 300 ERAir Deccan : Modern fleet of ATR-42-320 aircraftsKingfisher Airlines : Started with 4 Airbus A320 presently have 73 air craft , 5 no Airbus A330 , 6 no Airbus A321 DC , 2 no Airbus A321 SC , 10 no Airbus A320 DC , 14 no Airbus A320 SC , 3 no Airbus A319 , 27 no ATR 72-500 , 6 no ATR 42-500,Jet Lite :1 no B737-300, 2 no B737-400 , 7 no B737-700 , 5 no B737-800 , 2 no B737-800W , 7 no CRJ-200Go Air :10 No Airbus A320-200 Indi Go : Airbus A320Paramount Airways : Business Class Travelers with Royals Class flier membership club, 2 no Embraer E170, 3 no Embraer E175 Spice Jet : Boeing 737-900ER , Boeing 737-800


Future Perspective Airlines all over the world are operating in alliance , merger modeIndian aviation industry , specifically has to review its bilateral ties and to renew it Potentially , India has large corporate and luxury travel marketPotentially , India has large low fare marketIndia is potential transit hub in more than one direction


Air IndiaAir India traces its roots back to Oct. 15 ,1932 when its founder J. R. D. Tata flew a single engine De Havilland Puss Moth registered VT-AND carrying air mail (postal mail of Imperial airways) from Karachi’s Drigh road aerodrome to Bombay’s Juhu Airstripe via Ahmedabad.August 1 , 1953 Government Nationalised Aviation Industry1960 the Jet Age begin with commissioning of first Boeing 707 . On 11th June 1962 Air India become the world’s first all jet air lines.


In1971 with introduction of first Boeing 747-200 named as Emperor Ashoka Air India Branded itself as ‘Palace in the sky’.In 1986 introduced fleet of Airbus A310 to its fleets.In 1990’s Liberisation aviation Industry .Over the years Air India has been in services of Passenger operation and Cargo operation.


The Present Air India Crisis

The real reasons behind the present financial crises are the interest burden , repayment and overhead expenses.

Some of the present fact related to Air India are : Annual loses of Rs.5000 Crs. (US $ 1 billion) and total accumulated loses of Rs. 16000 Crs. (US $ 3.2 billions) Air India has 10% of Total global airlines revenue loses with just 0.35% of global traffic. It owes Rs. 1400 Crs. (US $ 700 millions) to state own airport operator and aviation turbine company.


The Causes :

Bad management and faulty policies has brought Air India to this crisis level. A culture of complete sloth in administration. Complete lack of Ownership. Lake of responsibility for results and failures. Deeply ingrained corruption in all levels. City corporator onward everybody in the Government exploiting Air India. About 31500 employees annual wage bills of Rs. 3000 Crs. (US $ 600 millions) for fleet size of 150 (including affiliated carriers) Air crafts. Highest Employees per Aircraft in the world 200:1 where as desirable is 130-170:1.


The Causes :

Unionized strike with political patronage has crippled Air India.

The head of Air India who are appointed from IAS cadre may be good administrator but little exposure to global Air lines industry.

The Top Boss of Air India not having decision power as there will be ministry interventions which leads to lake of cohesiveness , focused , proactive and long term business planning.


Government Turnaround Strategy of Air India

Bail Out plan for Rs.15000 Crs. (US $ 3 billions) – Rs. 5000 Crs. (US $ 1 billion) as equity infusion and the balance as soft loan with long term repayment period and subsidized interest rate. Creation of Sub business unit including ground handling , engineering service and cargo. Improved defined work methods which could lead to substantial cost reductions


Revival Strategies

The cash strapped Air India revival strategies can be comprehensively drawn out on short term , medium term and long term basis. The Area of Strategic Interest should be on following business. The most important aspect to address would be on line of agility , teamwork and response spontaneity.

Air India the international brand 1. Full service high value travel 2. Business Class travel Air India – the national brand 1. Full service high value travel 2. Business Class travel The Cargo Services


Revival Strategies

Other Strategy 1. Ground Handling 2. Engineering services 3. Use of technology - Use of Internet - New Technology for service Like CMM in construction industry 4. Air Craft Leasing and renting 5. Business services


Revival Strategies

Short term strategy would in evaluating and reorganizing in other strategy area and existing operation which are to be completed in 3 to 6 months timeMedium term strategy would be in International , National and Cargo service with an comprehensive analysis of segmentation of market to be executed in 6 to 12 months Long term strategy would be online of global perspective to the aviation business and developing further future strategy to be considered for 12 months and beyond periods.


The main values for revival strategies should be agility , team work and response spontaneity to services.


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indian aviation industry