...Overview The history of civil aviation in India began in December 1912. At the time of independence, the number of air transport companies, which were operating within and beyond the frontiers of the company, carrying both air cargo and passengers, was nine. In early 1948, a joint sector company, Air India International Ltd., was established by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft. Its first flight took off on June 8, 1948 on the Mumbai (Bombay)-London air route. At the time of its nationalization in 1953, it was operating four weekly services between Mumbai-London and two weekly services between Mumbai and Nairobi. The joint venture was headed by J.R.D. Tata, a visionary who had founded the first India airline in 1932 and had himself piloted its inaugural flight. Current Trend in Civil Aviation Industry in India It is a phase of rapid growth in the industry due to huge build-up of capacity in the LCC space, with capacity growing at approximately 45% annually. This has induced a phase of intense price competition with the incumbent full service carriers (Jet, Indian, Air Sahara) dis-counting to 60-70% for certain routes to match the new entrants ticket prices. This, coupled with costs pressures (a key cost element, ATF price, went up approximately 35% in recent months, while staff costs are also rising on the back of shortage of trained personnel), is exerting bottom-line...
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...REASON BEHIND KINGFISHER AIRLINE’S FAILURE: “AN EYE OPENING CASE STUDY REVEALING THREE KEY WORDS FOR AVIATION INDUSTRY SUCCESS: COSTS, COSTS, COSTS” * JAYANT SRIVASTAVA (Asst. Professor, Trinity Business School, Murad Nagar, Ghaziabad) ** ASAD ALI & AKANSHA TIWARI (Students PGDM, Trinity Business School) ABSTRACT: Our research paper try to throw lights on some major reasons which were somehow responsible for the current crisis going inside the kingfisher Airlines which can be realized by the press statement from KFA, on 12 March 2012, highlights the challenges: “The flight loads have reduced because of our limited distribution ability caused by IATA suspension. We are therefore combining some of our flights. Also, some of the flights are being cancelled as a result of employee agitation on account of delayed salaries. This situation has arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are making all possible efforts to remedy this temporary situation.” RESEARCH OBJECTIVE: The key objective of this research study is to investigate the reasons behind the failure of the Kingfisher airline in the year 2012. To investigate the government policies and the various steps taken to fix the current crisis. To investigate the reasons due to which the whole Aviation Industry is suffering from higher operating losses. What went so terribly wrong with Kingfisher when rival Jet Airways has comparatively much higher debt? INTRODUCTION: Global...
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...Kingfisher Airlines Limited Case Kingfisher Airlines Limited is an airline based in Bangalore, India. It is a major Indian airline operating 218 flights a day and has an extensive network to 37 destinations, with plans for regional and long-haul international services. Its main bases are Bangalore International Airport, Bangalore, Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport, Delhi. Kingfisher Airlines, through one of its holding companies United Breweries Group, has acquired 26% stake in the budget airline Air Deccan and has option to buy further of 20% stake from the secondary market. Kingfisher is one of only 6 airlines in the world to have a 5 star rating from Skytrax, along with Asiana Airlines, Malaysia Airlines, Qatar Airways, Singapore Airlines and Cathay Pacific Airways. 3. Situational Analysis i. Steeple analysis Sociological Today’s air traveler is like any other consumer looking for value for money. Disposable incomes are on the rise and the consumer is willing to spend more for quality and brands. Air travel is no more about transporting passengers. It is more about the flying experience. People like travelling in planes. ‘Kingfisher airlines’ has a very good social image. Being a five star airlines, customers want to travel with Kingfisher. Also, the brand charges a premium price that is why only upper Socio Economic Class people prefer Kingfisher airlines. The lifestyle of the people is improving....
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...Aviation Industry Prepared by Madhulika Appasani The Indian Aviation Industry has been going through a turbulent phase over the past several years facing multiple headwinds – high oil prices and limited pricing power contributed by industry wide over capacity and periods of subdued demand growth. At the industry level, long term viability also requires return of pricing power through better alignment of capacity to the underlying demand growth. Aviation Industry Indian hospitality sector contributes 8-9 percent of the country’s GDP. The sector encompasses travel and tourism and major segments that fall under this category include accommodation and catering (hotels, restaurants), transportation (cruise, railway, rentals, airline companies), travel agencies and tour operators. The tourism and hospitality sector together contributed US $32.7bn in 2011, and registered a CAGR of 13 percent. Currently, India has 114,000 hotel rooms, which stands 150,000 rooms short in meeting the current requirement. Thus, the growth opportunity for this sector is immense, but is tangled with challenges across parallel sectors and the overall economy. According to estimates provided by World Travel & Tourism Council (WTTC), contribution of travel and tourism to nation’s GDP will grow consistently in the next decade though this growth opportunity will be closely linked to the growth of India’s hotel and restaurant business. Structure of Indian Aviation Industry: ECO 561 – IMT Hyderabad ...
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...Imperial Airways of the UK). This marked a new beginning in India. Three years later, Tata Sons started a regular airmail service between Karachi and Madras. At that time, there were a few transport companies operating within and also beyond the frontiers of the country, carrying both air cargo and passengers. Some of these were Tata Airlines, Indian National Airways, Air Service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. The Tata Airlines was converted into a public limited company in the year 1946 and renamed Air India Limited. In 1948 a joint sector company-Air India International was established by the Government of India and Air India headed by J.R.D. Tata. In 1953, the Parliament passed the Air Corporation Act. Air India International and Indian Airlines Corporation came into formal existence and Air India International was nationalized. The Indian Aviation sector was liberalized in commence in 1990 with private sector players being allowed to operate as air taxi operators in India. A number of private players commenced domestic operations like Damania, East-West, Modiluft, Air Sahara and NEPC, entered the industry. However, a decade later none of them have survived. Today the Indian Aviation sector is dotted with new players like Air Deccan, Indian Airlines, SpiceJet, GoAir, Air Indigo, KingFisher, Jagson Airlines and Jet Air. Key characteristics of the industry Limited Air Infrastructure The airline industry...
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...experts say Mallya has a tough job on his hands. "I don't know if this would work. Mixing everything in one company doesn't work. It will have a full-service airline, a no-frills airline, plus international operations under one umbrella,'' said an airline expert and investor. History is not on Mallya's side. Full-service carriers and low-cost carriers (LCC) belong to separate worlds, and their DNAs seldom match. Whenever they have tried to merge or work together under one umbrella, they have nearly failed. It happened when British Airways tied up with budget carrier Go, and when Delta Air acquired budget carrier Song. This, despite the fact that these were subsidiaries, whose operations were independently managed. ''Analysts and investors are paranoid about the features of the LCC model. They don't like even the smallest deviation,'' said a former airline executive who requested anonymity, as he was employed by one of the two airlines. In fact, when Deccan planned an inflight magazine (to communicate with its customers and earn through advertising), investors were paranoid. ''They said why do you want to do it - it has a management aspect,'' said a former Deccan executive. ''The key question is whether you can successfully run a full-service airline, an LCC and international operations under one umbrella. It has been seen for many years that it doesn't work,''...
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...Deccan-Kingfisher Combine To Look At Share Sale December 20, 2007 Deccan Aviation will merge the scheduled airline operations of unlisted Kingfisher Airlines, to create one of the biggest air carriers in the country and pave the way for the latter to fly overseas. The combined operations will need about USD$250 million - USD$300 million over the next two quarters and it may look at private placement of shares, UB group Chief Financial Officer Ravi Nedungadi said. India's top spirits maker UB group, which runs Kingfisher Airlines, bought a 26 percent stake in Deccan in May and subsequently raised it to 46 percent. Deccan will be called Kingfisher Airlines after the merger and the charter operations of Deccan will be spun off into a separate firm to be equally owned by Deccan's founder G.R Gopinath and the UB group, Deccan said. The combined entity will operate the two brands -- Deccan, a low-cost airline, and Kingfisher, a full service carrier, Nedungadi said. "The two board's have taken a decision. The legal process will take anywhere between 4-6 months. From an organizational point of view the the integration is already on the fast track," he said. The merger was recommended by consultancy firm Accenture and the merger methodology will be suggested by consultants KPMG and Dalal and Shah. "The merger will be structured in such a way to allow us to carry forward the accumulated losses," Nedungadi said. The two airlines have a combined loss of about INR20 billion...
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...Walk-in Flights. With Its distinctive orange and white logo emblazoned on the tails of all its aircraft is the most comprehensively renowned Indian brand symbol that has with passage of time become synonymous with service, efficiency and reliability. With its network range from Kuwait in the west to Singapore in the East and covers 75 destinations - 59 within India and 16 abroad. Reason for Air India & Indian airlines to go for this deal: The common reason that both airlines share is fierce competition from domestic private & global airline companies and contraction of market share. The new entity would be in a better position to bargain while buying fuel, spares and other materials. In addition to this, both airlines desired international footprint which could significantly enhance their customer base and allow easy entry into one of the three global airlines alliances, while making it the largest airline in India and comparable to other airlines in Asia. Work cited: * "director's report" NACIL 10. 09 AUG 2012...
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...To analyze the Indian Commercial Aerospace market for Cobham India Pvt. Ltd By Satyendra Shukla 11P224 Management Development Institute Gurgaon 122 001 May, 2012 To analyze the Indian Commercial Aerospace market for Cobham India Pvt. Ltd By Satyendra Shukla Under the guidance of Mr. Lee Griffiths Director India Cobham India Pvt. Ltd. Management Development Institute Gurgaon 122 001 May, 2012 Executive Summary The project aims at to analyze the Indian Aerospace Industry and try to find out through secondary research the growth prospective of the same. Cobham has many capabilities that could be exploited to supply equipments and spares for the MRO (maintenance, repair and overhaul) industry in India. So we used the various reports and predictions available at the websites of Airport Authority of India, Directorate General of Civil Aviation, Ministry of Civil Aviation and websites of various airlines and MRO companies to understand the market dynamics. We came across various difficulties faced by them and also saw various opportunities lurking round the corner. We tried to estimate the fleet size of various airlines and the expected growth in next five years. Also the focus was given on the Non-Scheduled operators as their numbers is rising at a lightening pace. We also had the projections made by Ministry of civil aviation about the growth of passenger volumes in the future, and all the future growths...
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...industry-wide shakedown, which will have far-reaching effects on the industry's trend towards expanding domestic and international services. In the past, the airline industry was at least partly government owned. The airline industry can be separated into four categories: * International - 130+ seat planes that have the ability to take passengers just about anywhere in the world. Companies in this category typically have annual revenue of $1 billion or more. * National - Usually these airlines seat 100-150 people and have revenues between $100 million and $1 billion. * Regional - Companies with revenues less than $100 million that focus on short-haul flights. * Cargo - These are airlines generally transport goods. Porter's 5 Forces Analysis Threat of New Entrants * We might think that the airline industry is pretty tough to break into, but it is not be. We’ll need to look at whether there are substantial costs to access bank loans and credit. If borrowing is cheap, then the likelihood of more airliners entering the industry is higher. The more new airlines that enter the market, the more saturated it becomes for everyone. * Expected retaliation- The market is concentrated in the hands of a few players thus any new player would to face stiff competition and retaliation from the existing players such as Jet Airways and Indian. * Inadequate airport infrastructure often makes it difficult for the new entrants to get right flying slot time. * Shortage...
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...Q.1 How did the concept of LCC emerge in India? Which factors encouraged the growth of LCCs? * Tata Group; India’s prominent business house; launched Tata Airlines in 1930s. Over the next two decades, eight more private companies entered the field, entry was slightly restricted. * Flying was a dream for the middle class populace of India. Emergence Of LCC was mostly to target this middle class segment. * Air Corporations Act which was formulated in 1953 transformed the existing airlines into two nationalized entities: Indian Airlines Corporation (IA) for domestic services and Air India Corporation (AI) for international services. The Act restricted private players from operating across India * Progressively, Private sector was allowed to re-enter the market, beginning in the early 1990s during the first phase of economic liberalization in India. * By 1994, the government had approved six private carriers including Jet Airways, Air Sahara, Damania Airways, NEPC Airlines, Modiluft and East West Airlines to commence domestic operations. Only the two private carriers Jet Airways and Sahara Airlines had survived by the year 2003; but this duopoly was challenged by Air Deccan in the year 2003 by the introduction of the first ever LCC in India which was a turning point in the Indian Aviation Industry wherein the traditional economy and business fares were replaced by special discounts, promotional fares, and corporate discounts. * India, being one of the fastest...
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...aviation industry. Thus SpiceJet, a rebirth of ModiLuft, entered market with fares as low as Rs.99 with its first flight commencing between Delhi-Ahmedabad- Mumbai. It targeted the cost conscious customers and had high utilization factor by being more time in air. It received competition from its peers, IndiGo, JetKonnect, Kingfisher Red etc. Employee shortage, poor infrastructure, high cost of ATF were some of the factors affecting the operations of SpiceJet. Ans 2: In 1930’s Tata group launched its first airlines as Tata Airlines. In 1953, Air corporations Act was reformed and nationalization of airlines took place. The existing airlines, were merged and called Indian Airlines Corporation for domestic services and Air India for international services. After the LPG policy by 1994, there were 6 private players in the aviation sector but only 2 survived by the end of 2003 i.e. Jet airways and Sahara airlines. The entry of first LCC of Air Deccan, proved to be a turning point in the aviation sector. Special discounts, check fares, promotional fares, web fares and corporate discount plans etc formed the part of LCC. India being the fastest growing economy, saw a CAGR of 19.14 % in air traffic and 9.91% in cargo movement with funds flowing in for infrastructure and aviation sector. With increase in FDI, inflow of tourists, higher corporate travel, higher household incomes, sustained business growth and supporting government polices all lead to...
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...REASON BEHIND KINGFISHER AIRLINE’S FAILURE: “AN EYE OPENING CASE STUDY REVEALING THREE KEY WORDS FOR AVIATION INDUSTRY SUCCESS: COSTS, COSTS, COSTS” * JAYANT SRIVASTAVA (Asst. Professor, Trinity Business School, Murad Nagar, Ghaziabad) ** ASAD ALI & AKANSHA TIWARI (Students PGDM, Trinity Business School) ABSTRACT: Our research paper try to throw lights on some major reasons which were somehow responsible for the current crisis going inside the kingfisher Airlines which can be realized by the press statement from KFA, on 12 March 2012, highlights the challenges: “The flight loads have reduced because of our limited distribution ability caused by IATA suspension. We are therefore combining some of our flights. Also, some of the flights are being cancelled as a result of employee agitation on account of delayed salaries. This situation has arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are making all possible efforts to remedy this temporary situation.” RESEARCH OBJECTIVE: The key objective of this research study is to investigate the reasons behind the failure of the Kingfisher airline in the year 2012. To investigate the government policies and the various steps taken to fix the current crisis. To investigate the reasons due to which the whole Aviation Industry is suffering from higher operating losses. What went so terribly wrong with Kingfisher when rival Jet Airways has comparatively much higher debt? INTRODUCTION: ...
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...INFRATSRUCTURE The Eleventh Five Year Plan emphasized the need for removing infrastructure bottlenecks for sustained growth. It, therefore, proposed an investment of US $500 billion in infrastructure sectors through a mix of public and private sectors to reduce deficits in identified infrastructure sectors. As a percentage of the gross domestic product (GDP), investment in infrastructure was expected to increase to around 9 per cent. For the first time the contribution of the private sector in total investment in infrastructure was targeted to exceed 30 per cent. Total investment in infrastructure during the Eleventh Plan is estimated to increase to more than 8 per cent of GDP in the terminal year of the Plan --higher by 2.47 percentage point s a s c ompa red t o the Tenth Pl an. The private sector is expected t o be contributing nearly 36 per cent of this investment. RAILWAYS Some of the major goals set for Vision 2020 in the document include (a) laying of 25,000 km of new lines; (b) quadrupling of the 6,000 km network with segregation of passenger and freight lines; (c) electrification of 14,000 km; (d) completion of gaugeconversion; (e) upgradation of speed to 160-200 kmph for passenger trains; and (f) construction of 2,000 km of high-speed rail lines. • Freight performance: Freight loading on Indian Railways during April-November 2011 was 618.0 MT as compared to 593.4 MT in April-November 2010, an increase of 4.14 per cent. • Upgradation...
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