The document provides an overview of regulatory changes and challenges facing the Indian aviation industry. Some key points:
- FDI limits have been increased for airports, air cargo, and domestic airlines. Greenfield airports have been built.
- Taxes on aviation fuel and air travel have been reduced to lower fares. Airport infrastructure is being upgraded.
- However, aviation fuel prices in India are higher than international benchmarks, increasing operating costs.
- Passenger traffic has declined due to the global economic slowdown, further straining carrier finances as fuel is a major cost.
2. Backdrop of Regulatory Change
Changes in FDI Policy
• 100 % FDI under automatic route is permissible for Greenfield airports
• For existing airports, FDI up to 74 % is permitted through automatic approval and upto 100 %
through special permission
• FDI level in domestic airlines under the automatic route increased from 40% to 49%, but not
by foreign airline companies
• FDI limit in the air cargo segment increased from 49 % to 74 %
Airport Infrastructure Changes in Taxes and Duties
• Mumbai and Delhi airports have been privatized and • 100 % tax exemption for airport projects for a period of
are being upgraded 10 years
• Greenfield airports are operational at Bangalore and
Greenfield airports are operational at Bangalore and • Foreign Travel Tax (FTT) and 15% inland air travel tax
Foreign Travel Tax (FTT) and 15% inland air travel tax
Hyderabad (IATT) charged on Basic airfare abolished by the
• Greenfield airport planned at Navi Mumbai using government wef from January 9,2004 to reduce fares
public‐private partnership (PPP) mode • With effect January 9,2004, the excise duty on ATF
• 35 other city airports proposed to be upgraded reduced from 16 to 8 %
•OOver the next 5 years AAI has planned a massive
th t5 AAI h l d i • Landing charges for aircrafts with less than 80 seats
Landing charges for aircrafts with less than 80 seats
investment of INR 153.5 bn abolished and landing charges for larger aircraft
43% of will be for three metro airports in Kolkata, Chennai reduced by 15% with effect from February 11,2004
and Trivandrum, and the rest will go into upgrading other
non‐metro airports and modernizing the existing
aeronautical facilities
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3. Despite the regulatory changes, aviation industry is running in
losses due to high fuel prices and decline in passenger traffic
• ATF accounts for about 40% of the operating cost of the domestic carriers
Aviation turbine • Effective April 2001, prices of ATF in India are based on the International Import Parity Prices
fuel (ATF) prices • ATF prices for domestic operations in India are higher than international benchmarks
ATF Prices Comparison (INR/Kl)
ATF Prices Comparison (INR/Kl)
2004 2005 2006 2007
Bankok 11,499 16,069 22,383 21,272
Singapore 11,272 15,816 22,111 20,779
Kuala Lumpur 11,044 15,589 21,427 20,874
India 21,200 27,400 37,000 36,100
Decline in • Domestic passenger traffic has declined to 6.4 mn in April 2009 compared to 7.6 mn in April
passenger traffic
ffi 2008 15.4% decline y o y
2008 ‐ 15 4% decline y‐o‐y
• Decline in passenger traffic can be attributed to global meltdown
mn Domestic Passengers
20
7.6 8.1 6.9 5.9
59 5.8
58 5.2
52 6.1
61 6.0
60 6.5
65 6.5
65 6.5
65 6.2
62 6.4
64
10
0
Apr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr
08 08 08 08 08 08 08 08 08 09 09 09 09
Distressed financial performance of the Indian carriers have put the aviation industry in dire need of restructuring
Di t d fi i l f f th I di i h t th i ti i d t i di d f t t i
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10. Company Snapshot : Kingfisher Airlines
Corporate Information Financial Performance
Headquarters Bangalore Revenue Revenue Profit
INR mn INR mn
Founded 9 May 2005 Profit
30,000
30 000 26,875
26 875 0 0
Employees 5023
‐2,000
Parent United Breweries Group 20,000
15,085 ‐4,000
Subsidiaries Kingfisher Red ‐6,000
10,000
Key People
Key People • Dr Vijay Mallya (Chairman & CEO)
Dr. Vijay Mallya (Chairman & CEO) 4,250
4 250 ‐8,000
8 000
• Mr. A. Raghunathan (CFO) 0 ‐10,000
• Mr. N. Srivatsa (Company Secretary) 2006 2007 2008
Domestic Operations (2008) Revenue breakdown*
Fleet Size 41 4,184 13,613 26,856
Destinations 64 0% 0% 3% 0% 3% 0%
Hubs • Primary : Bangalore Others
• Secondary: Mumbai, Delhi
y , Cargo
g
100%
100% 96% 97%
Service class Premium Business Class 96% Passenger
Premium Economy class
Low fare basic class of service
Market Share Passenger: 28 % (as of Jan‐Feb 2009)
g ( ) 2006 2007 2008
* Revenue from Scheduled Services only
* f S h d l dS i l
Cargo: 23% (as of Jan‐Feb 2009) Financial year ending in March
Note: In December 2007, Air Deccan and Kingfisher Airlines decided to merge following which Air Deccan was re‐branded as Kingfisher Red.
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11. Operational Performance
Traffic Statistics 2005‐06 2006‐07 2007‐08
Fleet Size 11 25 41
No. of flights operated per day 34 109 203
No. of passengers carried per day 3362 8933 15851
Average Passenger Load Factor 59.3% 68.2% 68.1%
Cargo carried per day (Tonnes) 1.5 5.3 99
Average Weight Load Factor 59.2% 61.6% 58.7%
Operational Performance 2005‐06 2006‐07 2007‐08
No. of Employees per aircraft 158 127 123
Operating Revenue per Employee ( INR mn)
Operating Revenue per Employee ( INR mn) 2.45
2 45 4.75
4 75 5.35
5 35
Operating Expenses per Employee ( INR mn) 3.79 6.43 6.98
Operating Revenue per Passenger carried (INR.) 3464 4626 4645
Operating Expenses per Passenger carried ( INR) 5369 6261 6058
Operating Revenue per RPKM (INR) 3.65 5 5.23
Operating Expenses per RPKM ( INR) 5.65 6.8 6.82
Definitions:
1. Avg. Passenger Load Factor: Percentage of available seats that are filled with paying passengers
2. Avg. Weight Load Factor :Tonne‐kilometres performed expressed as a percentage of tonne‐kilometres available
3. RPKM (Revenue Passenger Kilometres): Measure of sales volume of passenger traffic
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16. Company Snapshot : Indigo Airlines
Corporate Information Financial Performance
Headquarters Gurgaon Revenues
Founded 2005 Profit
15,000
15 000 0 0
Employees 2074 11,328 ‐500
10,000
Parent Interglobe Enterprises ‐1,000
Subsidiaries N.A. 2,163 ‐1,500
5,000
‐2,000
2 000
Key People • Mr. Aditya Ghosh (President)
0 ‐2,500
• Mr. Riyaz Peermohammed (CFO)
2007 2008
Domestic Operations (2008) Revenue breakdown*
Fleet Size 17 2,151 11,259
1% 6%
Destinations 17
Hubs • Primary – New Delhi
Primary New Delhi Cargo
99% 94%
• Secondary ‐ Bangalore and Mumbai Passenger
Service class Low Cost Airline (LCC)
Market Share
Market Share Passenger: 13.6% (as of Jan Feb 2009)
Passenger: 13 6% (as of Jan‐Feb 2009) 2007 2008
Cargo: 13.8%(as of Jan‐Feb 2009) * Revenue from Scheduled Services only
Financial year ending in March
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17. Operational Performance
Traffic Statistics 2006‐07 2007‐08
Fleet Size 8 17
No. of flights operated per day 20 83
No. of passengers carried per day 2501 10658
Average Passenger Load Factor 70.1% 72.7%
Cargo carried per day (Tonnes) 1 89
Average Weight Load Factor 63% 71.5%
Operational Performance 2006‐07 2007‐08
No. of Employees per aircraft 136 122
Operating Revenue per Employee ( INR mn)
O ti R E l ( INR ) 2 5.5
55
Operating Expenses per Employee ( INR mn) 3.6 6.5
Operating Revenue per Passenger carried (INR.) 2369 2912
Operating Expenses per Passenger carried ( INR) 4276 3458
Operating Revenue per RPKM (INR) 2.4 2.9
Operating Expenses per RPKM ( INR) 4.3 3.5
Definitions:
1. Avg. Passenger Load Factor: Percentage of available seats that are filled with paying passengers
2. Avg. Weight Load Factor :Tonne‐kilometres performed expressed as a percentage of tonne‐kilometres available
3. RPKM (Revenue Passenger Kilometres): Measure of sales volume of passenger traffic
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25. Company Snapshot : Air Deccan (now Kingfisher Red)
Corporate Information Financial Performance
Headquarters Bangalore
INR mn Revenue INR mn
Founded 23 August 2003 Profit /Loss
/
30,000
30 000 5,000
5 000
Employees 3310 21,423
13,518 0 0
20,000 15,454
Parent United Breweries Group
‐5,000
Subsidiaries N.A. 10,000
3,203
3 203 ‐10,000
682
Key People • G. R. Gopinath 0 ‐15,000
• Vijay Mallya 2004 2005 2006 2007 2008
Domestic Operations ( 2008) Revenue breakdown*
Fleet Size 41 314 2,751 11,726 17,103 14,073
1% 0% 1% 1% 1%
Destinations 65
Others
Hubs • Primary : Bangalore
Primary : Bangalore Passenger
99% 100% 99% 99% 99%
• Secondary: Chennai
Service class Low Cost Carrier (LCC)
Market Share
Market Share Passenger: 16% (as of March 2008)
Passenger: 16% (as of March 2008) 2004 2005 2006 2007 2008
* Revenue from Scheduled Services only
* f S h d l dS i l
Financial year ending in March
Note: In December 2007, Air Deccan and Kingfisher Airlines decided to merge following which Air Deccan was re‐branded as Kingfisher Red.
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26. Operational Performance
Traffic Statistics 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08
Fleet Size 4 16 29 39 41
No. of flights operated per day 14 58 133 212 253
No. of passengers carried per day 408 2683 8330 18220 19445
Average Passenger Load Factor 61.9% 70.9% 74.7% 78.8% 73.3%
Cargo carried per day (Tonnes) 0 0 0 0 0
Average Weight Load Factor
g g 61.1% 69.4% 75.6% 76.9% 71%
Operational Performance 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08
No. of Employees per aircraft 72 74 93 78 81
Operating Revenue per Employee ( INR mn)
Operating Revenue per Employee ( INR mn) 2.385
2 385 2.707
2 707 5.03
5 03 7.02
7 02 4.67
4 67
Operating Expenses per Employee ( INR mn) 2.244 2.813 6.24 8.18 8.5
Operating Revenue per Passenger carried (INR.) 4585 3270 4446 3221 2177
Operating Expenses per Passenger carried ( INR) 4316 3399 5506 3753 3962
Operating Revenue per RPKM (INR) 12.18 4.68 5.12 3.8 2.47
Operating Expenses per RPKM ( INR) 11.46 4.86 6.35 4.4 4.49
Definitions:
1. Avg. Passenger Load Factor: Percentage of available seats that are filled with paying passengers
2. Avg. Weight Load Factor :Tonne‐kilometres performed expressed as a percentage of tonne‐kilometres available
3. RPKM (Revenue Passenger Kilometres): Measure of sales volume of passenger traffic
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28. Company Snapshot : Air Sahara / Jet Lite
Corporate Information Financial Performance
Headquarters New Delhi Revenue Revenue Profit
INR mn INR mn
Founded 1991 Profit / Loss
30,000
30 000 2,000
2 000
Employees 2557
20,617 20,153 0 0
Parent Jet Airways 20,000 17,883
15,055
Subsidiaries N.A. 13,305 ‐2,000
9,598
10,000
Key People
Key People •Mr.Subrata Roy (Founder),
•Mr Subrata Roy (Founder) ‐4,000
4 000
•Mr. Naresh Goyal (Owner, Jet Airways)
•Mr. Gary Kingshott (CEO) 0 ‐6,000
2003 2004 2005 2006 2007 2008
Domestic Operations ( 2008) Revenue breakdown*
Fleet Size 25 9,061 12,949 17,603 20,410 19,974 14,631
3% 1% 3% 0% 2% 1% 2% 1% 2% 1% 2% 0%
Destinations 24
Hubs • Primary – New Delhi Others
• Secondary – Hyderabad ,Mumbai, Chennai
Secondary Hyderabad ,Mumbai, Chennai Cargo
g
and Kolkata 96% 97% 97% 97% 97% 98% Passenger
Service class •Economy class
•Business class
Market Share Passenger: 7.4% (as of Jan‐Feb 2009)
2003 2004 2005 2006 2007 2008
Cargo: 3.7% (as of Jan‐Feb 2009) * Revenue from Scheduled Services only
Financial year ending in March
Note: Air Sahara has been acquired by Jet Airways in April 2007 and re‐branded as Jet Lite
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29. Operational Performance
2001‐ 2002‐ 2003‐ 2004‐ 2005‐ 2006‐ 2007‐
Traffic Statistics
02 03 04 05 06 07 08
Fleet Size 10 12 20 22 29 27 25
No. of flights operated per day
No of flights operated per day 37 55 92 114 116 113 111
No. of passengers carried per day 1680 3567 5271 7423 8081 8714 9032
Average Passenger Load Factor 37.5% 57.7% 60.8% 69.9% 69.9% 67.5% 71.1%
Cargo carried per day (Tonnes) 27 48.2 54 61 56 52.5 29.3
Average Weight Load Factor 34.2% 48.4% 58% 67.8% 68.6% 71.4% 73.5%
2001‐ 2002‐ 2003‐ 2004‐ 2005‐ 2006‐ 2007‐
Operational Performance
02 03 04 05 06 07 08
No. of Employees per aircraft 237 237 164 186 156 137 102
Operating Revenue per Employee ( INR mn) 20.62 3.376 4.046 4.38 4.55 5.43 5.89
Operating Expenses per Employee ( INR mn) 23.84 3.267 3.8 4.02 4.69 6.93 7.49
Operating Revenue per Passenger carried (INR) 7995 7372 6913 6600 6990 6336.1 4567
Operating Expenses per Passenger carried (INR) 9242 7133 6491 6052 7192 8085 5808
Operating Revenue per RPKM (INR) 6.96 5.92 5.87 5.83 5.83 5.2 3.8
Operating Expenses per RPKM ( INR) 8.04 5.73 5.51 5.35 6 6.6 4.8
Definitions:
1. Avg. Passenger Load Factor: Percentage of available seats that are filled with paying passengers
2. Avg. Weight Load Factor :Tonne‐kilometres performed expressed as a percentage of tonne‐kilometres available
3. RPKM (Revenue Passenger Kilometres): Measure of sales volume of passenger traffic
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