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The aviation sector has become the most important segment in the
economic development of a nation. It plays a vital role in moving people or
products from one place to another, be it domestic or international,
especially when the distances involved are far. Stiff competition and
favorable initiatives of the Government of India added fuel to enlarge both
flights and fleets. Air Deccan was the premier airline, which offered low
tariff to the domestic as well as international destinations and created a
new landmark in aviation sector in India. Now, ordinary citizens were able
to easily access the aviation service from their respective air terminals. In
a highly competitive environment the provision of high quality services to
passengers is the core competitive advantage for an airline's profitability
and sustained growth. In the past decade, as the air transportation market
has become even more challenging, many airlines have turned to focus on
airline service quality to increase service satisfaction. Service quality
conditions influences a firm’s competitive advantage by retaining customer
patronage, which in turn results in increase in market share. Delivering
high-quality services to passengers is essential for airline survival, so
airlines need to understand what passengers expect from them.
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History of Indian Civil Aviation:
Over 100 years old, the Indian aviation sector has earned the
distinction of being the ninth largest in the world. Today’s giant leaps
though have come from a small step taken by Henry Piquet on February
18,1911, when he flew his Humber bi-plane six miles from Allahabad to
Naini junction carrying only mail and introduced the concept of air travel in
India. For the next 21 years, the country witnessed such flights that flew
off and on without any timetable.
They began making way for schedule air travel- that operate as per
a timetable-when 25 year old Jehangir Ratanji Dadabhoy Tata got the first
pilot license issued in India on February 10,1929. In July 1932, business
tycoon J.R.D., who would go on to be hailed as the Father of Indian Civil
Aviation, established the aviation department in Tata Sons. Soon to be
called Tata Airlines, it planned the first schedule flight in India- a mail
service on the Karachi-Ahmadabad-Bombay-Bellary-Madras, route to be
the India connection to Imperial Airways’ London-Karachi flight.
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fly domestic airlines. Other noted women pioneers in the industry include
Chanda Sawant Budhabhatti – Founder/President of Indian Women Pilots’
Association, 1967 and Durba Banerjee – the first woman pilot to fly with
Indian Airlines in 1956. While the construction of civil airports in India had
begun as early as 1924, the country’s first aircraft rolled out in July 1941 –
a Harlow trainer which was followed by a ten-seater glider designed by Dr.
V.M.Ghatage at Hindustan Aeronautics Limited (HAL). Meanwhile, Tata
Airlines continued to add both aircraft and services, and in 1946 was
renamed as Air India Ltd., two years later establishing its international
division which began a weekly Bombay-Cairo-Geneva-London flight using
the Constellation VT-CQP “Malabar princess”.
Over the next 10 years, several Greenfield (all new) airports are
expected to come up, complementing existing airports and relieving the
burden on airports which see heavy traffic. Renovating old airports is
another part of this refurbishment of the Indian airport sector. With
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sophisticated terminals, state-of-the-art check-in counters, better baggage
handling and increase in passenger conveniences, Indian airports are
about to receive more than just a fresh coat of paint. The focus is on
building sustainable airports that can withstand the test of time, without
becoming redundant in a few years. Karnataka is one such state where
four new airports are slated to come up in the next few years, with two – in
Shimoga and Gulbarga- opening to passengers at the end of 2012 in a bid
to push tourism in these areas.
The new Mopa airport in north Goa and a brand new Greenfield
airport in Maharashtra’s Sindhudurg will ease the heavy foreign passenger
traffic descending on the shores of India’s sunshine state every holiday
season. North east states, that were previously sparsely-connected should
also see better connectivity in the coming few years. Two airports, one
each at Kohima in Nagaland and Itanagar at Arunachal Pradesh will be
developed. Durgapur, the steel city in northern West Bengal is also in the
process of getting a Greenfield airport that should relieve the busy Kolkata
airport. Airports such as Kolkata are getting a second wing with large scale
renovation taking place. Delhi, which was a stark example of previously ill-
equipped airports, is now one of the best in the world, with the brilliant new
terminal 3 becoming the face of air travel in India. Many of the world’s best
airports lack the glitz and fitments that the new Indira Gandhi International
Airport sports. The Hyderabad airport was also developed by the GMR
Group that constructed the Delhi airport and is one of the best in the
country, if not the world. Similarly, Mumbai, Bengaluru and Kochi have
also gone the private route as Indian airports are finally shaking off the
third-world tag.
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rival the best in the world. The future of Indian aviation looks promising,
even as globally the industry is going through a watershed moment of
austerity. From the days of sporadic airmail service, the sector has grown
so much that there’s a dedicated India aviation event- organised by FICCI
in Hyderabad. It is held once in every two years. That is the biggest
international exhibition of its kind in India. It promotes the causes and
interests of civil aviation while showcasing all aspects of aviation from
aircraft to in-flight products. With airports, connectivity and new avenues
sprouting up across the country, responsible, healthy and well managed
airlines will be the key to the success of Indian aviation. India has great
potential to grow given its population, its growing economy and need for
connectivity across the country. It has been hundred years of Indian
aviation and with the future looking good in terms of airports and
connectivity, the story of flying in India is most certainly pointing towards
realizing the projections of being one of the top three players in the world
by the year 2020.
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long distances. Therefore, sustaining a viable aviation industry is vital if
the economy is to reap the full benefits of the future growth in foreign trade
and investment. Industries that rely most heavily on air transport for their
international freight shipments include high growth sectors such as
pharmaceuticals, office equipment and electronic equipment sectors
besides those that have high value to weight products. Thus, it has been
observed that high growth sectors in emerging markets are heavily
dependent on the services of the aviation industry. Increased air
connectivity enables manufacturing enterprises to exploit the speed and
reliability of air transport to ship components across firms that are based in
different and distant locations thereby minimizing the inventory cost.
Countries with higher connectivity in general are stated to be more
successful at attracting Foreign Direct Investment. Role of air transport is
crucial for the development of Tourism industry. Tourism makes a large
and growing contribution to the Indian economy. The Tourism Satellite
Accounting developed for India for the year 2002-03 confirms tourism as
one of the largest sectors in the economy. Tourism value added accounts
for 2.78 percent of the GDP in terms the direct contribution; when indirect
effects are also accounted for, the share of tourism in the GDP is 5.83
percent.
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India contribute to over 50 per cent of the gross income of the Civil
Aviation sector in India. While income of the scheduled carriers operating
in India does include income from their global operations, income of the
international airlines having operations in India is not part of the income
shown under scheduled airlines, which according to industry sources
would be in the region of about Rs.20,000 crores for 2010-11. If this is
taken into account then the size of airline industry alone would exceed Rs.
60,000 crores. It is evident that contribution of Airline industry to the total
sector revenue is over 50 per cent. Since, the airlines are the largest
contributor to the sector in terms of revenue; their viability is of paramount
importance for the growth of the sector.
Table: 4.1
Estimated Gross Revenue Earned by Sub-Sectors of
Indian Civil Aviation Sector
Sub-Sectors Gross Income
(Rs. Crores)
Airlines
Scheduled 43,352
Non-Scheduled 1,528
Total 44,880
Airports
AAI 5,734
Private 3,805
Total 9,539
Maintenance Repair and Overhaul (MRO) 4,000
Total 79,744
Source: Respective Annual reports, Industry Sources; Analysis: MoCA
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Indian Aviation Market:
In the last two decades, the fastest growth in overall air traffic in
India was witnessed during 2004-05 to 2010-11 at the rate of 16.5 per cent
with domestic traffic clocking a CAGR of 18.5 per cent and International
traffic at 14 per cent. This growth is much higher than the growth
witnessed during the period 1995-96 to 2003-04. Also, it is evident that the
domestic traffic grew more than three times and the international traffic to
and from India more than doubled in the last 7 years. Performance of
domestic air traffic evaluated for a longer time frame of twenty years (from
1990-91 to 2010-11) suggests that it grew at an annual average rate of
10.4 per cent. During the same period, international passenger traffic grew
at 9.4 per cent and total passenger traffic at 9.9 per cent (Table 4.2).
Table: 4.2
Passenger Traffic Carried by Scheduled Carriers
Year Passenger Carried (in millions)
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Underperformance of international passenger traffic as compared to
domestic traffic over the last twenty years stands established in earlier part
of analysis of this section. Contrary to the popular belief, share of Indian
Carriers in International market has actually increased since the
liberalization of market after years of stagnation in a protected
environment. Trend observed with respect to International Passengers
carried by scheduled carriers to and from India is given in Table 4.3.
Scheduled Carriers of India have made some gains in total international
passenger traffic from/ to India during the last 20 years. For instance,
International traffic handled by Indian Carriers increased from 31.7 per
cent in 1990-91 to 34.6 per cent in 2009-10.
Table: 4.3
Market Share of International Passengers
Scheduled Carriers Foreign Carriers
India
1990-91 31.7 68.3
1994-95 29.3 70.7
2004-05 28.9 71.1
2009-10 34.6 65.4
Source: ICAO.
However, given the vibrant domestic air traffic market and the Indian
economy being one of the most attractive investment destinations of the
world, Indian Carriers could not make substantial inroads into the
international market for air traffic. The low level of utilization of
international traffic rights by Indian Carriers, restrictions on entry of Indian
Carriers to operate on International routes and certain inherent cost
disadvantages are often cited as reasons for slow growth in the market
share of International Passenger traffic market for Indian Carriers. Another
aspect of International traffic to and from India pertains to trend in foreign
tourist arrivals in India. Table 4.4 traces the trends in Foreign Tourist
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Arrivals (FTAs) in India and some other countries since 1995. It is
pertinent to note that FTAs in India is almost stagnant during the latter half
the previous decade signifying the fact that inbound tourism potential that
exists for India in its cultural diversity and a vast array of attractions have
not been tapped at all during the last few years. The stagnant inbound
tourism is also attributed to protectionist market access policy regime.
Table: 4.4
Foreign Tourist Arrivals in India
Years China Singapore Indonesia India Brazil Vietnam
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FTAs in countries like Indonesia, Singapore and China are much
higher than FTAs in India. Particularly it is to be noted that FTAs in India is
about one-tenth of that in China. In order that India’s FTAs is increased, it
is essential that the concerned Ministries and Departments like Ministry of
Civil Aviation, Ministry of Tourism, Ministry of Culture and State
governments work in tandem. Therefore, enhancement of international air
traffic to and from India could come from both the sides. A substantial
reform in the market access arena could perhaps change the situation. For
instance entry of India based low cost carriers between India and Middle
East and between India and South East Asian countries could boost
international traffic as services in this region have become more
convenient and less expensive at a time when disposable incomes of
people in India are on the rise.
Table: 4.5
Growth of Outbound and Inbound Passengers
(In Millions)
Source: DGCA
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Key Drivers of Growth of Indian Aviation:
Growth rate of the economy has been steadily rising. For instance,
in the period 1990-91 to 2003-04, the CAGR of India’s GDP works out to
5.7 per cent which then rose to 8.6 per cent during 2004-05 to 2010-11.
The growing economic activity resulted in greater business travel by
professionals and greater leisure travel by individuals. These income
groups drive the consumption pattern in India and are primarily
concentrated in urban areas. NCAER analysis reveals that the middle
income group population in 2010 stood at 160 million individuals i.e. 13.3
per cent of the total population, which is expected to rise to 547 million in
2025 (i.e. 37.2 per cent of the total population).
Low Cost Carrier (LCC) model which made air travel affordable for
common man got established firmly in the domestic market since 2004.
This stimulated the pent up demand for air travel. LCCs along with the
LCC brand of Full Service Carriers (FSCs) constituted 63.3 per cent of the
market share in 2009. The domestic traffic is rapidly shifting towards the
LCC model. Market sources suggest that this has crossed 67 per cent
during 2011-12. Also, the LCCs are reported to have displayed strong
operational performance immediately after the recovery witnessed in
2010. This leads us to believe that Low Cost Operations in a price
sensitive market like India appear to be a more sustainable business
model.
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Opening up of the airport infrastructure to private sector participation
fuelled the growth of the air traffic in India. Total investment made by
private airport operators in the last five years was to the tune of Rs 30,000
crores spread across Greenfield development of Hyderabad and
Bengaluru international airports and modernization of Delhi and Mumbai
international airports. Airports Authority of India (AAI) continued its
unparalleled role in creating air connectivity across the nation, incurring an
expenditure of around Rs 12,500 crores during the 11th Plan period.
Rapidly expanding air transport network aided by massive investments in
the airport infrastructure could be cited as one of the key reasons for the
surge in air passenger traffic in India.
In line with the trend observed in growth of India’s GDP, the tourism
sector has displayed stellar performance during the last decade. During
the period from 2001 to 2010, the average annual growth rate of foreign
tourist arrivals in to India and Indian national departures from India grew
by 9.2 per cent and 11.5 per cent respectively. Domestic tourism was not
to be left behind. Domestic Tourist Visits within India stood at 740.2 million
for the year 2010. In fact the average annual growth rate of Domestic
Tourist visits within India for the decade ending 2010 is estimated to be
13.5 per cent. The number of foreign tourist arrivals in India stood at 5.6
million in the year 2010 as against 3.46 million in 2004 and 2.54 million in
2001. Similarly, the number of Indian National departures from India stood
at 12.1 million in 2010 as against 6.21 million in 2004 and 4.56 million in
2001. In areas with difficult terrain, air transport offers the fastest mode of
connectivity to remote and inaccessible regions. Given the thrust of the
Government of India to enhance connectivity in remote and inaccessible
regions of the country and concerted efforts of some State governments in
this respect, there is a strong likelihood of demand emanating from these
areas in future.
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The air traffic density can be measured by linking urban per capita
income with air passengers. Taking 1000 passengers per million urban
capita, a recent study has arrived at a comparative picture. Air traffic
density in India using this measure is very low at 72 as compared to China
(282), which is 4 times higher; Brazil (231), which is 3 times higher;
Malaysia (1225) is 17 times higher, U.S.A. (2896) is 40 times higher and
Sri Lanka (530), which is 7 times higher. This indicates the untapped
market potential given the projected burgeoning young population and
rising disposable income levels in future.
Global air traffic is seen shifting to Asia Pacific region during the last
few years. This is on account of the slowdown in Europe and North
America. Within the Asia Pacific region China and India are the two fastest
growing economies and they are becoming the epicenter of supply and
distribution. Global air traffic Forecasts for 2030 in this context also point
to that direction. Traffic share of Asia- Pacific in the global traffic are likely
to move up and on the contrary traffic share of North America and Europe
are set to decline correspondingly.
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expected that such reforms in market access arrangements as and when it
happens will potentially enhance traffic to and from India. Further,
deregulation of the international air traffic markets would enable the LCCs
to capitalize the opportunities of newer markets first and enhance growth
of international traffic.
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handlers, MRO service providers, aircraft manufacturers and training
academies in the aviation sector are all dependent on forecast of air traffic,
which is the core business around which every other activity revolves.
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11. The decade 2000-01 to 2010-11 witnessed a growth of 2.7 times in
international segment. Forecast for 2031-32 suggests that domestic air
passengers to be carried in India will be 448 million. For the same year
international passengers will be 237 million (excluding transshipment
passengers). GDP elasticity of 1.5 in case of domestic passengers and
global income elasticity of 3.1 in case of international passengers is
applied to derive the numbers for domestic and international segments of
air traffic. Domestic passenger traffic is relatively less sensitive to
domestic GDP as compared to international passenger traffic to global
GDP. By the year 2020-21, the domestic Non-Scheduled Passenger
segment is expected to witness 3.2 million passengers with a CAGR of 7.2
per cent from the year 2010-11. Today business jets are no longer seen
as a luxury but as a tool for enhancing productivity. Tourism is another key
growth driver for general aviation in India. The helicopter market in India is
equally promising, with growing requirements in tourism, mining, corporate
travel, air ambulance, homeland security etc. In the next 20 year period
i.e. by 2031-32 the domestic Non-Scheduled passenger segment is
expected to witness 4 million passengers at a CAGR of 6.6 per cent from
the year 2010-11.
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Joint Venture (JV) airports under the PPP framework and these are:
Mumbai, Delhi, Hyderabad, Benguluru, Nagpur and Cochin airports.
Further, there are 8 airports, which are either completely privately owned
or owned by State Governments and these are in Jamshedpur, Latur,
Lengpui, Mundra, Nanded, Baramati, Puttaparthy and Vidyanagar.
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Chennai, Hyderabad and Bengaluru in that order. Cumulatively, all these 6
metro airports have 78.6 per cent of the total passenger handling capacity
in India, the rest being with non-metro airports. The total capacity of all
these 6 metro airports is 160 million passengers. The passenger handling
capacity at all the 15 major airports taken together is 180 million
passengers which is approximately 89 per cent of the total capacity to
handle passengers at all Indian airports. Total capacity to handle
passengers at all Indian airports stood at 210 million passengers in 2010-
11.
The terminal capacity utilization for all Metro airports stood at 62.5
per cent and for all Indian airports at 70.4 per cent reflecting that there is
still potential for passenger traffic growth at the non-metro airports for
effective capacity utilization. Table 4.6 gives a list of all major airport
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terminal capacity, passenger traffic handled and capacity utilization for the
year 2010-11.
Table: 4.6
Annual Terminal Capacity and Passengers
S. Major Airports Annual Passenger Capacity
No. Capacity Traffic Handled Utilization
(Million) (Million) (per cent)
1 Mumbai 29.07 29 100 per cent
2 Delhi 60 29.94 50 per cent
3 Chennai 23 12.05 52 per cent
4 Bangalore 11.5 11.59 101 per cent
5 Kolkata 24.1 9.63 40 per cent
6 Hyderabad 12 7.60 63 per cent
7 Cochin 5 4.34 87 per cent
8 Ahmadabad 4.02 4.04 101 per cent
9 Goa 3.23 3.08 95 per cent
10 Trivandrum 1.79 2.53 141 per cent
11 Guwahati 1.15 1.93 168 per cent
12 Jaipur 1.16 1.66 143 per cent
13 Calicut 1.85 2.06 111 per cent
14 Lucknow 1.21 1.58 130 per cent
15 Pune 1.12 2.81 251 per cent
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airports are expected to improve connectivity with underserved and
unserved regions of India and air in propelling development in Tier 2 and
tier 3 cities. In order to enhance regional air connectivity in the Northeast,
AAI has almost completed the construction of a Greenfield airport at
Pakyong (Sikkim) at an estimated cost of Rs. 309 crores while two other
airports Cheithu (Nagaland) and Itanagar (Arunachal Pradesh) are at
various stages of development. The other Greenfield airports are given in
Table 4.7. The Greenfield airports are mostly being set up via PPP route
wherein a Joint Venture is established between private promoters and
State Govt. promoted company or State govt. or AAI.
Table: 4.7
List of Approved Greenfield Airports
Airport Airport
Navi Mumbai, Sindhudurg, Shirdi Mopa
(Maharashtra) (Goa)
Kushinagar Dabra
(Uttar Pradesh) (Madhya Pradesh)
Kannur Paladi Ram Singhpur, Saras
(Kerala) (Rajasthan)
Bijapaur,Simoga, Hassan, Gulbarga Karaikal
(Karnataka) (Puducherry)
Durgapur Aerotropolis Ludhiana Aerotropolis
(West Bengal) (Punjab)
Source: MoCA
Airport Infrastructure:
Until recently, development, maintenance and ownership of airport
facilities in the country was vested with the Airports Authority of India. With
the opening up of the airport sector for private participation, six airports are
under the PPP model and these are Hyderabad, Bangalore Delhi,
Mumbai, Cochin and Nagpur. Currently, 60 per cent of air traffic is handled
by airports under PPP mode and the rest by AAI airports. Therefore any
discussion on investment requirements for airport infrastructure should
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take in to account the position in respect of both AAI and JV airports from
the point of view of ownership. Another important component of the airport
relates to air side infrastructure which includes runways, taxiways and
apron. In all the airports of the country, AAI continues to provide Air
Navigation Services which includes Communication, Navigation, and
surveillance and air traffic management services. Signs of capacity
shortages have already reemerged in four out of five metro airports in the
country. It is pertinent to note that by the financial year ending 2012
beginning from 2007, Private Airport Operators would have invested about
US $ 7 billion including third party investment towards infrastructure for
providing ancillary aviation services. Budgetary support from Government
for investment in development of airports in remote areas and regions
which need special consideration from socio economic and connectivity
point of view for AAI will be part of the requirements for investment.
Regional airport development to cater to the emerging air traffic in Tier II
and Tier III Towns may initially require budgetary support during the initial
period of its operations and until such time the operations become viable.
Even at present, there are only 12-13 airports of AAI that are making profit
with current level of operations. Thus, growth in the passenger and cargo
traffic requires significant investments in terms of construction of new
airports, expansion and modernization of existing airports, improvement in
connecting infrastructure (road, metro, sea link, etc.) and better airspace
management. Estimates received from AAI and the industry indicate that
the Indian airports would require an investment of about Rs 67,500 crores
during the 12th Plan of which around Rs 50,000 crores is likely to be
contributed by the private sector.
Table: 4.8
Aircraft Ownership Pattern for Full Service Carriers In
India During 2010
Airline Leased Owned Total
Air India Limited 29 94 123
Jet Airways 58 33 91
Jet Lite 23 0 23
Kingfisher Airlines 63 3 66
Total 150 130 280
Source: World Air Transport Statistics- 2010, IATA
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Table: 4.9
Pattern Of Aircraft Ownership By LCC During 2010-11
Airlines Leased Owned Total
Indigo 33 5 38
Go Air 10 0 10
Spice Jet 27 0 27
Jet Lite 23 0 23
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capital, improvement in the quality of the factors of production, faster
growth of output and employment, increased productive efficiency,
consumer benefits and access to global markets. Presently, strategic
investment by airlines registered overseas is not permitted to invest in
Indian companies in the airline business. Relaxation of Ownership and
Control rules governing airline sector is expected to result in significant
benefits in terms of financing costs especially at a time when the industry
has launched itself in the path of higher trajectory of growth. More
importantly, costs of financing can become cheaper for the Airlines if there
is a freedom to access financial resources wherever it is cheaper rather
than having to source it from home market which may be higher, thus
adding to their financial woes.
It was reported by CAPA in July 2010 that the three large airline
groups in India have a combined debt of approximately USD 13.5 Billion
with an annual interest burden of over USD 1Billion. For the financial year
2011-12, it is estimated that this would touch $20 Billion for the entire
airline industry. And they will require capital raising of a further USD 10-12
billion over the next 2-3 years to finance scheduled aircraft deliveries.
Because of the low equity base, raising additional capital by these
enterprises will be a challenging task. External Commercial Borrowings
(ECB) could become an important source of funds for the industries in
India particularly to Airline industry which are adversely affected by high
cost of loans in India. Relaxation of restrictions on ECB to Indian industries
should provide the much needed relief to them. This measure would be of
very high relevance at this juncture when cost of debt is prohibitively high
in India. Terms and conditions for accessing ECB should be reasonable
without imposing stringent norms during the difficult times such as the
current period.
Aircraft Utilization:
One of the key factors in the operating environment for airline
industry pertains to aircraft utilization. In the context of a growing market
such as India, this analysis could lead us to certain conclusions about the
efficiency of carriers in capacity planning and rational deployment to
maximize revenue which is crucial. As discussed earlier there is no scope
for flexibility in capacity adjustment in the short run in the airline industry.
Higher aircraft utilization helps in reducing overall operating cost and in
rationalizing capacity induction. Among Indian Carriers, low cost airlines
such as Spice Jet and Indigo are better placed than Full service Carriers
i.e. Jet Airways and Kingfisher Airlines in utilizing aircrafts. Aircraft
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utilization rate should be higher enough to maximize the yield and
minimize the cost. Indian Airlines is having the lowest rate of utilization
among the Carriers selected for comparison; its rate of utilization is almost
half of the utilization record of GOl Brazil and way behind even some of
the Indian Carriers like Spice Jet, Indigo and Jet Airways. It will be useful
to compare the two output parameters i.e. passenger load factor and
breakeven load factor for the airlines under study. A higher passenger
load factor implies that an airline was successful in selling more number of
available seats. However, higher passenger load factor does not always
result in to operating profit. Any addition to the PLF beyond the Break
Even is a net addition to the operating profit margins of the airline
enterprises. When Passenger load factor is higher than Break Even load
factor, the airline in question starts making profits. Evidently, most of the
LCCs in India were operating at Passenger load factor higher than that of
the Breakeven load factor during 2010-11. Among the Full Service
Carriers, Air India and Kingfisher Airlines have witnessed Breakeven load
factor much higher than the passenger load factor suggesting huge
losses. On the contrary, Full service carriers such as Emirates and
Singapore Airlines have reported Passenger load factors higher than
Break Even load factors. In the analysis that follows, factors behind the
operating economic environment of these and other airlines are analyzed.
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In 1986, private airlines were allowed to operate charter and non-
scheduled services under the Air Taxi Scheme which meant, inter-alia that
they could not publish time schedules, or issue tickets to passengers. This
was introduced to boost tourism, augment domestic air services and
boosted the much needed competition in the existing monopoly market. A
host of private players commenced operations as air taxi operators
including Air Sahara, Damania Airways, East-West Airlines, Jet Airways,
Modiluft and NEPC Airlines. With effect from 1st March 1994, the Air
Corporation Act was repealed and the air transport sector in India was
opened to private players subject to the fulfillment of statutory
requirements for operation of scheduled services. While six operators
were granted license only. Jet and Air Sahara were able to start their
services. In 1997, steps were taken to further remove the barriers to entry
and exit from the sector. There was now only a pre-entry scrutiny of
applications to verify the financial soundness, maintenance, security and
safety aspects of operations and human resources development proposed
to be undertaken by the applicant. The choice of the aircraft type and size
was also left to the operator. By 1997, only 4 operators that started
operations following the deregulation continued to operate namely Jet
Airways, Air Sahara, Jagson and Modiluft.
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record is a judgment of past performance but does not guarantee the
future, although it is a useful indicator. While pilot error is said to be on the
decline, factors of fatigue, weather, congestion and automated systems
have complicated safety. Airline operators, pilots, mechanics, flight
attendants, government regulators and makers all have a stake in making
aviation as safe as possible. The International Air Transport Association
(IATA), the International Civil Aviation Organization (ICAO), manufacturers
and others bodies cooperate in this aim. As world air traffic is expected to
double or more by 2020, the accident rate must be reduced in order to
avoid major accidents occurring more frequently around the globe.
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Airport Authority of India was set up on April 1,1995 by
amalgamating the International Airport Authority of India and the National
Airport Authority of India, the Airport Authority of India was to handle all
matters relating to infrastructure for civil air traffic and transport at the
international and the domestic airports and enclaves in the country. Indira
Gandhi Rashtriya Uran Akademi was set up at Fursatganj to standardize
and improve the flying training facilities in the country. Till January 1997 it
had trained 289 pilots on fixed wing aircraft and 20 pilots on rotary wing
aircraft. Flying/gliding training clubs: On December 31, 1996, besides the
above Akademi, 41 flying clubs/institutes and their branches including nine
private institutes were imparting flying training. Five gliding clubs, seven
gliding wings of flying clubs and a government Gliding Centre, Pune, were
imparting training in gliding. Development of Civil Aviation: The repeal of
the Air Corporation Act from 1 March 1994 enabled private operators to
provide air transport services. Six operators were given the status of
scheduled operators on 1 February 1995. Currently there are five
international airports and 87 domestic airports in the country with 28
civilian enclaves for defense purposes. The Airport Authority of India plans
to invest Rs 35,000 million for the construction and up gradation of
airports. Budgetary support of Rs 485.50 million was allocated to AAI in
1996-97. In august 1996, in a major policy decision, the government
allowed the private sector to set up air cargo complexes in a bid to ensure
smooth movement of export cargo. Domestic and foreign investors
including NRIs have been invited to participate in the development of
infrastructure support at select airports. With a market share of 43 per cent
Indian Airlines is the biggest player in aviation. Rs 24,710 million have
been marked for development of the civil aviation sector in the annual plan
for 1997-98. Both Domestic cargo and International cargo are poised to
grow according to the projections. The major reasons, which can be
attributed to this increase, are (a) Increase in overseas trade, (b) Indian
176
economic policies (c) Customer service orientation, (d) Inventory
concerns, (e) E-commerce development.
179
prominently on the global aviation map, thereby contributing to the
prosperity, growth and all round economic development of the region.
Table: 4.10
Growth of Passengers at Hyderabad Airport
Year Domestic International Total
2013-2014 6,358,189 2,370,067 8,728,256
2012-2013 6,282,075 2,084,656 8,366,731
2011-2012 6,703,050 1,899,289 8,602,339
2010-2011 5,758,608 1,875,557 7,634,165
2009-2010 4,793,910 1,700,920 6,494,830
2008-2009 4,648,657 1,566,803 6,215,460
2007-2008 5,619,320 1,442,240 7,061,560
2006-2007 4,567,474 1,206,058 5,773,532
2005-2006 3,040,565 1,001,082 4,041,647
2004-2005 2,095,845 749,072 2,844,917
2003-2004 1,601,450 610,366 2,211,816
2002-2003 1,451,015 459,174 1,910,189
Source: Hyderabad Airport.
Indira Gandhi International Airport, Delhi
181
A330-200 type of Aircraft. At this Airport International airlines Air India,
Saudi Arabia, Fly Dubai, Oman Air, Air India Express, Budha Air and
Domestic airlines Air India, Jet Airways, Jetlite, Kingfisher Airlines, Indigo,
Go Air, are operating. There are average 26 flights per day operating
to/from this airport. Annual traffic handled by the Airport is shown in Table
4.11.
Table: 4.11
Annual Traffic Handled by Airport
Financial Year Aircraft Movement Passenger Movement
Domestic
2006-07 14702 482904
2007-08 11878 547318
2008-09 16676 669427
2009-10 17343 1035443
2010-11 19472 1267959
International
2006-07 1306 120802
2007-08 1626 143633
2008-09 2993 179867
2009-10 2387 275191
2010-11 2324 331467
Source: Lucknow Airport.
Performance of Civil Aviation Industry:
There has been impressive progress in annual traffic and operating
of Indian carriers during last 10 years. During 2011-12, duration of aircraft
flown was recorded 1.46 million hours with 830.29 million kms. The total
passengers carried out in the year were reported to be 75.22 million. The
available seats were reported 150150 million kms. in the corresponding
year. Passenger load factor was recorded 75.1 per cent in 2011-12 while it
was recorded 64.8 per cent during 2002-03 (Table 4.12).
182
Table: 4.12
Annual Traffic and Operating of Indian Carriers in India
Year Aircraft Flown Passengers Available Passenger
Seat Kms. Load
(Million) Factor (
Hours Kms. Carried Kms.
per cent)
(No.) (000) (No.) Performed
Million)
Source: ICAO.
There has been increasing trend in aircraft flown, passengers
carried, available seats and passenger load factor during 2002-03 to
20011-12. During 2002-03, 13.95 million passengers were carried by
Indian carriers while this increased up to 60.84 million during 2011-12.
Similarly, passenger load factor has increased from 56.3 per cent in 2002-
03 to 75.1 per cent in 2011-12 (Table 4.13).
Table: 4.13
Annual Domestic Traffic and Operating of Indian
Carriers during Last Ten Years
Year Aircraft Flown Passengers Available Pax.
Seat Load
Hours Kms. Carried Kms. Kms. Factor (
(No.) (000) (No.) Performed (Million) per
(Million) cent)
183
2002-03 295173 165827 13951034 12848 22833 56.3
Source: ICAO.
Table: 4.14
Aircraft Departures on Scheduled Domestic Services
Year Aircraft Departure (Numbers) Percentage Share ( per cent)
National Private Total National Private Total
Carriers Carriers Carriers Carriers
2002-03 96,266 107,211 203,477 47.3 52.7 100.0
2003-04 105,172 129,074 234,246 44.9 55.1 100.0
2004-05 109,996 155,893 265,889 41.4 58.6 100.0
2005-06 102,499 213,326 315,825 32.5 67.5 100.0
184
2006-07 104,854 315,812 420,666 24.9 75.1 100.0
2007-08 112,424 408,307 520,731 21.6 78.4 100.0
2008-09 104,631 404,936 509,567 20.5 79.5 100.0
2009-10 110,265 402,658 512,923 21.5 78.5 100.0
2010-11 113,604 417,448 531,052 21.4 78.6 100.0
2011-12 116,466 484,043 600,509 19.4 80.6 100.0
Source: ICAO.
Growth of scheduled domestic passenger traffic is shown in
Table 4.15. During 2002-03, 139.5 lakh domestic passengers were carried
while the numbers of domestic passengers carried were reported 608.4
lakh in 2011-12. Thus, it shows impressive progress in domestic
passenger traffic. On an average, domestic passengers carried has shown
fluctuating trend with the highest growth in 2006-07 and negative growth in
2008-09.
Table: 4.15
Scheduled Domestic Passenger Traffic in India
Year Scheduled Pax. Load per cent Change In
Domestic Factor ( per Scheduled Domestic
Passenger Carried cent) Passengers Carried
(In Lakhs)
2002-03 139.5 56.3 -
2003-04 156.8 58.4 12.4
2004-05 194.5 64.9 24.0
185
During 2011-12, there were 355 fleets in India and most of the fleets
were from private carriers. The numbers of national carriers were reported
to be 126 while private carriers were recorded 229 in the corresponding
years. Out of total fleets, the share of Jet Airways was reported high
followed by Indian Airlines and Indigo. Average daily revenue hours were
recorded high for Go Air followed by national carriers and private carriers
(Table 4.16).
Table: 4.16
Scheduled Indian Carriers During 2011-12
Arline Number Number of Number of Average
of Revenue Hours Flown Daily
Aircrafts Departure Revenue
Hours
Air India + Indian 94 137,071 322,001 9.9
Airlines
Ai Express 21 18486 58,339 N.A.
Alliance Air 11 14,359 19,951 7.4
National Carriers 126 169916 400291 11.4
Jet Airways 103 175,646 400,060 11.9
Jet Lite (P) Ltd. 19 41,992 70,269 10.9
Indigo 55 98,416 173,159 10.9
Spice Jet 40 81,034 115,910 9.8
Go Air 12 28,265 45,421 13.5
Private Carriers 229 425,353 804,819 11.3
Grand Total 355 595,269 1,205,110 11.3
Source: ICAO
186
Table: 4.17
Fleet Size of All Scheduled Airlines in India
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Name Of
The Airline
Air India 31 35 37 38 35 36 31 33 29 94
Ai Express - - - 4 13 18 21 25 Ns 21
Indian 43 47 52 55 59 72 72 76 77 *
Airlines
Alliance Air 11 15 15 15 15 20 16 17 14 11
Jet Airways 41 41 42 53 63 81 88 88 98 103
Jet Lite (P) 12 20 22 29 27 25 24 25 18 19
Ltd.
Air Deccan - 4 16 29 39 41 - - - -
Paramount - - - 1 5 5 5 - - -
*
Spice Jet - - - 5 11 19 19 20 Ns 40
Kingfisher - - - 11 25 41 83 66 66 -
Go Air - - - 3 5 6 - 8 12 12
Indigo - - - - 8 17 19 25 38 55
Total 138 162 184 243 305 381 378 383 352 355
Source: ICAO
Growth of scheduled international traffic is shown in Table 4.18.
There has been about 5 times increase in the number of international
passengers during 1990-91 to 2009-10. During 1991, total number of
passengers were reported 6.3 million which increased 32.1 million in
2009-10. Out of total international passengers, a large segment of
passengers constituted foreign passengers. During 2009-10, 21 million
foreign passengers were reported while the numbers of Indian passengers
were recorded 11.1 million.
187
Table: 4.18
Growth of Scheduled International Traffic
(Passengers in Millions)
Year Indian Foreign Total
1990-91 2.0 4.3 6.3
1991-92 2.1 4.7 6.8
1992-93 2.2 5.1 7.3
1993-94 2.2 5.5 7.7
1994-95 2.4 5.8 8.2
1995-96 2.9 6.6 9.4
1996-97 3.1 7.0 10.1
1997-98 3.3 7.4 10.7
1998-99 3.3 7.7 11.0
1999-2000 3.5 8.0 11.5
2000-01 3.6 8.7 12.2
2001-02 3.5 8.5 12.0
2002-03 4.0 9.2 13.2
2003-04 4.3 10.4 14.7
2004-05 5.0 12.3 17.3
2005-06 6.1 14.0 20.1
2006-07 7.2 16.2 23.4
2007-08 8.7 18.5 27.2
2008-09 9.6 19.4 29.0
2009-10 11.1 21.0 32.1
Source: ICAO
During 2011-12, national carriers reported the employment of 2871
persons while private carriers reported the employment of 24605 persons.
Out of total employment in Airlines, most of the employed persons were in
the category of ground staff, maintenance and overhaul, ticketing and
sales and cabin attendants (Table 4.19).
188
Table: 4.19
Personnel Employed in Airlines
Category of Stay Number of Total Expenditure
Personnel (Rs. In Millions)
National Private National Private
Carriers Carriers Carriers Carriers
Pilots and 1,846 2911 8,843.58 14,499.1
Co-Pilots
Other Cockpit Personnel 52 500 5.77 342.3
Cabin Attendants 3,873 5538 4,375 2,918.3
Maintenance and Overhaul 7,588 3210 8,809.03 3,428.5
Personnel
Ticketing and Sales Personnel 6,024 1828 4,698.28 755.4
All Other Personnel 9,398 10393 8,552.35 4,777.8
Overseas Payroll 225
Total 28,781 24,605 35,284 26,721.2
Source: ICAO
Most of the airlines reported that they are facing recurring loss
during 2011-12. The loss has been reported much higher for national
carriers as compared to the private carriers. In the private carriers, the loss
was reported higher for Jet Airways followed by Spice Jet and Jet Lite
(Table 4.20).
Table: 4.20
Income and Expenditure of Indian Carriers
(Rs. In Million)
National Carriers
189
Private Scheduled Domestic Airlines
Jet Airways 147,859.7 154,407.4 -6547.7
Jet Lite (P) Ltd. 18,731.7 21,617.1 -2885.4
Go Air 15,633.8 16,380.3 -746.5
Spice Jet 39,432.6 45,726.3 -6293.7
Indigo 55,524.0 56,400.8 -876.8
Total 277,181.8 294,531.9 -17,350.1
Grand Total 441,050.2 513,777.6 -72,727.40
Source: ICAO
During 2011-12, all the scheduled airlines reported heavy loss.
However, airlines received revenues from passengers, freight, excess
baggage etc. The expenditure by airlines has been reported significantly
higher for flight operations while the major source of revenue has been
passengers. The amount spent on depreciation and amortization has been
also reported higher (Table 4.21).
Table: 4.21
Detailed Financial Results of Scheduled Airlines
(Rs. In Millions)
Item National Private All
Carriers Scheduled Scheduled
Domestic Airlines
Airlines
1. Scheduled Services
Total Operating Revenue 163,868.4 277,181.8 441,050.2
(A) Passenger 129738.6 246125.3 375,863.9
(B) Ex. Baggage 965.3 1612.5 2,577.8
(C) Freight 7717.5 18164.2 25,881.7
(D) Mail 1048.3 109.3 1,157.6
Total 139469.7 266011.3 405,481.0
2. Non-Scheduled Services 6678.9 274.3 6,953.2
3. Other Operating Revenue 17719.8 10896.2 28,616.0
Total Operating Expenses 219245.7 294,531.8 513,777.5
1. Flight Operations 113602.7 176117.8 289,720.5
2. Maintenance And Overhaul 5210.8 17439.7 22,650.5
190
3. Depreciation And 18021.4 10489.3 28,510.7
Amortization
4. User Charges & Stationery 12483.8 24314.4 36,798.2
Expenses
5. Passenger Services 9035.2 9064.8 18,100.0
6. Ticketing,Sales & Promotion 6131.8 22754.7 28,886.5
7. General & Administrative 39799.7 26030.7 65,830.4
8. Other Operating Expenses 14960.3 8320.4 23,280.7
C. Operating Result (55,377.3) -17350.0 (72,727.3)
D. Total Non-Operating -24431.3 -4772.8 (29,204.1)
Items (Balance)
E. Net Profit Or Loss(-)
1. Before Income Tax -85407.7 -22122.8 (107,530.5)
2. After Income Tax -85428.2 -21429.0 (106,857.2)
Source: ICAO
Operating revenue for revenue passenger kilometer performed was
recorded Rs. 4.78 in 2002-03 which has declined to Rs. 3.91 in 2011-12.
Similarly, operating expenses per revenue passenger kilometer performed
has also declined significantly during the corresponding period
(Table 4.22).
Table: 4.22
Operating Revenue and Expenses per Revenue
Passenger
Year Operating Revenue Per Operating Expenses Per
Revenue Passsenger Revenue Passenger Kilometre
Kilometre Performed Performed
(In Rs.) (In Rs.)
191
2007-08 4.43 5.23
Source: ICAO
Overall analysis demonstrates that there has been paradigm shift in
civil aviation in India. The role of public sector in civil aviation has
drastically declined while the share of private sector in civil aviation has
significantly increased over the period. There has been enormous growth
in infrastructure and facilities at the major airports besides, phenomenon
growth in the passengers. A large segment of passengers comprises of
women and girls. A large proportion of women passengers including girls
travel alone or with their small kids. Thus, they require special facilities
and care at the airport. Most of the airports are not concerned about the
special care and services for women segment of passengers. No airline
has introduced any scheme for addressing the gender concerns and
issues while delivering the air services to them. Even gender concerns
have not been incorporated in the service manuals of the airlines. Thus, it
is imperative to restructure the services and facilities at the airport and in
the airlines to cater the needs and requirements of women passengers.
References
Government of India (2012), Report of Working Group on Civil Aviation Sector,
Ministry of Civil Aviation, Government of India.
Ministry of Civil Aviation (2012). Annual Reports. Industry Sources; Analysis.
Government of India.
Directorate of General of Civil Aviation. (2012) Airport Authority of India.
Analysis: Ministry of Civil Aviation.