Tourism 1Q09 Industry

ISI Analytics
TOURISM INDUSTRY
ISSUE 1Q 2009
India Industry Research
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Tourism
1. Industry Profile 1.1 World and South Asia Perspective 1.2 India Tourism 2. Market Trends and Outlook 5 2.1 Mode of Transport 2.2 Port of Entry 2.3 Trends Tourist Arrivals Market Performance and Share 2.4 Seasonality Patterns 2.5 The Indian Aviation Industry 2.5.1 Introduction 2.5.2 Regulatory Overview ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. 2.5.3 Key Players in Indian Aviation Industry 2.5.4 Global Scenario 2.5.5 Impact of Fuel Prices on the Industry 2.5.6 Low Cost Carriers 2.5.7 Indias Budget Airlines: Snapshot 2.6 Summary of Key Challenges 2.7 Foreign Exchange Earning From Tourism 2.8 Share of India in the World Tourism Receipts 2.9 Airport Statistics 2.10 Domestic Tourism Statistics 2.11 Hotel and Room Supply 2.12 Travel Agents, Tour Operators and Tourist Transport Operators 3. Leading Players 3.1 Major Players 3.1.1 East India Hotels Ltd. 3.1.2 Thomas Cook India Ltd. 3.1.3 Jet Airways (India) Ltd.
Notes: 1 USD = 48.4497 INR 1 INR = 0.02064 USD 1 crore = 10 million
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1. Industry Profile
1.1 World and South Asia Perspective
Chart 1: International Tourist Arrivals, 19502020
Source: World Tourism Organisation (UNWTO) Tourism Highlights 2008
The World Travel & Tourism Council (WTTC) expected global tourism to increase by 3.3% in 2008, in terms of total travel and tourism demand, with growth averaging 4.4% annually over the next ten years. Additionally, the travel and tourism economy was said to have generated over 238 mn jobs worldwide and would contribute 9.9% of the global GDP in 2008. By 2018, jobs generated are expected to reach 296 mn and contribution to the global GDP would rise to 10.5%. The South Asian travel and tourism economy in 2008 is expected to account for 10.2% of GDP and 22.43 mn jobs (8.5% of total employment). By 2018, contribution towards GDP will decline to 10.1%, however employment will rise 27.37 mn (8.7% of total employment). Real GDP growth for travel and tourism economy is expected to be 4.1%
in 2008 and will average 5.3% annually over the next ten years. The impact on travel and tourism in future years is much greater, due to the deterioration in the macroeconomic environment and the marked slowdown in 2008s monthly tourism activity indicators. Travel and tourism economy GDP is now anticipated to contract in 2009 and will probably grow by 2% in 2010. Long-term prospects in the industry are supported due to the continued rapid expansion of emerging destinations along with global increase in per capita income. UNWTOs Tourism 2020 Vision projects that international arrivals are to reach nearly 1.6 bn by the year 2020. Of these worldwide arrivals, 1.2 bn will be intraregional and 378 mn will be long-haul travelers.
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ISI Analytics Table 1: International Tourist Arrivals (million)

2003 World Europe Northern Europe Western Europe Central/ Eastern Europe Southern / Mediterranean Europe Asia and the Pacific North - East Asia South -East Asia Oceania South Asia Americas North America Caribbean Central America South America Africa North Africa Sub -Saharan Africa Middle East * Provisional 690 396.6 44.5 136.1 68.3 147.7 119.3 67.6 36.2 9 6.4 113.1 77.4 17 4.9 13.7 30.8 11.1 19.7 30 2004 763 416.4 48.4 138.7 78.4 150.9 152.5 87.6 47.3 10.2 7.5 125.8 85.8 18.2 5.8 16 33.2 12.8 20.4 35.4 2005 808 441.6 52.9 142.7 88 158 156.7 87.6 50.6 10.5 8 133.6 90.1 18.9 6.5 18.1 36.8 14.3 22.4 39.7 2006 847 462.2 56.4 149.5 91.5 164.8 167 94.3 53.1 10.5 9.1 135.8 90.6 19.4 7.1 18.7 41.4 15.1 26.3 40.9 2007* 903 484.4 57.6 154.9 95.6 176.2 184.3 104.2 59.6 10.7 9.8 142.5 95.3 19.5 7.7 19.9 44.4 16.3 28.2 47.6
Sources: UNWTOTourism Highlights 2008; CEIC
1.2 India Tourism
"India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend and the great grandmother of tradition. Our most valuable and most instructive materials in the history of man are treasured up in India." Tourist arrivals remain healthy Tourism is one of the third largest net earner of foreign exchange for the country recording earnings of USD10,729 mn in 2007, a growth of 24.3% YoY, according to the Ministry of Tourism. In 1951, international tourist arrivals stood at around 17,000 only while the same has now gone up to 5.08 mn in 2007. Tourism in India has registered significant growth in recent years. The upward trend is expected to remain firm in the coming years. It is also one of the sectors that provide huge employment opportunities. The Indian Travel & Tourism economy is ranked number:
146 in relative contribution to national economies 1 in longterm (10-year) growth, 176 countries estimated by WTTC/OEF
16 in absolute size worldwide
With a historical backdrop of 5,000 years, India is one big package of cultures and legends that never fails to captivate the imagination of the visitors. These include history tourism, adventure tourism, medical tourism (ayurvede and other forms of Indian medication), spiritual tourism, beach tourism etc. India has been a late starter in tourism. Understandably, immediately after independence the focus was on key areas like agriculture, industry, irrigation, infrastructure and the social sector. Tourism started receiving attention in the last decade. The WTTC has identified India as one of the countries slated to become the foremost growth centers in the world in the coming decade. While the growth in tourism has been impressive, Indias share in total global tourism arrivals and earning is quite insignificant. India 's travel and tourism economy in 2008 is thought to account for 6.1% of GDP and 30.49 mn jobs (6.4 % of
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ISI Analytics
total employment). India 's travel and tourism was expected to grow 7.9% in 2008 and by 7.6% per annum over the next 10 years. Travel and tourism in India for 2008 was expected to generate USD73.6 bn in economic activity.
Over the past few years, India witnessed a growth in foreign tourist arrivals. International tourist arrivals rose 14.3% in 2007 to 5.08 mn, the highest ever, and as at June 2008 arrivals stood at 2.7 mn, an increase of 11.1% when compared to the same period in 2007. India's tourist industry is booming due to a rush of foreign tourists and increased travel by Indians to domestic and overseas destinations. The visitors are pouring in from all over the world: Europe, USA, Japan, Canada and Australia. The boom has come Some of the important initiatives taken by the even as global tourism dropped, due to the government to improve the flow of foreign September 11 terrorist attacks in the United tourist into the country and thereby increase States, the outbreak of Severe Acute the country share in world tourism includes Respiratory Syndrome from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. adventure in East Asia, and the launching of cruise tourism, ISIEmergingMarketsPDF in-kpmg1 Iraq war. tourism, wellness tourism and the launching of the Incredible India campaign called Tourism professionals cite several reasons Colours of India. Domestic tourists are also for the buoyancy in the Indian industry. The fueling the industry's revival. Many of them recent surge in the Indian economy has escape from the summer heat on the plains raised middle class incomes, prompting to resorts in the Himalayan Mountains. One more people to spend money on vacations of the major beneficiaries being Kashmir, abroad or at home. At the same time, India's where a cease-fire between India and emergence as a global information Pakistan has reduced violence, if not technology hub and an aggressive completely, at least enough to help revive advertising campaign by the government are the state's sagging tourism industry. credited with changing India's image from that of a land of snake-charmers, and An important highlight in inbound tourists sparking new interest among overseas during 2007 was an increase of 24.3% travelers. Tourism in India is also benefiting witnessed in the foreign exchange earnings from the stronger economies of Indias two in dollar terms. The revised estimated foreign major source markets, the United Kingdom exchange earnings during 2007 touched the and the United States. level of USD10,729 mn against USD8,634 mn in 2006. As at June 2008, foreign In the last few years, the government has exchange earnings reached USD6,385 also made some financial reforms to facilitate which grew 25.5% as compared to the same the development in the tourism sector. The period in 2007. As stated in Table 2, Tourism Ministry allocated INR10,470 mn in international tourism receipts globally the 2008-09 budget, an increase of INR503.8 reached USD856 bn, while India contributed mn from the previous year. The government USD10.7 bn which is approximately 1.25%. has put emphasis on the development of tourist infrastructure and has earmarked
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INR4,720 mn for construction of budget accommodation, wayside amenities and tourist reception centres. A five-year tax holiday has been announced in the budget for two-, three- or four-star hotels established in specified districts having UNESCOdeclared World Heritage Sites. The hotel should be constructed and start functioning from 1 April 2008 to 31 March 2013. The ministry received a boost in the allocation for the overseas campaignfrom INR1,650 mn to INR2,200 mn. Additionally, with openskies, Indian private airlines can fly to ASEAN countries and neighboring SAARC capitals. The Centre has also accepted the industrys demand that all airports not just a handful can receive charter flights.
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ISI Analytics Table 2: International Tourism Receipts 2007

COUNTRY WORLD France Spain USA Italy China INDIAS NEIGHBOURHOOD Maldives Hong Kong Malaysia Thailand Singapore Indonesia INDIA USD billion 856 54.2 57.8 96.7 42.7 41.9
0.5 13.8 14.0 15.6 8.7 5.3 10.7

Source: World Tourism Organisation
growth story, as was done at the Davos The foreign tourist arrivals have surged nearly 11.1% to about 2,719,410 tourists in Summit in Switzerland in 2005. the period between January-June 2008. The ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. It is stepping up on infrastructure peak season was between November and March. Improved access and convenience of development initiatives and has launched a scheme for development of nationally and travel especially by air have aided growth in the segment. FY2008 looks equally internationally important destinations and promising. Foreign tourist arrivals rose from circuits through Mega Projects. To date, 22 projects have been identifies and of these 17 4.45 mn in 2006 to 5.08 mn in 2007. The projects have been sanctioned. The Ministry Union Ministry of Tourism has set a target of 10 mn foreign tourist arrivals in a few years. of Tourism is also taking initiatives with other Central Govt. Ministries, such as Railways, Civil Aviation, Road Transport and With the Indian economy slated to grow at Highways, Food Processing and Urban 7% over the next few years, the government Development. has started to gear up to make India Everywhere its campaign to hype the India
Chart 2: Foreign Tourist Arrivals from 2005 to 2008
700 600 Arrivals 000's 500 400 300 200 100 0 November September December March June February January October May April July August 2005 2006 2007 2008
Sources: Ministry of Tourism, CEIC
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2. Market Trends and Outlook

2.1 Mode of Transport
Table 3: Total Passenger Traffic Trends
% Change Air continues to be the predominant mode of Airports 2008-09 2007-08 YoY travel for tourist coming to India during 2006. In 2006, this mode of transport constituted Mumbai 23,028,031 21,333,789 7.9 87.1% of the total traffic. Top 4 airports in the Delhi 19,025,224 17,517,681 8.6 country handle 68% of the passenger traffic out of which Delhi and Mumbai together Chennai 8,206,863 7,558,014 8.6 alone account for 55% traffic. Passenger traffic has growth at an average of 13% over Bangalore 7,110,558 6,445,879 10.3 the last 10 years. It is estimated that the Kolkata 4,852,405 4,507,291 7.7 domestic passenger segment is likely to grow at 12% per annum. Anticipated growth Note: Figures are forecast estimates for international passenger segment is 7%. Source: Financing Plan for Airports Report - Planning Arrivals by sea were negligible 0.6% in 2006 Commission, Govt. of India and the share of arrivals through land routes at 12.3% was the second most common 2.2 Port of Entry means of entry mainly from Bangladesh and Pakistan. ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Delhi and Mumbai continue to be major entry ports for 2007-08 and 2008-09 with an Chart 3: Mode of Transport, 2006 increase of 8.6% YoY for Delhi and 7.9% Land YoY for Mumbai. The arrivals at Chennai, 12.3% Sea Bangalore and Kolkata airports constitute 8.2 0.6% mn, 7.1 mn and 4.9 mn respectively. Sea cruise passenger market continue to grow with the introduction of various government initiatives such as streamlining systems and procedures to facilitate seamless travel by Air tourists. The government also relaxed 87.1% Cabotage Law (this does not permit foreign flag vessels to carry coastal cargo in India) Note: 2007 data unavailable Source: Ministry of Tourism for cruise ships for five years (from December 2003) and provided a rebate of up Total passengers traffic at all Indian airports to 50% on vessel-related charges such as is expected to total 84.7 mn during 2008-09 berth hire and pilotage. In December 2008, as against to 77.6 mn handled during 2007the Cabotage Law was relaxed further for 08, registering a growth rate of 9.2%. An another 10 years. Apart from the projecting increase in passengers traffic is due to Mumbai, Mormugao, New Mangalore, Kochi, discounted airfare, liberal bilateral aviation Tuticorin and Chennai ports for the cruise agreement between India and other circuit. Indians are generally not inclined countries, increasing disposable incomes towards long sailings, and a four- to fiveand softened dollar. night package is considered the ideal length, unlike abroad where a cruise lasts at least seven nights.
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2.3 Trends Tourist Arrivals Market Performance and Share

Chart 4: Share of Top Ten Markets for Arrivals in India during 2007
USA Uk 15.7% Bangladesh 15.7% Canada France 35.6% Sri Lanka 9.4% Germany 4.0% 4.1% Japan 2.7% Australia 2.2% 3.6% 2.9% 4.0% Malaysia Others
Source: Ministry of Tourism Report, 2007
spending power of the Americans, whether it is on accommodation, food or shopping, among others. On an average, the US traveler spends at least two weeks in the country. The primary mode of arrival of the American tourist continues to be air. As far as port of disembarkation is concerned Mumbai airport continue to be the main airport of entry followed by Delhi, Chennai and Kolkata. 2. United Kingdom
Chart 6: Tourist Arrivals from UK
1,000,000 800,000 No. of Tourist 600,000
1987
1990
1993
1996
1999
2002
1. USA
Chart 5: Tourist Arrivals from USA
1,000,000 No of Tourists 800,000 600,000 400,000 200,000 Year 0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: CEIC
The United Kingdom is presently the second largest market for India though it occupied the top position till 2005. Foreign arrivals grew from 116,684 in 1981 to 796,0000 in 2007 at an average compound rate of was around 7.4% per annum from 1981 to 2007. In 2007, foreign arrivals grew 8.4% YoY from 734,240 in 2006. As per previous years U.K. nationals came by air and a minority through the land route. 3. Bangladesh
Source: CEIC
The USA has become the largest tourist market for India pushing down the UK that has been the leader from 1973. In 2007, tourist arrivals from the US stood at 799,000, an increase from 696,739 foreign arrivals from the previous year. The increasing number of arrivals from the US is significant for the tourist industry considering the higher
Bangladesh replaced Singapore on the top ten markets for arrivals in India. Foreign arrivals from the country totaled 480,000 in 2007, a drop from 484,401 the year before. The compounded annual growth rate of arrivals is around 4.5% for the period 1988 to 2007.
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2005
The top ten markets that formed arrivals into 400,000 India are listed in Chart 4. The USA and UK form approximately 15.7% each of the total 200,000 share. Bangladesh follows 121.244.145.4 on ISIEmergingMarketsPDF in-kpmg1 from with 9.4% of total2011-07-06 01:20:43 market share, whilst other countries that are 0 not listed above make up 35.6%.
EDT. DownloadPDF.
Year
ISI Analytics
Chart 7: Tourist Arrivals From Bangladesh
600,000 No of Tourist 500,000 400,000 300,000 200,000 100,000 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Year
5. France
Chart 9: Tourist Arrivals from France
250,000
No of Tourist
200,000 150,000 100,000 50,000
Year
0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: CEIC
4. Canada
Chart 8: Tourist Arrivals from Canada
250,000 200,000 150,000 ISIEmergingMarketsPDF in-kpmg1 from 100,000 50,000 0 1987 1989 1991 1993 1995 No of Tourists
Source: CEIC
Source: CEIC
France has moved from its initial fourth position to being the fifth tourist generating country for India, and constitutes about 4.0% of the foreign tourist arrivals in India during 2007. The arrivals grew from 57,272 in 1981 to 205,000 in 2007. Most French tourist used the air route to visit India followed by land and sea route. So far port of 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF.as disembarkation is concerned, Delhi airport continues to be the primary point of entry for French tourist. Followed by Chennai, Year Mumbai and Kolkata. The periods October to December and January to March were the most popular period of visit for the French tourist.
1999 2001 2003 2005 2007
1997
Canada has been pushed a step back from its initial third position and now occupies the fourth position among the tourist generating countries for India and constituted about 4.1% of the tourist arrivals in 2007. Arrivals from Canada grew 8 folds over a period of 27 years from 25,358 in 1981 to 208,000 in 2007. The above graph shows the yearly trends in the tourist arrival from this country. Most Canadian tourists continue to visit India by air and a small number of by land. This trend is expected to continue with the liberalisation of chartered flights and India emerging as a safe, all round, year round destination. As far as port of disembarkation is concerned, maximum number, disembark at Delhi airport followed by Mumbai, Chennai and Kolkata.
6. Sri Lanka Sri Lanka occupied the sixth position among the tourist generating countries for India and constituted 4.0% of tourist arrivals during 2007. Arrivals from Sri Lanka, which were 75,842 in 1981, grew up to 204,000 in 2007. The main states visited were Tamil Nadu and Karnataka . The peak period of Sri Lankan tourist visiting India was the third quarter from July to September, followed by the forth quarter October to December. The main mode of entry into India is by air via Chennai airport followed by Delhi, Mumbai and Kolkata.
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Chart 10: Tourist Arrivals from Sri Lanka
250,000 No of Tourist 200,000
No of Tourist
8. Japan
Chart 12: Tourist Arrivals from Japan
160,000 120,000 80,000 40,000
Year
150,000 100,000 50,000 Year 0 1987 1990 1993 1996 1999 2002 2005
0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: CEIC
7. Germany
Chart 11: Tourist Arrivals from Germany
200,000 No of Tourist 150,000
Source: CEIC
100,000 ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. 50,000 Year 0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Japan is one of the most important tourist markets of India in the East and it constituted about 2.9% of foreign tourist in 2007. It grew from 29,032 in 1981 to 146,000 in 2007. There was a 22.4% increase YoY in 2007, from 119,292 foreign arrivals during the prior year. During the year most of the tourist from Japan came to India by air and minimally by the land route. Delhi airport was the main port of disembarkation followed by Mumbai, Chennai and Kolkata. Most tourists arrived during the period of January to March followed by period November to December. Majority of Japanese nationals visited India for tourism & other purposes while a smaller percentage visited for business. 9. Australia In 2007, Australia occupied the ninth position among the top ten tourist generating markets for India. The tourist traffic from Australia during 1981 was 20,940, which increased to 136,000 in 2007. The contribution of Australian tourist to the total traffic to India was about 2.7% in 2007. The air was predominant mode of transport for Australian transport, whilst only 1.5% came by land routes. Delhi is the main disembarkation point followed by Mumbai, Chennai and Kolkata. Most Australian tourist visited India during the months of October to December.
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Source: CEIC
Germany occupies the seventh position among the tourist generating countries for India in 2007 and constituted about 3.6% of foreign tourist arrivals in India. There was an increase in arrivals by 17.3% in 2007, from the prior year. The arrivals grew from 55,471 in 1981 to 184,000 in 2007. The most preferred mode of transport for travel to India by the German tourist continue to be air and it accounted for most of the arrivals, while around 2% used sea routes. So far the most tourist disembark in Delhi airport followed by Mumbai, Chennai and Kolkata. Most German tourist visited India for tourism & other while the rest of the arrivals were on business visit. The maximum number of Germans visited the country during the period October to December and followed by January to March.
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ISI Analytics
Chart 13: Tourist Arrivals from Australia
160,000
No of Tourist
120,000 80,000 40,000

Year
Chennai airport is the main disembarkation point for Malaysian tourist to India followed by Delhi, Mumbai and Kolkata. Majority of the tourist arrivals were on devotional and spiritual visits followed by visiting relatives. Malaysian tourists generally visited India during the months of November to January.
Chart 14: Tourist Arrivals from Malaysia
120,000 90,000 60,000 30,000
0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: CEIC
10. Malaysia
Malaysian tourist accounted for 2.2% of the total tourist traffic to India in 2007. The tourist 0 traffic from Malaysia, which during 1981 was merely 26,458 increased to 113,000 in 2007. The graph shows the yearly trend in the Source: CEIC tourist arrivals from this country since 1981. ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43
1987
No of Tourist
Year 1990 1993 1996 1999 2002 2005
EDT. DownloadPDF.
Table 4: Foreign Tourist Arrivals in India

Month 2006 2007 2008 * % Change 2007/06 % Change 2008/07
January
459,489
535,631
591,337
16.6%
10.4%
February March April May June July August September October November December
Total
439,090 391,009 309,208 255,008 278,370 337,332 304,387 297,891 391,399 442,413 541,571
4,447,167
501,692 472,494 350,550 277,017 310,364 399,866 358,446 301,892 444,564 532,428 596,560
5,081,504
561,393 541,478 384,203 300,840 340,159 429,456 391,423 330,874 452,000 521,000 522,000
5,366,163
14.3% 20.8% 13.4% 8.6% 11.5% 18.5% 17.8% 1.3% 13.6% 20.3% 10.2%
14.3%
11.9% 14.6% 9.6% 8.6% 9.6% 7.4% 9.2% 9.6% 1.7% -2.1% -12.5%
5.6%
* Provisional Sources: Ministry of Tourism Report, 2007, CEIC
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2.6 Seasonality Patterns Tourist arrivals for the first half of the year hovered around 2.45 mn mark in 2007, as compared to 2.13 mn in 2006. For the second half of the year, tourist arrivals reached 2.63 mn in 2007, whilst it was 2.31 mn in 2006. The peak and lean months of arrivals of tourists for different nationalities are given below:
Table 5: Lean and Peak Months of Foreign Tourist Arrivals in India During 2006
Nationality Lean Month Peak Months
1 2 3 4 5
UK USA Canada France
June September May May
December December December February
For many years in India air travel was perceived to be an elitist activity. Until less than a decade ago, all aspects of aviation were firmly controlled by the government. In the early fifties, all airlines operating in the country were merged into either Indian Airlines or Air India and, by virtue of the Air Corporations Act, 1953 this monopoly was perpetuated for the next forty years. The Directorate General of Civil Aviation controlled every aspect of flying including granting flying licenses, pilots, certifying aircrafts for flight and issuing all rules and procedures governing Indian airports and airspace. Finally, the Airports Authority of India was entrusted with the responsibility of managing all national and international airports and administering every aspect of air transport operation through the Air traffic Control.
With the opening up of the Indian economy in the early EDT. DownloadPDF. ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 Nineties, aviation saw some important changes. Most importantly, the Air 6 Sri Lanka May August Corporation Act was repealed to end the 7 Japan May February monopoly of the public sector and private 8 Australia May December airlines were reintroduced. Domestic 9 Malaysia July December liberalisation took off in 1986, with the launch of scheduled services by new start-up 10 Nepal April September carriers from 1992. A number of foreign 11 Singapore July December investors took an interest. Modiluft closed 12 Italy May December after failing to meet financial obligations to lessors and its technical partner, Lufthansa. 13 Korea (South) May January In 1996-1998, Tata and SIA tried to launch a 14 China (Main) August November domestic carrier, but the civil aviation 15 Netherlands June July minister had publicly stated his opposition on numerous occasions (Airline Business 1998). Source: Bureau of Immigration
Germany June November
2.7 The Indian Aviation Industry 2.7.1 Introduction Air India was set up by J.R.D. Tata, who ran it successfully until it was nationalised in 1953. In the 1960s the Maharaja, as the national flag-carrier was affectionately known, was flying to 32 destinations (it now flies to 130 destinations) and making profits.
The Indian government introduced the open sky policy for domestic players in 1991 and partial open sky policy for international players only in November 2004. Increasing liberalisation and deregulation has led to an increase in the number of players. The industry comprises three types of players full cost carriers, low cost carriers and many start-up airlines that are making/planning an entry.
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Present Indian Scenario It is a phase of rapid growth in the industry due to huge build-up of capacity in the low cost carrier space, with capacity growing at approximately 45% annually. This has induced a phase of intense price competition with the incumbent full service carriers discounting up 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 pressure.
2.7.2 Regulatory Overview Indias civil aviation sector is undergoing a rapid transformation these years. In 1990, the Indian government launched a programme of economic liberalisation of air transport services, which resulted, inter alia, in (i) the announcement of a cargo open skies policy for international flights; (ii) the permission of non-state owned airlines to enter the Indian market; and (iii) gradual liberalisation of bilateral air services agreements with third countries.
The Indian government increasingly recognises that the aviation sector can be a The growth in supply is overshadowed by the catalyst of general economic development extremely strong demand growth, led and in 2003 therefore set up a Committee, primarily by the conversion of train/bus led by former cabinet secretary Naresh passengers to air travel, as well as by the Chandra, to draw up a Road Map as a basis fact that low fares have allowed passengers for a new national policy for civil aviation. It to fly more frequently. There has, therefore, appears that the current Indian government been an increase in both the121.244.145.4 on 2011-07-06 01:20:43employ key recommendations width and depth continues to EDT. DownloadPDF. ISIEmergingMarketsPDF in-kpmg1 from of consumption. However, the regulatory of the Committee of developing a more open environment, infrastructure and tax policy and competitive aviation market in India. have not kept pace with the industrys growth. The report of the Naresh Chandra Committee declared that an integrated Enactment of the open sky policy between approach to civil aviation is required, one India and SAARC countries, increase in which is based on the following four bilateral entitlements with the EU and the fundamental pillars: US, and aggressive promotion of India as an The introduction of a level playing field for attractive tourism spot helped India attract all operators; 3.9 mn tourists in 2004-05. This market is growing at 15% per annum and India is Increasing private participation and expected to attract 10 mn tourists by 2010. competition by reducing barriers to entry; Also, increasing per capita income has led to an increase in disposable incomes, leading Adherence to stringent safety standards as to greater spend on leisure and holidays and well as sound regulatory oversight of the business travel has risen sharply with air transport market; increasing MNC presence. Smaller cities are also well connected now. Passenger traffic Transparent institutional mechanisms has increased and over 21 mn seats have which provide for socially desirable but been sold, resulting in a growth of over 50%. uneconomical services. The Indian travel market is expected to triple to USD51 bn by 2011 from USD16.3 bn in The Committees investigation led to the 2005-06. identification of several overall conclusions including the following:
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ISI Analytics As an immediate priority it looked for a
more liberal fiscal regime, which would include a reduction of fuel taxes. The government is yet to adopt its recommendations in this respect.
The
Jet Airways a regular airline which offers normal economy and business class seats. Jet Airways is an airline based in India The Committees advocacy of the serving domestic and international routes. elimination of route dispersal rules seems The airline operates over 399 daily flights to to have been taken up by the government 68 destinations within India and overseas. In in June 2004 thereby changing the old January 2006, Jet Airways announced to system of mandatory route mix of all acquire its largest private competitor, Air operators of routes between major cities Sahara for approximately USD500 mn in anand thin marginal routes to a new system all cash deal which would have given the with a levy on private operators allowing combined entity a market share of 50%. funding of uneconomical routes (public Unfortunately, the deal did not go through service obligations). and was concluded in April 2007 for USD340 mn. Subsequently, DownloadPDF. ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. Jet Airways renamed Air Similarly, the suggestion that foreign equity Sahara as JetLite and marketed it between investment (except from foreign airlines) low-cost carriers and full service airline. The should be permitted for up to 49% of company controls about 31% of India's airlines has been acted upon. aviation market as at June 2007. At the end of 2004, the Indian government decided to allow privately owned carriers fulfilling certain criteria (i.e. having a fleet of at least 20 aircrafts and more than five years of operating experience) to operate on international routes. Two carriers (Jet Airways and Air Sahara) qualified for this and were granted rights from the Indian government to fly to international destinations. The number of airlines providing services on the domestic market is rapidly increasing. There are currently sixteen scheduled registered airlines in India. 2.7.3 Key Players in Indian Aviation Industry Airlines on International Routes Air India is the national flag carrier airline of India with a network of passenger and cargo services worldwide. It is one of the two stateowned airlines in the country, the other being Airlines on Domestic Routes SpiceJet is a low-cost airline based in New Delhi. Their marketing theme "offering low 'everyday spicy fares' and great guest services to price conscious travelers". Their aim is to compete with the Indian Railways passengers travelling in AC coaches. GoAir Airlines The Smart Peoples Airline, a low cost carrier promoted by The Wadia Group is a domestic budget airline based in Mumbai and operating since November 2005. Its a relatively small player as compared to other low cost airlines. Kingfisher Airlines is an airline based in Bangalore, India. Services started on 9 May 2005, following the lease of 4 Airbus A320 aircraft. It currently operates on domestic routes. The United Breweries Group, parent company of Kingfisher Airlines, acquired
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committee deemed that airport charges were too high and should be lowered and that the supply of aviation fuel should be liberalised to allow additional suppliers at airports.
Indian Airlines. Air India flies to 130 destinations. The airline has been profitable in most years since its inception. In the financial year ending March 31, 2006, Air India has made a net profit of INR97 mn; earned a revenue of INR87,480 mn representing a growth of almost 15% over the previous year.
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26% of Air Deccans parent Deccan Aiation in May 2007 at INR5.46 bn. Not long after, in December 2007, the Group increased its stake to 46% and decided to merge but run both airlines as two separate brands. Therefore, Kingfisher will target the corporate and business travel segment whilst Air Deccan focuses on serving the low-fare segment. Deccan Airlines is operated by the Deccan Aviation Limited, which is Indias first no-frills, low-cost, scheduled commercial passenger airline. Deccan only operates on domestic routes and is a no-frills operator with free seating on flights, on the basis of first-comefirst-served seating. The airlines strategy is to connect metro airports and small towns, as well as Tier II cities that are equipped with small airports or airfields.
carriers profitability will shrink from USD900 mn in 2007 to USD300 mn in 2008. Even within Asia it is a mixed picture. Some carriers are among the most profitable. Others however are struggling. The International Air Transport Association (IATA) has forecasted that airlines in the Asia Pacific region will probably see losses reaching USD1.1 bn in 2009. IATA also predicts air traffic to fall 3% in 2009 in the region. 2.7.5 Impact of Fuel Prices on the Industry
The high price of fuel up to August 2008 was killing airline profitability. By the end of 2008, crude oil is over 60% less than it was in August 2008. Indian carriers troubled by the financial crisis are given till March 2009 to clear their dues of around INR25 - 28 bn to oil companies in equated monthly installments. Many airlines had cut capacity IndiGo Airlines is a private domestic airline and jobs to deal with the high based in India. IndiGo targets customers2011-07-06 01:20:43 EDT. DownloadPDF. oil prices in ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2008. However, in the last few months of who are cost conscious and are looking for 2008, carriers also slashed their fuels affordability, punctuality and hassle-free surcharges and offered fare deals in processing. The airline plans to serve around response to the declining fuel prices, with 30 Indian cities with a fleet of 40 Airbus Ahopes to attract more travelers. 320s by 2010. 2.7.4 Global Scenario At the macro-economic level Asia Pacific growth is impressive. India and China are growing between 8% and 10% each year. China is now the world's third largest economy. Global airline traffic is expected to rise steadily until 2008 in line with an anticipated good performance by the world economy, according to the United Nations (UN) aviation agency. The UN International Civil Aviation Organisation expected airline traffic to grow 5.6% in 2008, from 5.8% in 2007. Up to 2015, traffic would grow at an annual rate of 4.4%. This is equivalent to 30 mn flights and 2.8 bn passengers. Globally airlines lost USD5.2 bn in 2008 and expect a further USD2.5 bn to be lost in 2009. US carriers lost USD4.5 bn. European profits will drop seven-fold to USD300 mn from USD2.1 bn. Asia Pacific 2.7.6 Low Cost Carriers (LCCs) The influx of LCCs across the world has affected the industry. Asian LCCs are assessing the successes and failures of their North American and European counterparts. LCCs deliver their superior margins primarily through cost advantages such as more flexible work models, better aircraft utilisation and fewer amenities. The LCCs in India are now controlling almost half of the market are were expected to carry more than 20 mn passengers in 2008. A problem faced by this segment is the rights to fly during non-peak hours on the trunk routes due to unavailability of slots during the peak hours of the day. As such, the development of secondary airports at key cities play a pivotal role. The gloom that has descended on the worlds aviation industry has allowed Asian low-cost airlines to explore expansion plans
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and are now looking at opportunities where others see losses. Path Forward for India The turbulence that hit the aviation sector in 2008 is expected to clear up a little in 2009. A report by the Centre for Asia Pacific Aviation (CAPA) predicts demand for the first half of 2009 will be weak but will improve by the third quarter of the year. International traffic, especially to West and South Asia, remains strong. However, traffic to Europe and North America is likely to remain weak due to the economic climate in the countries and excess capacity on UK/Europe routes.
scrapped and overseas carriers may win the right to buy into Indian airlines. Although poor airport infrastructure remains a concern, we need to maintain a positive outlook on the sector as the government allows private participation and FDIs in construction and maintenance of air-traffic infrastructure. For now, as more and more Indians take to the skies, the country is set to emerge as the fastest growing aviation market. With the impact of the crisis, the Tourism Ministry is realising that a target of more than 7.5 mn for 2010 is not realistic. The only incentive to boost Indias tourism sector in the two economic bailout packages announced by the government has been to allow external commercial borrowings in the hotel sector.
As a result of the recent Mumbai terror attack, inbound traffic has also been affected. The US and Australia have advised its citizens to reconsider travel to India. The attack on Mumbais Taj Mahal Hotel, Oberoi Trident and the Chhatrapati Shivaji Terminus The Indian government plans to ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. aggressively has caused room rentals at most Indian market India as a tourism destination by hotels to fall. declaring 2009 as the year to Visit India. Packages are being made for adventure Entry restrictions on new airlines may tourism, rural tourism, Buddhist sites and continue in 2009 but licenses may be issued others to lure tourists. for those commencing operations in 2010. Additionally, investment restrictions may be
Table 6: Airline Fleet Details
Airlines Type of Aircraft Current In Service Future On - Order
Deccan Airlines Air India Express Go Air Airlines Kingfisher Airlines IndiGo Airlines Paramount Airways SpiceJet Airways
A320, ATR Turboprop B737-800 A320-200 ATR 72-500, A319-100, A319-100CJ, A320-200, A321-200, A330-200, A340-500HGW, A350-800XWB, A380-800 A320-232 E-170-100LR, E-175-200LR B737-800, B737-900ER
43 8 5 44 19 5 19
92 68 20 107 100 22 20
Note: A- Airbus, B- Boeing, E-Embraer Source: Cygnus Civil Aviation Industry Report, June 2008
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2.7.7 Indias Budget Airlines : Snapshot 2.7.7.1 Deccan Airlines

Table 7
Deccan Airlines
IATA DN
Founded Hubs Focus cities / secondary hubs Fleet size Destinations Parent company Headquarters Key people
ICAO DKN 2003
Callsign DECCAN
Deccan Airlines has grown rapidly since it first started air operations in 2003. It has revolutionised air travel in India and has brought air travel with in the reach of common man. Deccan Airlines was the first airline in India to link second rung cities like Hubli, Madurai and Visakhapatnam to metros like Bangalore and Chennai. The airline went public in May 2006. The proceeds from the IPO were planned be used to set up a training centre in Bangalore and a maintenance facility in Chennai. Presently, Deccan Airlines covers 59 destinations in India. The Deccan Airlines fleet consists of 43 aircrafts. These include 20 Airbus A320 and 23 ATR Turboprop. Deccan Airlines has massive expansion plans. Deccan placed an order for 30 new 72-seater ATR 72-500 aircraft in 2006, 32 A320 jets in 2006 and 30 additional A320 aircrafts with delivery beginning 2008. 2.7.7.2 SpiceJet Airways
Table 8
Bangalore International Airport Chennai International Airport 43 59 The United Breweries Group Bangolare
Capt. V. Gopinath
Website: http://www.deccanairlines.in
Source: Cygnus Civil Aviation Industry Report, June 2008
Deccan Airlines is Indias first low-cost airline. It is operated by Deccan Aviation Private Limited, India's largest private helicharter company. Deccan Airlines was established in 2003 and started operations in August that year with regular scheduled flights from Bangalore to Mangalore and Hubli. Captain V. Gopinath, is the Executive Chairman of Deccan Airlines and is one of the founders of Deccan Airlines. Deccan Airlines is Indias first airline to follow a NoFrills, Low Cost Scheduled Passenger Airline business. model. The company operate from seven bases located in the largest urban centers in India: Mumbai, Delhi, Chennai, Bangalore, Kolkata, Hyderabad and Trivandrum. In May 2007, The United Breweries Group, parent company of Kingfisher Airlines, acquired 26% of Deccan Airlines and subsequently increased its stake to 46%. Both airlines are being run as two separate brands.
SpiceJet
IATA SG
Founded Hubs
ICAO SEJ May 2005
Callsign SPICEJET Chatrapati Shivaji International Airport. Indira Gandhi International Airport N/A 19 18 SpiceJet New Delhi Siddharth Sharma, Ajay Singh, the Kansangra family and Sanjay Malhotra
Focus cities / secondary hubs Fleet size Destinations Parent company Headquarters Key people
Website: http://www.spicejet.com
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SpiceJet is a low-cost airline based in New Delhi. Spice Jets mission is to become Indias preferred low cost airline, delivering the lowest air fares with the highest consumer value, to price sensitive consumers. Its vision is to ensure that flying is no longer confined to CEOs and business travelers, but is affordable for everyone. SpiceJet airlines is promoted by Ajay Singh, the Kansangra family and Sanjay Malhotra. Spice Jet airways began its operations in May 2005. It was earlier known as Royal Airways, a reincarnation of Modiluft. SpiceJet has chosen a single aircraft type fleet which allows for greater efficiency in maintenance, and supports the low-cost structure. It has a fleet of 17 Boeing 737-800 and 2 Boeing 737-900ER.
Pune, Agartala, Dibrugarh, Mangalore and Jaipur. In a short span of time Kingfisher Airline has carved a niche for itself. The airline offers several unique services to its customers. These include: personal valet at the airport to assist in baggage handling and boarding, exclusive lounges with private space, accompanied with refreshments and music at the airport, audio and video on-demand, with extra-wide personalised screens in the aircraft, sleeperette seats with extendable footrests, and three-course gourmet cuisine.
Table 9
SpiceJet's new generation fleet of aircraft is IATA ICAO Callsign backed by cutting edge technology and IT KFR KINGFISHER infrastructure to ensure the highest ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Founded 2004 standards in operating efficiency. It has Hubs Banglore International Airport maintenance support and state of the art technology from world leaders like KLM, Star Focus cities / N/A secondary hubs Navigation, Russel Adams and Tech Log. Spice Jet currently flies to 18 destinations. Fleet size 44 These include: Ahmedabad, Bangalore, Destinations 71 Chennai, Delhi, Goa, Hyderabad, Jammu, Parent company Ub Group Kolkata, Mumbai, Pune, and Srinagar. The Headquarters Mumbai airlines has ordered 5 Boeing 737-900ER Key people Dr. Vijay Mallya, CMD and 5 Boeing 737-800 aircrafts to be Website: http://www.flykingfisher.com delivered between 2007 and 2009, and Source: Cygnus Civil Aviation Industry Report, June 2008 acquired an additional 10 options for either Boeing 737-800 or Boeing 737-900ER or a Kingfisher Airlines currently operates with a combination. brand fleet size of 44 which include ATR72500, A319, A320, A321 and A330. It was the 2.7.7.3 Kingfisher Airline first airline in India to operate with all new Kingfisher Airline is a private airline based in aircrafts. Kingfisher Airlines is also the first Bangalore, India. Vijay Mallaya of United Indian airline to order the Airbus A380. In Beverages Group owns the airline. June 2007, the airlines placed orders to buy Kingfisher Airlines started its operations on another 15 A350-800 jets worth USD3 bn. May 9, 2005 with a fleet of 4 Airbus A320 The order also includes 5 A340-500 planes, aircrafts. The airline operates on domestic 10 A330-200 and 20 A320-family jets worth a routes. The destinations covered by total of USD7.2 bn. Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata,
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Kingfisher Airlines
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2.7.7.4 GoAir Airlines

Table 10
Jaipur, Jammu, Mumbai, Pune, and Srinagar. Go Air operates with state-of-theart Airbus A320 aircraft fleet. 2.7.7.5 Paramount Airways
Table 11
IATA GB
Founded Hubs
ICAO GOW 2004
Callsign GOAIR
Paramount Airways
Chhatrapati Shivaji International Airport Chennai International Airport 5 13 Wadia Group Mumbai Jehangir (Jeh) Wadia
IATA 17
Founded Hubs
ICAO PMW 2005
Callsign PARAWAY Chennai International Airport N/A 5 8 Paramount Airways Chennai
Focus cities / secondary hubs Fleet size Destinations Parent company Headquarters
Website: http://www.goair.in
ISIEmergingMarketsPDF in-kpmg1 from Report, June 2008 on 2011-07-06people Source: Cygnus Civil Aviation Industry 121.244.145.4 Key 01:20:43 EDT. DownloadPDF. Mr. Thiagarajan
GoAir Airlines is a low-cost budget airline based in Mumbai, India. The airline is promoted by Wadia Group, which has been synonymous with leading Indian companies, through its brands Britannia and Bombay Dyeing. GoAir Airlines has been showcased as The People's Airline and is the brainchild of Jeh Wadia, who is the Managing Director of GoAir Airways. GoAir Airlines Director, is looking at 'commoditising air travel' by offering airline seats at marginally higher train prices to all cities in India. The airlines theme line is Experience The Difference and its objective is to offer its passengers a quality consistent, quality assured and time efficient product through affordable fares. GoAir's business model has been created on the 'punctuality, affordability and convenience' model. GoAir's route network spans prominent business and leisure destinations, across India. Currently it covers 13 destinations. These are Ahmedabad, Bangalore, Chennai, Cochin, Coimbatore, Delhi, Goa, Hyderabad,
Website: http://www.paramountairways.com
Paramount Airways is a low-cost private airline operating in India. Paramount Airways was launched on October 19, 2005 by the Paramount Group, a leading Indian textile manufacturer based in Madurai. The headquarters of Paramount Airways is in Coimbatore. Paramount Airways aims to provide exceptional value for money, unparalleled comfort and convenience to the passengers. Paramount Airways offers several value added facilities such as valets to assist in boarding the plane, gourmet meals, and a range of in-flight services and entertainment. Paramount Airways has number of firsts to its credit. It is the first airline in India to launch the New Generation Embraer 170/190 Family Series Aircrafts. It is the first to offer full business class services but at prices that are equivalent to the economy class fares of other carriers. Paramount
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Airways is also the premium service schedule airline offering first time direct services to a number of commercial Hubs in India, connecting them to primary metros across the country. Paramount Airways presently operates only in South India connecting Bangalore, Chennai, Cochin, Coimbatore, Hyderabad, Vizag, Trivandrum and Madurai. It plans to expand operations from Bangalore to Pune & Goa. Paramounts fleet includes 2 Embraer E-170-100LR and 3 Embraer E-175-200LR. The airline planned to introduce an additional 7 aircrafts in 2008 and another 15 by the end of 2009. Paramount plans to have a large fleet of 40 aircrafts by the end of 2010, connecting the South, West and Northern markets. 2.7.7.6 IndiGo Airlines
conscious and are looking for affordability, punctuality and hassle-free processing. IndiGo presently has a fleet of 15 aircrafts, all A320s. Further orders for 100 A320s have been placed at USD6 bn, and IndiGo expects to receive them by 2016. Some of the sectors on which IndiGo is concentrating are Delhi - Imphal, Delhi Pune - Bangalore, Delhi - Kolkata Guwahati, Delhi - Hyderabad, Delhi Mumbai and Delhi - Nagpur. The airlines hopes to serve around 30 Indian cities with a fleet of 40 A320s by 2010. 2.7.7.7 Jagson Airline
Table 13
ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Table 12
Jagson Airways
IndiGo Airlines
IATA 6E
Founded Hubs
ICAO IGO 2005
Callsign IFLY Indira Gandhi International Airport
IATA NA
Founded Hubs
ICAO NA 1992
Callsign TBA
Chatrapati Shivaji International Airport, Indra Gandhi International Airprt Pune 3 8 NA New Delhi JG Gupta
Delhi - Imphal, Delhi - Pune Bangalore, Delhi - Kolkata Focus cities / Guwahati, Delhi - Hyderabad, secondary hubs Delhi - Mumbai, and Delhi Nagpur
Fleet size Destinations Parent company Headquarters Key people
19 17 Interglobe Enterprises New Delhi Bruce Ashby
Website: http://www.jagsonairline.com
Website: http://www.goindigo.in
IndiGo is the latest entrant to the domestic civil aviation space in India. The low cost carrier took off its inaugural flight from Delhi to Imphal on August 4, 2006. IndiGo is targeting those people who are cost
Jagson Airline is a private low-cost budget airline based in Delhi, India. In 1991 when the aviation sector was opened for the private sector, Jagson Airlines, was the first private airline to avail of this opportunity. It commenced its operations in 1992.
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Jagson Airline presently flies to select destinations in Himachal Pradesh, Uttaranchal and Rajasthan. It also operates a helicopter service between Srinagar, Baltal and Amarnath. Jagson Airlines is the only airlines that connects to all three airports in the Himachal Pradesh state. Later, it expanded to Jaipur, Jaisalmer and Jodhpur in Rajasthan, as well as the business districts of Rajkot and Surat in Gujarat. It has 3 Dornier-228 aircrafts and 2 MI-172 helicopters. The destinations currently covered by Jagson Airline are:
Kullu & Manali Jaipur Pondhicherry Jaisalmer Jodhpur Pant Nagar Shimla
Air-India Express is a low-cost airline subsidiary of Air India. With flying becoming more and more popular in India, a large group of customers are demanding low cost international flights like the new low-cost domestic private airlines. To help meet this need and expand the airline, Air India spun off Air India Express as its low-cost avatar. Currently, the airlines operates the Gulf and Middle Eastern routes and some Southeast Asian routes. It also flies domestic routes from Mumbai, Delhi, Kochi and Kozhikode. The airline was established in May 2004 and started operations on April 28, 2005 from Thiruvananthapuram. Their first Boeing 737 had been delivered in February 2005. Air India Express will be receiving 18 Next Generation B737-800s, whereby 8 of the aircrafts have already been delivered. 2.8 Summary of Key Challenges
2.7.7.8 Air-India Express

Table 14
Air India Express
IATA IX
Founded Hubs
ICAO AXB 2005
Callsign EXPRESS INDIA Trivandrum International Airport Cochin International Airport Indira Gandhi International Airport Kozhikode International Airport Mumbai International Airport Chennai International Airport 8 18 Air India Charters Ltd. Mumbai V. Thulasidas
Standards of international airports: Visitors are generally not impressed by the standard of Indias international airports. Most of the facilities are outdated and in need of a total facelift to accommodate more charters, bigger aircraft and handle the increased number of passengers passing through. Expensive domestic flights: Domestic flights are still too expensive, while the government must be complimented on the reduction on ATF taxes, high cost domestic aviation makes it cheaper for Indian travelers to visit other countries rather than their own. High level of bureaucracy: The other end of the scale, Indias lack of decent convention facilities means it is still missing out on the profitable MICE sector. Singapore, Malaysia, Hong Kong, Jakarta and Dubai are considered attractive options, bringing in high profile tourists among the delegates, but India is not yet on the conference map. While building more hotels would provide an
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Website: http://www.airindiaexpress.in/airindiaexpress/ home.asp

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answer and there is still a great deal of land that could be developed, the high cost of land coupled with complex laws and large amounts of bureaucracy acts as a deterrent.
Legalisation of gambling: Areas that are still left wide open by the government for the development are the legalisation of the gambling (which is the main source of income in some tourist destinations in tourist places). Demand and supply mismatch: The demand and supply mismatch in the availability of rooms discourages the tourist to change their plans. As very few countries share the same demand and supply mismatch which the Indian hoteliers face where the average tourist stay is 10 to 12 days.
Cruise tourism: Cruise tourism is also another area, which needs attention from the government. In the last six years the cruise tourism alone has generated USD100 mn for the Indian government. But, still not enough cruise terminals are set to facilitate the tourist or not proper information regarding the packages is made available to the tourists. Terror attack: The November 2008 Mumbai terror attack has affected inbound traffic. The US and Australia have advised its citizens to reconsider travel to India. The government has to find ways to lure tourists back to India and aggressively market the country as a safe destination.
ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on
Poor support infrastructure: Though the Indian government is taking steps, there are still many more improvements to 01:20:43 2011-07-06 be done. EDT. DownloadPDF.
2.9 Foreign Exchange Earning From Tourism

Table 15: Foreign Exchange Earnings in INR and USD
Year Foreign Exchange Earnings (INR Million) Percentage Change Foreign Exchange Earnings (USD in Million) Percentage Change
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006* 2007* 2008#
71290 84300 100460 105110 121500 129510 156260 150830 150640 207290 279440 331230 390250 443600 258250
7.8 18.2 19.2 4.6 15.6 6.6 20.7 -3.5 -0.1 37.6 34.8 18.5 17.8 13.7 18.2@
2272 2583 2832 2889 2948 3009 3460 3198 3103 4463 6170 7493 8634 10729 6385
7.0 13.7 9.6 2.0 2.0 2.1 15.0 -7.6 -3.0 43.8 38.2 21.4 15.2 24.3 25.5@
Notes: * Revised Estimates, #Advance Estimates (Jan - June), @ Growth Rate over Jan - June 2007 Sources: Reserve Bank of India and Ministry of Tourism
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Chart 15: Foreign Exchange Earnings Through Tourism
#2008 (Jan - June) *2006 2004 Years 2002 2000 1998
Chart 16: Foreign Exchange Earnings Through Tourism

#2008 (Jan - June) *2006 2004 Years 2002 2000 1998
1996
1996
1994 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000
1994 0 2000 4000 6000 8000 10000 12000
Earnings (Rs m n)
Sources: Reserve Bank of India and Ministry of Tourism
Earnings (USD m n)
from 1.16% in 2006 to 1.25% in 2007. Worldwide, international tourism receipts stood at USD856 billion in 2007. The table ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Indias share in the total of world tourism below indicates worldwide receipts and receipts rose from 0.67% to 1.25% over the Indias share to it since 1998. last ten years. Indias contribution increased
Table 16: World Travel Receipts and Indias Share
Year World Travel Receipts (USD Bn) Travel Receipts In India (USD Mn) Percentage Share of India
2.10 Share of India in the World Tourism Receipts
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
442.6 457.2 477.0 463.6 474.2 525.0 622.0 680.0 742.0 856.0 N/A
2,948 3,009 3,460 3,198 3,103 4,463 6,170 7,493 8,634* 10,729* 6,385#
0.67 0.66 0.73 0.69 0.65 0.85 0.99 1.10 1.16 1.25 N/A
Notes: * Revised Estimates, #Advance Estimates (Jan - June) Sources: Reserve Bank of India, Ministry of Tourism and WTO
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ISI Analytics Table 17: Passengers Trend

Airports International Passengers Oct 2008 Oct 2007 Change (%) Domestic Passengers Oct 2008 Oct 2007 Change (%)
12 International 5 JV International 8 Custom 21 Domestic Other Airports
746,317 1,744,501 75,463 312
646,584 1,576,496 65,386 38
15.4 10.7 15.4 721.1
1,741,685 3,337,886 360,877 564,688 104,911
1,982,991 4,095,968 360,776 562,108 106,549
-12.2 -18.5 0.0 0.5 -1.5
Source: Airports Authority of IndiaTraffic Statistics, Oct 2008
2.11 Airport Statistics
The total count of international passengers arriving at all airports in India have increased over the year. Domestic passengers on the other hand decreased, however in 21 domestic airports there was a slight increase Travelers by EDT. DownloadPDF. in passengers of 0.5%. ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43air have decreased by 7.67% between the period October 2007 and The governments Open Skies policy, October 2008. However, from the month granting permission for domestic airlines to September 2008, total travelers increased by 14.85% MoM. International travelers grew by commence international flights, start up of various low-cost carriers, and fleet expansion 9.06% MoM in October 2008, whilst by domestic players has created a huge domestic travelers rose 17.47% MoM. International passengers stood at 2,288,596 incentive for domestic travelers to explore in October 2007, but grew to 2,566,593 a distant countries. year later. On the other hand, domestic The increase in international passenger passengers totaled 7,108,392 in October 2007 and declined to 6,110,047 a year after. traffic can be attributed to the introduction of
Chart 17: Travelers by Air
Millio n s 12 10 8 6 4 2 0 O c t-07 J an-08 O c t-08 J un-08 J ul-08 F eb08 May 08 Nov 07 Dec 07 Mar08 Aug08 Sep08 Apr08
operation by Air Arabia, Silk Air and Sri Lankan Airlines since October 2007. Domestic passenger traffic experienced a decrease due to the withdrawal of operations by many airlines in the domestic sector since June 2008.
International
Source: Airports Authority of IndiaTraffic Statistics
Domestic
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2.12 Domestic Tourism Statistics

Table 18: Domestic Tourist Visit Years 1999 2000 2001 2002 2003 2004 2005 2006 Number of Domestic Tourist Visits 190.67 220.11 236.47 269.60 309.04 366.27 391.95 461.76 % Change Yon -Y 15.4 7.4 14.0 14.6 18.5 7.0 17.8
(13.5%), Karnataka (7.2%) and Rajasthan (4.9%) in 2007. 2.13 Hotel And Room Supply The booming tourism industry had a cascading effect on the hospitality sector with an increase in occupancy ratios and average room rates (ARR). With increasing disposable income, more people can afford to travel to different pilgrimage and tourist spots domestically. The government is actively promoting tourism. With growing business, domestic and international leisure travel, room demand is going to rise further.
With the arrival of low cost airlines and the competitive prices on offer, domestic tourists 2007 526.57 14.0 are provided with a host of options. The Source: Ministry of Tourism - At a Glance 2007 Report opening up of the aviation industry in India has paved the way for exciting opportunities for the hotel industry as it relies on airlines to The travel bug that's bitten Indians as seen transport 80% EDT. DownloadPDF. in the table above, hasfrom 121.244.145.4 on 2011-07-06 01:20:43 of international arrivals. caused a continuous ISIEmergingMarketsPDF in-kpmg1 increase in domestic tourist visits, with the An increasing number of foreign tourists are year 2007 witnessing a growth of 14% YoY arriving in India, and boosted foreign and a growth of 17.8% YoY for the year exchange earnings at around 26.5% from 2006. 2006 to 2008. This has assisted with the growth of ARR and occupancy rates of the Domestic tourist growth rates have dipped hotel industry. The upcoming slightly due to the tough economic times Commonwealth Games in 2010 will also faced in 2007, which will most likely continue drive demand for quality accommodation. for the next two years or so. Competitive air fares and improved access and convenience More than 50% of the occupancy of majority of travel, especially by air, have aided growth of the budget hotels comes from business in the segment. Thomas Cook India is said to travelers. The ARR realised from business be strengthening its focus on the domestic travelers is usually higher than leisure travel segment. The company is expecting travelers. Furthermore, growing demand and the segment to grow five to ten times in the robust occupancy in the budget hotel sector next five years. Currently, many travel has resulted in an increasing number of agents are preparing domestic holiday budget hotels. packages that are affordable and allow customers to customise the package. Service apartments, offering comfort and Variations of packages include mid-term, convenience of a home, are becoming a short-term and weekend breaks. globally successful concept. This range is a usual choice for corporate employees or The top two states that were most commonly expatriates relocating, or visitors staying on visited by domestic tourist were Andhra for a longer duration. Pradesh and Uttar Pradesh, accounting for 24.3% and 22.1% of total domestic visits respectively. Following on was Tamil Nadu
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ISI Analytics Table 19: Hotel and Room Supply

Year Hotel Supply Change Room Supply Change Room Occupancy Rate (%) *
2003 2004 2005 2006 2007
1722 1892 1190 1169 1437
152 170 -702 -21 268
91,720 97,770 67,613 75,787 84,327
6239 6050 -30157 8174 8540
60.7 65.1 67.7 60.4 N/A
Note: * State Approved Hotels Source : CEIC
The occupancy levels by different cities in India recorded mixed trends. Despite a drop in occupancy for the three major cities Bangalore, Delhi and Hyderabad, other cities In 2007, there were 1,437 hotels in India, an increase of compared to 1,169 hotels in managed to see a slight growth in the ISIEmergingMarketsPDFthe number of 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Hyderabad 2006, whilst in-kpmg1 from rooms available average occupancy rate. Delhi, and Pune were initially at a rate of 80% and increased by 11.27% from 75,787 rooms to above in 2005-06, but experienced a decline 84,327 in 2007. The room occupancy rate stood at 60.4% in 2006, whilst the rate for in their occupancy rate in 2007-08. 2007 was unavailable. Throughout the past three years, the ARR was highest in Delhi, Mumbai and Looking at previous years, hotel and room supply have dipped since 2004, where it Bangalore. The highest growth rate in ARR
Table 20: Average Occupancies and Room Rates in Major Cities in India
Average Occupancy (%) City 2005-2006 2006-2007 2007-2008 2005-2006 Average Rate (INR) 2006-2007 2007-2008
The Indian government announced a new subsidy scheme linked to the number of rooms build by a hotel for the purpose of additional budget hotel room capacity catered for the upcoming Commonwealth Games.
recorded 1,892 and 97,770 respectively. In 2005, the room occupancy rate stood at its highest at 67.7% since 2000.
Bangalore Kolkata Chennai Delhi Goa Jaipur Mumbai Hyderabad Pune Ahmedabad
76.7 76.4 78.2 80.8 67.8 65.7 76.2 82.0 81.9 69.9
75.5 77.1 74.7 78.1 73.5 66.3 78.7 73.3 83.5 70.8
73.5 77.4 76.0 78.0 75.0 71.0 80.0 69.0 76.0 73.0
8,762 3,887 4,357 6,909 5,905 4,407 6,041 4,870 3,761 2,612
10,545 5,366 5,610 9,482 5,846 5,364 8,614 6,091 4,885 3,118
10,100 6,300 6,600 10,200 6,500 5,800 10,200 6,600 5,700 3,778
Sources: HVS International and Cygnus Research
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ISI Analytics
for the period 2006-07 to 2007-08 was experienced by Mumbai at 18.4% YoY. Following on was Chennai and Kolkata with ARR growth rates of 17.6% YoY and 17.4% YoY respectively. Hotels in cities like Mumbai and Delhi are adopting a rate strategy relating to occupancy, whereby the hotels increase revenue per available room.
2.14 Travel Agents, Tour Operators and Tourist Transport Operators In order to encourage quality standards and Services, the Ministry of Tourism approves travel agents, tour operators, tourist operators and adventure tour operators in the country to strict guidelines.
Table 21: Travel Trade

2007 2006 2005 2004 2003
Travel Agencies Tour Operators Tourist Transport Operators Adventure Tour Operators Domestic Tour Operators
341 441 163 24 19
327 433 169 17 13
305 429 147 15 2
223 308 175 13 -
186 340 154 13 -
ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Source: Dept. of Tourism - Annual Report
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ISI Analytics
3. Leading Players
3.1 Major Players 3.1.1 East India Hotels Ltd. (EIH) contracts of EIH Associate-owned Trident Hotels in Bangalore, Hyderabad, Manesar and Gurgaon. Under Oberoi Hotels, EIH has 1,832 rooms.
East India Hotels Ltd. was incorporated on 26th May, 1949 in Calcutta and was EIH have entered into a strategic alliance promoted by Rai Bahadur M.S. Oberoi and with Hilton International Co. for co-branding Oberoi Hotels (India) Ltd. The company was hotels in India under the Trident Hilton brand, built in collaboration with Intercontinental which brings together the global brand equity Hotels Corporation, a wholly owned and extensive worldwide marketing subsidiary of Pan American World Airways. resources of the Hilton Group. To support In 1966 the company entered into a the ongoing demand expansion is on the collaboration agreement with Sheraton cards. Hoteliers are expanding their capacity. International Inc., Boston. In 1968 the Due to the tremendous shortfall of rooms in Associated Hotels of India Ltd., and Hotels India it is expected that the hotel companies Pvt. Ltd., were amalgamated with the to expand their present capacity to take company. In 1988 the company entered into advantage of the ongoing demand. Not only a joint venture agreement with Accor of the Indian companies but also foreign brands France for constructionfrom 121.244.145.4 on 2011-07-06launching EDT. DownloadPDF. and development of are 01:20:43 their hospitality arms for ISIEmergingMarketsPDF in-kpmg1 medium priced hotels. In 1996 the name of opening premium hotels. Many international the company was changed to EIH Ltd. from brands are putting lot of money, giving Indian East India Hotels Ltd. In 2004 the company players a real good competition. entered into a strategic alliance with Hilton International. At present the company owns The company has a INR850-capex brand the second largest chain of hotels in India. It new hotel at Bandra-Kurla Complex (BKC) has 30 hotels and resorts in addition to 5 and it is expected to be the only five-star luxury cruisers under its various group hotel at BKC. The 440 room hotel is companies located in India and abroad. expected to open by the last quarter of FY2009. It is suppose to start of with a room EIH operates hotel under The Oberoi and base of 220 during its soft launch in January Trident brands. Oberoi properties are luxury 2009, and later extend to 440. hotels in the premium segment, addressing The government of India has ranked Travel the needs of foreign and domestic business. and Tourism as an economic priority having Trident hotels are high quality medium priced recognised and acknowledged the hotels, accorded 3,4 and 5 star ratings. EIH significance of the industry for the countrys also operates hotels at various international economy. The Tourism Department's destinations like Egypt, Indonesia and 'Incredible India' campaign has been widely Mauritius. A tie-up with Hilton international, acclaimed. The growth in tourist arrivals is continuous increase in tourist inflow coupled encouraging and higher paying tourists are with increased room demand and increased visiting the country. Foreign tourist arrivals ARRs and occupancy rates have been key into India are expected to grow to 10 mn by triggers for performance. 2010, in anticipation of the Commonwealth Games during the year. The company currently has 1,069 rooms in Trident Hotels under management contracts, and plans to add 775 rooms through
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ISI Analytics Table 22: Financial Years SnapshotIncome Statement and Balance Sheet Income Statement
Period to (INR mn) FY05 (12) FY06 (12) FY07 (12)
Net Sales Other income PBIDT
5,555 698 1,792
7,564 468 3,950
9,390 578 4,437
Interest Depreciation Amortisation

Profit before tax (PBT)
(737) (404) (64)

587
(868) (409) (64)

2,609
(981) (427) (64)

2,965
Tax
Profit after tax (PAT)
(256)
331
(721)
1,888
(960)
2,005
Balance Sheet
Sources of Funds
Net Worth
9,192
10,453
11,742
Share Capital Reserves

Loan Funds Def Tax (liability) Total
Uses of Funds
524 8,668
8,091 1,266 18,550
524 9,929
7,093 1,144 18,690
786 10,956
7,916 1,041 20,699
Total Fixed Assets
13,440
13,652
15,044
Net Block Gross Block Depreciation Capital WIP

Investments Net Working Capital
11,336 14,552 (3,215) 2,103

3,204 1,692
11,248 14,800 (3,553) 2,404

3,044 1,452
11,285 14,976 (3,691) 3,758

4,118 1,844 5,915 (4,463) 85 0 20,699
Total Current Assets Total Current Liabilities

Miscellaneous Expd. Def Tax (assets) Total
Source: Company Annual Reports
3,446 (1,754)
213 0 18,550
4,708 (2,863)
149 0 18,690
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ISI Analytics Table 23: Financial Years SnapshotCash Flow Statement

Period to (INR mn) FY06 FY07
Net profit before tax and extraordinary items Depreciation Interest expense Interest income Dividend income Operating profit before working capital changes Adjustments for: Trade & other receivables Inventories Trade payables Cash from operating activities Interest paid Income tax
1,647 409 868 (89) (4) 2,887
2,572 427 981 (92) (2) 3,893
(236) (61) 196 2,786 (858) (842)
(457) 111 220 3,767 (985) (1,106)
Cash flow before extraordinary item 1,086 1,676 ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Extraordinary items: Unrecovered advance pursuant to a settlement made at High Court of Calcutta Sale of land Repayments of Finance Lease Liabilities
Net cash from operating activities Cash flows from investing activities
(20) 1,098 0.20

2,164
144 1,820
(Inc)/Dec in fixed assets (Inc)/Dec in Investments Interest received Dividends received

Net cash from investing activities Cash flows from financing activities
(759) (8) 73 4 (691)
(2,324) (269.17) 68 2 (2,523)
Proceeds from borrowings Repayment of loans / liabilities Dividend paid

Net cash used in financing activities Net increase in cash and cash equivalents
1,500 (2,477) (472)

(1,450) (24)
1,200 (376) (259)

564 (139)
Cash at start of the year Cash at end of the year

Source: Company Annual Reports
640 664
664 506
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ISI Analytics Table 24: Financial Years SnapshotRatios

Period FY06 (12) Per share ratios FY07 (12) FY08 (12)
Reported EPS (INR) Div per Share Book Value per Share
Valuation ratios
36.04 10.00 196.65
5.10 1.40 29.66
5.53 1.80 33.17
P/E P/BV EV / Sales EV / EBIT EV / Core EBITDA

Profitability ratios
19.80 3.58 5.79 16.82 14.54
18.43 3.15 4.72 12.38 11.06
24.78 4.12 5.71 14.13 12.80
Operating Margin (%) Net Profit Margin (%)
33.66 23.50
36.72 20.14
38.14 18.89
Reported Return from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. 24.14 21.75 20.44 ISIEmergingMarketsPDF in-kpmg1on Net Worth (%) EBIT Margin (%)
Liquidity ratios
32.43
36.00
37.97
Current Ratio Quick Ratio Inventory Turnover Ratio

Leverage ratios
1.17 1.05 34.42
1.07 1.01 5,589.10
0.99 0.88 32.47
Debt / Total Equity

Component ratios
0.89
0.85
0.76
Selling Cost Component Exports as a Percent of Total Sales Long Term Assets / Total Assets
Payout ratios
4.76 59.41 0.75
4.23 56.05 0.74
4.42 55.31 0.82
Dividend Payout Ratio Earnings Retention Ratio

Performance ratios
31.64 41.90
32.10 59.61
38.09 62.77
ROA (%) ROE (%) Sales to Fixed Assets

Source: EMIS
8.79 18.06 0.87
7.97 17.07 1.07
8.60 16.64 0.99
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ISI Analytics
3.1.2 Thomas Cook India Ltd (TCIL) Thomas Cook began its Indian operations in 1881, with its first office in Mumbai. Subsequently, it expanded to the cities of Kolkata, Bangalore, Delhi and Chennai, under the aegis of Thomas Cook Overseas Limited. The current company, TCIL came into existence with effect from November 1, 1978. TCIL made its public issue in February 1983. TCIL activities include Corporate Travel, Leisure Holidays, Foreign Exchange and Travel related Insurance.
Table 25: Awards Received
2005 2006
Major shareholders of the company are TCIM Ltd (54.42%), Thomas Cook UK Ltd (20.48%) and Dubai Financial LLC (5.96%). The company is represented in 55 cities across 200 location in India with over 3,000 employees. Thomas Cook is quoted in BSE and NSE Stock Exchanges. Thomas Cook (India) Ltd. has been a recipient of a number of highly prestigious awards, listed in the table below.
1.
Golden Peacock Award for Excellence in Corporate Governance 2006 (Finalist Certificate) by Institute of Directors for ethical business practices
2004 2005
1.
Best Travel Agency Award, 2005 by The Pacific Asia Travel Writers Association (PATWA) PATA Gold Award, 2005 by Pacific Asia Travel Association (PATA) for marketing in the category of Industry Tour Operator / Travel Agent. Best Website Award by the Association of Business Communications of India (ABCI), where the company won the first prize for its website www.thomascook.co.in (3 years in a row). Best Technology Award, 2005 by Galileo Express Travel & Tourism Award for Best Technology Programmes. Excellence in Financial Reporting in Service Sector by The Institute of Chartered Accountants of India. Top CFO, Mr. Robin Banerjee, Executive Director Finance by Business Today Magazine, listed amongst the top 13 of Indias Best CFOs. Galileo India Express Travel and Tourism Awards Best Technology Programmes (200405). Best Travel Agency for Tourism Related Services by PATWA (Pacific Area Travel Writers Association) ITB Berlin Germany- March 2005. Malaysia Airlines Gold Award presented to Thomas Cook (I) Ltd. for Outstanding Sales Achievement 2004-05. Qantas High Flyer Award 2004-05 to Thomas Cook (I) Ltd.
2.
3.
4.
5.
6.
7.
8.
9. 10.
Source: Companys Website
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ISI Analytics Table 26: Financial Years Snapshot

2005 INR mn 2006 INR mn 2007 INR mn
Total Income Total Expenditure Profit before Taxation and Exceptional Item Provision for Taxation Exceptional Item Net Profit Transfer to General Reserve Proposed Dividend Corporate Dividend Tax Earnings Per Share ( INR) - Basic Fixed Assets Investments Net Current Assets Share Capital
1,304 889 415 147 269 27 55 8 1.84 537 191 961 146 1,488 1,633 56 1,689
2,430 1,826 603 200 18 385 38 80 14 2.64 559 2,025 1,503 146
2,251 1,858 393 59 334 34 80 21 1.76 596 1,927 2,103 1,200 560 1,760 2,832 33 4,626
Share Capital Suspense Reserves Shareholders Funds Loan Funds Deferred Taxation Total Source of Funds
Source: Companys Annual Reports
1,054 370 1,569 2,459 58 4,086
Chart 18: Market Capitalisation Chart
Chart 19: PAT Chart
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ISI Analytics
3.1.3 Jet Airways (India) Ltd Jet Airways, which commenced operations on May 5, 1993, has within a short span of 13 years established its position as a market leader. The airline has had the distinction of being repeatedly adjudged Indias Best Domestic Airline and has won several national and international awards. For the year 2007, the airlines won the Excellence Award for the Best Full Service Airline in India by the Air Passengers Association of India. The airline is owned by Tailwinds Ltd. (owned 80% by Naresh Goyal) and the remaining 20% is public shares. Jet Airways' shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Jet Airways current fleet consists of 54 B737 New and Next-Generation aircraft, 10 Airbus 330-200, 10 ATR 72-500 and 10 B777300ER aircrafts. The average age of the fleet is 4.1 years making it the operator of the youngest aircraft fleet in Asia. Jet Airways flies to 63 destinations within India and internationally. More aircrafts have been ordered to be deployed in far Eastern routes to serve Hong Kong and to expand services to Europe and the Middle East. The airlines primary hub and maintenance base is located in Mumbai; whilst Delhi, Kolkata, Chennai, Pune and Bangalore are Secondary Hubs. In April 2007, Jet Airwarys acquired Air Sahara for USD340 mn, renaming it as JetLite and marketed it between LCCs and full service airlines.
Table 27: Profit & Loss StatementFY 2008
Note: ROE used for conversion: USD1 = INR40.12 for FY2008 and USD1 = INR43.47 for FY2007 Source: Companys Annual Presentation
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ISI Analytics Table 28: Summary Balance Sheet
Table 29: Company Operating Parameters
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ISI Analytics Chart 20: Fleet Plan
Note: Jet has also firm orders for 20 B737, 10 B787 and 10 B737 option aircraft between FY2012-2014 Source: Companys Annual Presentation
The research report is based on material compiled from data considered to be reliable at the time of writing. However, information and opinions expressed will be subject to change without notice. We do not accept any liability directly or indirectly that may arise from investment decision-making based on this report.
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ISI Analytics

India Industry Research

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF.

ISI Analytics the Business research arm of ISI Emerging Markets

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF.

Source: World Tourism Organisation (UNWTO) Tourism Highlights 2008

ISI Analytics Table 1: International Tourist Arrivals (million)

Sources: UNWTOTourism Highlights 2008; CEIC

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF.

1.2 India Tourism

16 in absolute size worldwide

ISI Analytics Table 2: International Tourism Receipts 2007

0.5 13.8 14.0 15.6 8.7 5.3 10.7

Sources: Ministry of Tourism, CEIC

2. Market Trends and Outlook

2.3 Trends Tourist Arrivals Market Performance and Share

200,000 150,000 100,000 50,000

120,000 80,000 40,000

Year 1990 1993 1996 1999 2002 2005

Table 4: Foreign Tourist Arrivals in India

* Provisional Sources: Ministry of Tourism Report, 2007, CEIC

UK USA Canada France

June September May May

December December December February

ISI Analytics As an immediate priority it looked for a

2.7.7 Indias Budget Airlines : Snapshot 2.7.7.1 Deccan Airlines

ICAO DKN 2003

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF.

ICAO SEJ May 2005

2.7.7.4 GoAir Airlines

ICAO GOW 2004

ICAO PMW 2005

Callsign PARAWAY Chennai International Airport N/A 5 8 Paramount Airways Chennai

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF. Table 12

ICAO IGO 2005

Callsign IFLY Indira Gandhi International Airport

19 17 Interglobe Enterprises New Delhi Bruce Ashby

2.7.7.8 Air-India Express

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on 2011-07-06 01:20:43 EDT. DownloadPDF.

Air India Express

ICAO AXB 2005

Website: http://www.airindiaexpress.in/airindiaexpress/ home.asp

ISIEmergingMarketsPDF in-kpmg1 from 121.244.145.4 on

2.9 Foreign Exchange Earning From Tourism

Chart 16: Foreign Exchange Earnings Through Tourism

1994 0 2000 4000 6000 8000 10000 12000

2.10 Share of India in the World Tourism Receipts

ISI Analytics Table 17: Passengers Trend

12 International 5 JV International 8 Custom 21 Domestic Other Airports

746,317 1,744,501 75,463 312

646,584 1,576,496 65,386 38

15.4 10.7 15.4 721.1

1,741,685 3,337,886 360,877 564,688 104,911

1,982,991 4,095,968 360,776 562,108 106,549

-12.2 -18.5 0.0 0.5 -1.5

Source: Airports Authority of IndiaTraffic Statistics, Oct 2008

2.11 Airport Statistics

2.12 Domestic Tourism Statistics

ISI Analytics Table 19: Hotel and Room Supply

2003 2004 2005 2006 2007

1722 1892 1190 1169 1437

152 170 -702 -21 268

91,720 97,770 67,613 75,787 84,327