Present Scenario ...
The explosion in Indian air travel is being driven by a booming economy, a rapidly growing middle class and increased deregulation (Open Skies policy launched in 1990s). It is expected that about 19 million people will have taken domestic flights in India by 2005 which in turn would be a 28% jump from the previous year and one of the highest growth rates in the world. However, ATF prices and high airport charges may prove to be initial hindrances for airlines optimistic about expanding international operations, as quoted by Travel Trends Today. Early starters like Jet Airways, Air Sahara and more recently Air Deccan, have had to confront bottlenecks and challenges that accompany a new airline project in India. In today’s scenario, 80% of an airline’s operating expenditure is taken up by fuel, landing and navigation, aircraft charges, maintenance and payroll costs and not dependent on the business model. India’s geographic position being halfway between Europe and Australia, an ideal crossroad between major markets and a huge home market proves a big advantage for the Indian aviation industry. Domestic and international passengers are growing at around 20 per cent annually, with 70 per cent of the top 30 domestic markets carried from Mumbai, Delhi, Bangalore, Chennai and Kolkata, and 90 per cent of the top 20 international markets also carried from the same destinations. Aviation experts forecast that India’s annual passenger load will hit 50 million by 2010. “It’s just amazing what’s happening there,” says Maurice Flanagan, vice chairman of Emirates Group. Emirates offer 12,000seats/week to India and operate at 85% occupancy, which is very high by industry standards. New deregulation measures could help India accelerate its growth. The Indian government permitted last February, two privately owned airlines to compete with Air India on routes to Singapore, Malaysia and London and another Jet Airways to fly to the United States as well. As many as five new privately owned Indian Carriers are expected to begin flying domestically this year. India is also opening up to foreign airlines, striking more flexible bilateral deals with other countries that have multiplied the number of flights foreign operators can operate to and from the country. The Asian Wall Street Journal quoted India and Britian to have agreed to double the number of flights with each permitting about 40 a week. India has also been expected to sign an open skies agreement with U.S. – the world’s biggest civil aviation market. That deal is likely to remove all restrictions on routes between the two countries currently flown by two million people a year – The Asian Wall Street Journal. Asian, European and Middle Eastern airlines are already ramping up flights to India. Britian’s Virgin Group even hopes to buy a stake in an Indian carrier, although there exits no such provision from the government yet. With the advent of more competitors in the market, prices of tickets which once upon a time were the preserve of the elites in India are fast plummeting. This is far different from the 1970s and 1980s, when commuting even domestic was difficult and an expensive affair. Service was often awful and delays interminable. Air India and Indian Airlines held monopoly on local air travel and access to India by foreign airlines was tightly restricted. The 1990s witnessed a transformation that changed the domestic airline industry forever. The government lifted ban on private owned airlines and India saw the emergence of many small carriers but the ones that sailed the tough times are Jet Airways, Air Sahara and Air Deccan. With Jet Airways loosing market share over the past year to 37% from 42%, its acquisition of Air Sahara for $500 million is seen as a defensive move by industry observers. In his bid to regain market dominance, Naresh Goyal, chairman of the INR 44.2 billion, Jet Airways is also crafting a deal with low cost rival Air Deccan which in turn will give him a total market share of about 57%. Indian Airlines market share has fallen drastically since the transformation in 1990s to less than 40% [Businessworld- February 2006]. The prime concern marring this high expectations and growth are rundown aviation infrastructure and retrograde airport services. All aspects of airport services starting from runway maintenance to air traffic control and baggage handling needs mammoth upgrades to cope up with this escalating demand. The government of India has earmarked $3 billion to upgrade the country’s main gateway airports at Bombay and New Delhi which are crowded and chaotic beyond definition and $300 million to build new airports at Bangalore and Hyderabad [financial figures from Asian Wall Street Journal- March 2005]. Significant upgrades are also in the pipeline for more than a dozen smaller airports which in turn is a very good sign for the fast growing Indian low cost airline industry. “Every element of infrastructure for aviation in India is going to be stretched over the next three years.” The need is urgent, says McKinsey’s Mr. Zainulbhai. The world has great expectations from India at the moment and is anxiously waiting for further reforms to take place in the near future. Boeing estimates that sales of new aircrafts to India will be worth at least $35 billion over the next 20 years, making it the fastest growing aircraft market in the world after China. Binit Somaia of CAPA, a Sydney based consulting firm quoted- “The industry has been transformed completely.”
The explosion in Indian air travel is being driven by a booming economy, a rapidly growing middle class and increased deregulation (Open Skies policy launched in 1990s). It is expected that about 19 million people will have taken domestic flights in India by 2005 which in turn would be a 28% jump from the previous year and one of the highest growth rates in the world. However, ATF prices and high airport charges may prove to be initial hindrances for airlines optimistic about expanding international operations, as quoted by Travel Trends Today. Early starters like Jet Airways, Air Sahara and more recently Air Deccan, have had to confront bottlenecks and challenges that accompany a new airline project in India. In today’s scenario, 80% of an airline’s operating expenditure is taken up by fuel, landing and navigation, aircraft charges, maintenance and payroll costs and not dependent on the business model. India’s geographic position being halfway between Europe and Australia, an ideal crossroad between major markets and a huge home market proves a big advantage for the Indian aviation industry. Domestic and international passengers are growing at around 20 per cent annually, with 70 per cent of the top 30 domestic markets carried from Mumbai, Delhi, Bangalore, Chennai and Kolkata, and 90 per cent of the top 20 international markets also carried from the same destinations. Aviation experts forecast that India’s annual passenger load will hit 50 million by 2010. “It’s just amazing what’s happening there,” says Maurice Flanagan, vice chairman of Emirates Group. Emirates offer 12,000seats/week to India and operate at 85% occupancy, which is very high by industry standards. New deregulation measures could help India accelerate its growth. The Indian government permitted last February, two privately owned airlines to compete with Air India on routes to Singapore, Malaysia and London and another Jet Airways to fly to the United States as well. As many as five new privately owned Indian Carriers are expected to begin flying domestically this year. India is also opening up to foreign airlines, striking more flexible bilateral deals with other countries that have multiplied the number of flights foreign operators can operate to and from the country. The Asian Wall Street Journal quoted India and Britian to have agreed to double the number of flights with each permitting about 40 a week. India has also been expected to sign an open skies agreement with U.S. – the world’s biggest civil aviation market. That deal is likely to remove all restrictions on routes between the two countries currently flown by two million people a year – The Asian Wall Street Journal. Asian, European and Middle Eastern airlines are already ramping up flights to India. Britian’s Virgin Group even hopes to buy a stake in an Indian carrier, although there exits no such provision from the government yet. With the advent of more competitors in the market, prices of tickets which once upon a time were the preserve of the elites in India are fast plummeting. This is far different from the 1970s and 1980s, when commuting even domestic was difficult and an expensive affair. Service was often awful and delays interminable. Air India and Indian Airlines held monopoly on local air travel and access to India by foreign airlines was tightly restricted. The 1990s witnessed a transformation that changed the domestic airline industry forever. The government lifted ban on private owned airlines and India saw the emergence of many small carriers but the ones that sailed the tough times are Jet Airways, Air Sahara and Air Deccan. With Jet Airways loosing market share over the past year to 37% from 42%, its acquisition of Air Sahara for $500 million is seen as a defensive move by industry observers. In his bid to regain market dominance, Naresh Goyal, chairman of the INR 44.2 billion, Jet Airways is also crafting a deal with low cost rival Air Deccan which in turn will give him a total market share of about 57%. Indian Airlines market share has fallen drastically since the transformation in 1990s to less than 40% [Businessworld- February 2006]. The prime concern marring this high expectations and growth are rundown aviation infrastructure and retrograde airport services. All aspects of airport services starting from runway maintenance to air traffic control and baggage handling needs mammoth upgrades to cope up with this escalating demand. The government of India has earmarked $3 billion to upgrade the country’s main gateway airports at Bombay and New Delhi which are crowded and chaotic beyond definition and $300 million to build new airports at Bangalore and Hyderabad [financial figures from Asian Wall Street Journal- March 2005]. Significant upgrades are also in the pipeline for more than a dozen smaller airports which in turn is a very good sign for the fast growing Indian low cost airline industry. “Every element of infrastructure for aviation in India is going to be stretched over the next three years.” The need is urgent, says McKinsey’s Mr. Zainulbhai. The world has great expectations from India at the moment and is anxiously waiting for further reforms to take place in the near future. Boeing estimates that sales of new aircrafts to India will be worth at least $35 billion over the next 20 years, making it the fastest growing aircraft market in the world after China. Binit Somaia of CAPA, a Sydney based consulting firm quoted- “The industry has been transformed completely.”
No comments:
Post a Comment