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Challenges for aviation industry in india
The presentation discusses the challenges facing the Indian aviation industry. It notes that while the industry grew rapidly over the last decade, it is now facing several issues. These include a large debt burden carried by the major airlines, excess capacity as new aircraft are delivered during an economic slowdown, high fuel costs, lack of adequate infrastructure and airport facilities, environmental and land acquisition clearances slowing expansion, and a shortage of trained technical personnel. Addressing these challenges will be key for the industry to sustain its growth in the future.
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Highlights global aviation with 2,000 airlines, 23,000 aircraft, 32 million jobs, and challenges.
India's aviation growth, began in 1912, managed by AAI, with 450+ airports and DGCA oversight.
Transformation with low-cost airlines, 96 million passengers in 2007, 44.6% traffic growth noted.
Major roadblocks include environmental clearances, land acquisition, and manpower training shortages.
Forecasts indicate a rise to 400-450 million passengers by 2020, requiring substantial financial investment.
Highlighted regional connectivity issues, high input costs, and the need for competitive environment.
Concerns about trunk routes, excessive delivery of aircraft, debt burden, and ongoing infrastructure problems.
Focus on aircraft noise impact on health and inadequate airport facilities limiting operations.
Despite growth, the industry faces challenges from fuel prices, capacity issues, and declining passenger traffic.
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Challenges for aviation industry in india
- 1. Presentation On“Challenges forAviation Industry”Parminder Singh Grover
- 2. Aviation Industry (WorldWide)2,000 airlines, 23,000 aircraftsserve some 3,750 airports through a route network of several million kilometers 32 million jobs
- 3. India Aviation Industry(Intro.)Fastest growing aviation industryDec, 1912 first domestic route AAI manages all airport Over 450 airports and 1091 aircrafts
- 4. Cont’dDGCA controlled everyaspect Including granting flying licenses, pilots, certifying aircrafts for flight.
- 5. Indian Airline SectorKA and J A converted around half their capacity into low-cost services.Also govt. carrier Air India Launch LCSHas a Low cost Airline Air India Express
- 6. Cont’dFirst low costairline Air Deccan in 2003objective to increase their reach to a largely untapped middle class segment. Passenger traffic 96 million in 2007, compared 6 billion passenger by railway.
- 7. Current Scenario precipitatedthe boom for domestic and international passenger carriers.domestic passenger and cargo traffic recorded a growth rate of 44.6% and 8.7%.Intl. passenger and cargo traffic recorded growth rates of 15.8% and 13.8%
- 8. Cont’dTop 5 airportsof country handle 70% pass.All airports handle 90.44 million pass. 2006Growth of Aviation Industry is mostly due Low fares and schedules domestic services
- 9. ChallengesAviation industry facingmajor challenges like environmental clearances, acquisition of land and “obstructive” rules in developing its infrastructure.experts had asked the government and the environment agencies to give clearances
- 10. Cont’dLand acquisition isone of the major challenges Asian Institute of Transport Development Director (Aviation) - T R KesherwaniAirlines can expand themselves
- 11. but airports canincrease their capacity by expanding themselves Cont’dairport at Navi Mumbai has run into trouble over environmental clearances Long term need to master plan for development of infrastructureCAPA India CEO KapilKaul stressed on the need for air safety and communication
- 12. Cont’durgent need ofproviding training to manpowerindustry is facing shortage of trained technical staffs and this should not be ignored.
- 13. Cont’dprovide training tostaffs to full fill goalIndian aviation industry expected to grow two to three fold by 20203,000 Crore would be needed for the development of airportsRs 8,000 crore would be required for airlines
- 14. Cont’dnumber of passengersis likely to increase to 400-450 million by 2020 but present 110 m.number of scheduled aircraft is estimated to go up to 1,000-1,500 from 600 at present
- 15. Some Challenges whichfaced by aviation industry in India
- 16. Regional connectivityBiggest challengeslackof airports
- 17. High input costsATFprices in India continue far higher than Global ratesUS $ 755 in Delhi
- 18. US $ 455in Singapore
- 19. US $ 497in Dubai Cont’dWithholding tax on interest repayments on foreign currency loans for aircraft acquisition.Increasing manpower costs due to shortage of technical personnel.
- 20. Declining yieldsLCCs andother entrants together now command a market share of around 46%Increasing growth prospects have attracted & new Players
- 21. Gaps in infrastructure Airportand air traffic control (ATC) infrastructure is inadequate to support growth. While a start has been made to upgrade the infrastructure, the results will be visible only after 2 - 3 years.
- 22. Trunk routesA matterof concern that the trunk routes, are not fully exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of genuine competition. The entry of new players would ensure that air fares are brought to realistic levelsThis in turn would stimulate demand and lead to growth.
- 23. Excess CapacitySeveral newaircrafts were bought within a short span of time Aircrafts ordered during good times are being delivered during recession. According to industry experts, around 17% of the current fleet are scheduled for delivery during the next 3 years.
- 24. Cont’dthe industry grewabove 40%, almost half of the growth was primarily stimulated due to low fares. Maintaining such low levels of fares will be difficult due to excess capacity, especially during the ongoing global slowdown.
- 25. Hugh Debt BurdenHealthyprofits and increasing passenger traffic saw airlines raising significant amount of capital from Financial Institutions and Banks The top three airlines are now carrying a cumulative debt burden of approximately $8 billion.
- 26. Cont’dIncidentally, this isalmost equivalent to the losses of $8.5 billion posted by all global carriers. Restructuring this huge amount of leverage will be a challenge as resorting to equity capital will also be equally difficult during economic slowdown
- 27. Poor InfrastructureInfrastructure continuesto be a major constraint for Indian Airline Industry has been aggravated further due to excess capacity created during good times.
- 28. Cont’dsteps are beingtaken on this front to upgrade major airports in Mumbai, Delhi and Hyderabad, security concerns still remain to be addressed. Attracting investments from private sector will go a long way to develop and maintain the infrastructure
- 29. Air craft NoiseEmissionsThe perception of people -its intensity, its frequency and the length of time they are exposed to it. Aircraft noise, including night noise, is associated with sleep disturbance, long – term adverse health effects and learning difficulties.
- 30. Shortage of AirportFacilitiesThere are lot of problem at airports in India.There is no capacity to land two flight at same time.
- 31. ConclusionIndian Airline Industrywas one of the fastest growing Airline Industry across the world during the last decade.However, skyrocketing fuel prices, economic slowdown, slashed corporate travel budgets over the last 3 years has forced all Indian Airlines to rethink their business model.
- 32. Cont’dExcess capacity build-upand poor infrastructure continue to plague the industry which is also experiencing a decline in passenger traffic at the same time.
- 33. Thank You!Parminder SinghGrover, Punjab