Tuesday, November 22, 2011

Aviation Industry of India!

Dear Friends,


In my next few columns, i would try to pick each industry and would like to give you details related to that particular industry about How they Started, Their Growth, performance and future prospects. Today would like to start with The Aviation Industry.


Introduction:

The aviation industry encapsulates the development, operation and management of aircrafts. While the common perception about the sector is that it’s only about pilots and airhostesses, there are numerous other, equally significant job options that the industry cannot function without; from in-flight trainers and aircraft maintenance engineers to baggage handlers and reservations agents.
Research indicates the global aviation industry is poised to grow at a healthy 5.6% CAGR over the next 15 years. While major conventional mature markets such as the US and Europe will witness a significant fall in market share from 61% to 52%, emerging markets, such as India, China and the Middle East, offer a great growth potential.
Performance
The economic slowdown which began in 2008 hit the global aviation industry severely, with many airlines such as United and British Airways in the red. This was due to falling passenger numbers and increasing competition from low-frills airlines coupled with rapidly rising fuel costs. Despite passengers now resuming air travel, the increase has been very gradual. In fact, International Air Transport Association (IATA) Director General and CEO, Giovanni Bisignani, in December 2009, stated the global economic crisis “has cost the aviation industry 2 years of growth… as the improvement that has started since passenger traffic hit rock-bottom in March 2009 is similar to the pace of growth in 2006-2007.”
Growth Potential
In India, the industry sector continues to look promising. The liberalization of the Indian aviation sector in the mid nineties resulted in significant growth due to the entry of private service airlines. There was, and continues to be a strong surge in demand by domestic passengers, due primarily to the burgeoning middle class with its massive purchasing power, attractive low fares offered by the low cost carriers, the growth of domestic tourism in India and increasing outbound travel from India. In addition, the Government has also focused on modernizing non-metro airports, opening up new international routes, establishing new airports and renovating existing ones. Some estimate industry growth at 25% YoY.
Unfortunately, most major airline operators in India such as Air India, Indian Airlines, Jet Airways and Kingfisher Airlines have reported large losses since 2006, due to high aviation turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet expansion, and intense price competition. The problem was also compounded by new players entering the industry even before the existing players could stabilize their operations. As a result of the already weak domestic scenario, the airlines suffered even further when the recession, which exacerbated all these factors, hit. Suffice to say, though that the Indian aviation industry has been more resilient than its global counterparts.
Despite many private airlines being in the red, the industry itself remains robust. According to Kapil Kaul, CEO India & Middle East, Centre for Asia Pacific Aviation (CAPA), India's civil aviation passenger growth is among the highest in the world. “The sector is slated to cruise far ahead of other Asian giants like China or even strong economies like France and Australia. The number of passengers who will be airborne by 2020 is a whopping 400 million.” To keep pace with this accelerated demand, existing players have been trying to increase fleets and widen their footprint to regional destinations as well. There has also been increasing attention from international low cost airlines such as Air Asia (Malaysian) and JetStar Asia (Australian) to capture part of this lucrative opportunity.
Future Prospects
As a result of the strong growth trajectory of the industry, there is likely to be a massive need for skilled personnel to helm this growth. India is already experiencing a shortage of pilots and is likely to face similar shortages across the wide direct and indirect employment pool. Hence, it is a great time to consider playing a role in this sector, as it holds great promise for development over the coming ten years, at least.


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