AIR DECCAN

JAHID FASAL AJISH PAUL STEPHIN DOMEY MOHAMMED FARHAN

Evolution of Low Cost Carrier in India

Air Deccan was the largest private low cost sector in India. June 2007 Vijay Mallya bought 26% controlling stakes for Rs 5.5 billion. Launch in 2003 & serving two destination to 65 destination in 2007. Airline image came down due to unreliable services Facing competition from new low cost airline Vision was Empowering every Indian to fly. Operating loss of more than rs 6.5 million in 2005-2007.

Indian Aviation Market in 2007:

Confederation of Indian Industry (CII) report in 2000 between 45-70 million passengers were expected to fly domestically by 2010. Centre for Asia Pacific Aviation (CAPA) estimates 60 million passengers by 2010. In 2006,delhi-mumbai air route became the 7th busiest air traffic route in the world. Aviation analyst in India estimated a total loss of more than 20 billion for the airline industy in 2006-2007.

Demand Pattern

Demand mainly driven by leisure/visiting friends & relatives(VFR). Between april-dec,2006 was the low cost carriers carried more than 31% of the total passenger traffic. According to CAPA(centre for asia pacific aviation),low cost carriers were expected to have a market share as high as 70% by 2010.

Airport Infrastructure

2005-2006,airport authority of India(AAI) managed 94 civil airports,65 used actively.40 airports had runways of more than 5000 feet required for landing by large aircrafts. In 2003 85% of total passenger traffic handled by 10 airports which generates 80% of total revenue for AAI

Aviation manpower

increase in air traffic leads to increase in demand for pilots and cabin crews In 2006 AAI had talks with private sectors to setup a joint venture aviaton centre for training pilots.

Some threats

Lack of maintenance and repair facilities High fuel expenses

Opportunities

Demand in smaller cities Amble opportunities as and when compared with America low cost air travel which can be taken as a substitute for train travelling, where prime target market segment was upper class train passengers

Options for KFA Air Deccan

Merging

Make Subsidiary Maintain Status quo