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Civilaviation0715183253 110501054631 Phpapp01
Civilaviation0715183253 110501054631 Phpapp01
Civilaviation0715183253 110501054631 Phpapp01
Submitted By Anshika Srivastava(07) Aviral Pundir(15) Chetna Yadav(18) Kartik Menon(32) Rohit Menon(53)
Indian Civil Aviation completes 100 years in the year 2011. On February 18, 1911, the first commercial plane flew in India between Allahabad and Naini carrying mails. To commemorate this milestone, the year 2011-12 is being declared and celebrated as the Civil Aviation Centenary Year. With the liberalization of the Indian aviation sector, aviation industry in India has undergone a rapid transformation. From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned full service airlines and low cost carriers. With high growth and stability, India is having high trade and commerce activities the air traffic has increased by almost 20%.
History
Timeline
1912: Indian State Air service and Imperial Airways, UK collaborate to ply on first domestic route, between Delhi and Karachi. 1932: Tata Aviations established. It goes to Colombo in 1938. 1953: Indian Airlines Corporation formed through Air Corporation Act, 1953, by nationalizing Air India and Indian National Airways. 2003: Entry of low cost carriers. Air Deccan, Spice Jet, Go Air, Indigo.
1915: Tata Sons start airmail service between Delhi and Madras.
1948: Designated as flag carrier under the name Air India International with 49% govt. control.
1994: Air Corporation Act. 1953 repealed and thus allowed private players to come.
At the time of independence, nine air transport companies were carrying both air cargo and passengers. These were Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. After partition Orient Airways shifted to Pakistan. The inaugural flight of Air India International Ltd took off on June 8, 1948 on the Mumbai-London air route The Government nationalized nine airline companies vide the Air Corporations Act, 1953. Accordingly it established the Indian Airlines Corporation (IAC) to cater to domestic air travel passengers and Air India International (AI) for international air travel passengers. A third government-owned airline, Vayudoot, which provided feeder services between smaller cities, was merged with IAC in 1994. In April 1990, the Government adopted open-sky policy and allowed air taxioperators to operate flights from any airport, both on a charter and a non charter basis and to decide their own flight schedules, cargo and passenger fares To support the growth of the airline industry the Government in 1994-95 permitted direct import of aviation turbine fuel (ATF) under the special import license scheme
In 1994, the Indian Government, as part of its open sky policy, ended the monopoly of IA and AI in the air transport services by repealing the Air Corporations Act of 1953 and replacing it with the Air Corporations (Transfer of Undertaking and Repeal) Act, 1994.
Private operators were allowed to provide air transport services. Foreign direct investment (FDI) of up to 49 percent equity stake and NRI (Non Resident Indian) investment of up to 100 percent equity stake were permitted through the automatic FDI route in the domestic air transport services sector.
By 1995, several private airlines had ventured into the aviation business and accounted for more than 10 percent of the domestic air traffic. These included Jet Airways Sahara, NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental Aviation, and Damania Airways
Today, Indian aviation industry is dominated by private airlines and these include low cost carriers such as GoAir, SpiceJet etc, who have made air travel affordable.
Industry Statistics
Total Fleet size of commercial airlines india is more than 500 Fleet size of major domestic airlines in india are as below:
Airline Jet Airways Jet Lite Kingfisher Air India Spice Jet Indigo Air Go Air Fleet Size 97 110 66 48 22 39 10
Passengers carried by domestic airlines during Jan-Mar 2011 were 143.31 lakhs as against 118.54 lakhs during the corresponding period of previous year thereby registering a growth of + 20.9%.
Indian aviation industry ranks 4th in the world after USA, China, and Japan in terms of domestic passenger volume
The civil aviation sector witnessed a slowdown in passenger traffic during 2008 due to a sharp rise in fuel prices coupled with global economic slowdown.
Indias domestic passenger growth is expected to grow at the rate of 9%-10% to reach a level of 150-180 million passengers by 2020.
Operational Airlines
Airline Commenced Operations
October 1932 April 2005 1996 (as Alliance Air) June 2004 August 2006 May 1993 1991 (as Air Sahara) May 2005 May 2005
Market Distribution
IndiGo 20% Go Air 7% Spicejet 15% Kingfisher 20% Air India (Dom) 15% Jet Airways 18% JetLite 8%
Since the beginning of 2010, the Indian aviation industry has been on a revival path, with passenger numbers growing by 18 per cent against the previous year. And for 2011, the growth is forecast to be around 20 per cent, backed by a possible 9 per cent growth in the Indian economy.
Jet Airways and Kingfisher Airlines recently increased their fuel surcharge by up to Rs 200 to recover the extra outgo, as public oil marketing companies promptly increased aviation turbine fuel (ATF) prices to minimise their under-recoveries due to subsidies given on other fuels.
According to estimates by global aviation consulting firm Centre for Asia Pacific Aviation (CAPA), airlines could end the financial year 2010-11 with a combined net profit of $300 million. However, this calculation was made when oil prices were under control.
Jet Airways, for the first six months of the current financial year, reported a net profit of Rs 16 crore compared with a net loss of Rs 468 crore in the previous fiscal. SpiceJet, during the same period, reported a net profit of Rs 65 crore against a full-year net profit of Rs 61
crore in 2009-10.
Similarly, Kingfisher Airlines and Air India drastically cut down their losses due to
better cost management and improvements in yield. Kingfisher, during AprilSeptember 2010, reported a net loss of Rs 418 crore versus a full-year net loss of Rs 1,647 crore in 2009-10.
Though the profit and loss figures for Air India are not available, the national carrier
during April-November 2010 recorded revenue of Rs 7,250 crore compared with a revenue of Rs 5,911 crore during the same period of the previous year, an increase of 22.6 per cent. And notwithstanding its huge debt burden, Air India in November
2010 reported perhaps for the first time in recent times a cash profit of Rs 21.66 crore
due to significant improvement in efficiency.
Competition Analysis
Air India has the largest share of the fleet as expected. Jet Airways has the second largest fleet share but Kingfisher manages to catch up with it in terms of passenger share The success of low cost strategy of Indigo Air can be seen in its passenger share which matches upto Kingfisher and Jet despite having a much smaller fleet
68 61.1
76.5 69.2
80.2 76.7
83.6 80.4
81
87.6 81.2
% Seat Factor
60 50 40 30 20 10 0
Feb-11 Mar-11
Air India
Jet Airways
JetLite
Kingfisher
Spicejet
Go Air
IndiGo
Again we can see that Indigo has the highest Seat Occupation ratio
GoAir comes a close second in terms of seat occupation mainly because of low cost strategy
Jet Airways, Indias largest airline by sales, was the only company to register higher net profit. Net profit margin (net profit to sales ratio) dipped marginally to 3.3% in December 2010 quarter due to a more than proportionate increase in net sales vis--vis profit. Profits were lower due to deferred tax adjustment made by the company. Although sales of Kingfisher Airlines surged by 28.1%, it continued to record a loss at the net level during October-December 2010 compared to a yearago. Appreciation of Indian Rupee vis--vis $ enabled Kingfisher register a decline in rent and lease rent.
Financial Performance of Listed Airline Companies in December 2010 Quarter (% yo-y growth)
Net sales
Powe Salari Rent & Intere r& es & lease st fuel wages rent
23.5 21.5 49.9 15.6 -1.2 23.6 6.1 -7.0 9.8 1.0 23.6 -33.1
Na
-2.3
Na
-8.5
-16.3
-16.13
Na 26.5
Na 10.5
Na 0.6
-16.2 12.4
7.7 -2.2
-93.8
Government Regulations
The Ministry of Civil Aviation has the following public sector undertakings/companies/autonomous bodies under its administrative control: National Aviation Company of India Limited (NACIL) Airports Authority of India (AAI) Pawan Hans Helicopters Limited (PHHL) Indira Gandhi Rashtriya Uran Akademi (IGRUA)
providing safe, efficient, adequate, economical and properly coordinated international air
transport services. It has been set up after the merger of Air India and Indian Airlines in 2007. This merger aims to create the largest airline in India. The name of the new airline is Air India and its logo is Maharaja. NACIL is carrying its operations under two operating permits, viz., NACIL-A and NACIL-I. It has following wholly owned subsidiaries, namely,
Hotel Corporation of India Limited, Air India Charters Limited (AICL), Air India Engineering
Services Ltd (AIESL); Air India Air Transport Services Limited (AIATSL); and Alliance Air.
Pawan Hans Helicopters Limited (PHHL) :- was established in 1985 as the country's national helicopter company for providing helicopter support services to the Oil Sector; operate scheduled/non-scheduled helicopter services in
inaccessible areas and difficult terrains; as well as provide charters for promotion
of travel and tourism. It has a well balanced fleet of 35 helicopters consisting of Bell 206L4, Bell 407, Dauphin SA 365N & AS 365N3 and Mi-172, which are most appropriate for multi-farious jobs. It is the only aviation company in India being
Functions of DGCA
Registration of civil aircraft; Formulation of standards of airworthiness for civil aircraft registered in India and grant of certificates to such aircrafts; Licensing of pilots, aircraft maintenance engineers; flight engineers; and air traffic controllers; Maintaining a check on the proficiency of flight crew, and also of other operational personnel such as flight dispatchers and cabin crew; Conducting investigation into accidents/incidents and taking accident prevention measures; Carrying out amendments to the Aircraft Act, the Aircraft rules and the Civil Aviation requirements for complying with the requirements of International Civil Aviation Organisation (ICAO); Granting approval to aircraft maintenance, repair and manufacturing organizations; Rendering advice to the Government on matters relating to air transport including bilateral air services agreements; on ICAO matters and on all technical matters relating to civil aviation;
These permits are equivalent to the Air Operator's Certificate required to be granted by ICAO member States in accordance with the provisions of Annex 6. Permits for any other special type of operation can be granted subject to the applicant showing satisfactory capability to undertake the type of operations.
MINIMUM REQUIREMENTS FOR GRANT OF PERMIT TO OPERATE SCHEDULED PASSENGER AIR TRANSPORT SERVICES.
India;
ii) its chairman and at least two-thirds of its directors are citizens of India; and
respect of civil flights in India. The Bureau keeps a constant vigil and monitors the
enforcement of the security measures. BCAS has four Regional Offices in Delhi, Kolkata, Mumbai and Chennai. The Following Acts provide power and authority to the BCAS
Legal Aspects
Legal Aspects
In India, the Industrial Disputes Act, 1947 is the main legislation for investigation and settlement of all industrial disputes. The Act enumerates the contingencies when a strike or lock-out can be lawfully
resorted to, when they can be declared illegal or unlawful, conditions for laying off, retrenching,
discharging or dismissing a workman, circumstances under which an industrial unit can be closed down and several other matters related to industrial employees and employers.
The Act is administered by the Ministry of Labour through its Industrial Relations Division. The Division is concerned with improving the institutional framework for dispute settlement and amending labour laws relating to industrial relations. It works in close co-ordination with the Central Industrial Relations Machinery (CIRM) in an effort to ensure that the country gets a stable, dignified and efficient workforce, free from exploitation and capable of generating higher levels of output.
Under the Industrial Disputes Act, 1947, the Central Government is the appropriate Government for investigation and settlement of industrial disputes in regard to, the Indian Airlines, Air India, the Airport Authority of India and all air transport services..
Taxation
Taxation
Domestic Airline Income Taxes Rates: For Domestic Airlines the effective tax rate is 30% and the tax rate with surcharge is 30% Attention must be given on the factor that if the taxable income is more than ` 1 million then a surcharge of 10% of the tax on income is levied Attention must also be given on the fact that all of the companies formed in India are regarded as Indian domestic companies, even in the case of ancillary units with mother companies in foreign countries
Attention must be given on the fact that the sanctions of the tax authorities on tax withholding
Attention must be given on the several of the tax treaties India signed with the other countries and also the various encouraging tax rates
Reduction in surcharge from 7.5% to 5%. The reduction in effective corporate tax rate will not have an immediate impact on account of accumulated losses.
Exemption from education cess and secondary and higher education cess presently available to aircrafts is being withdrawn A basic custom duty of 2.5% is being imposed on import of aircrafts for non scheduled operations. The exemptions from addiditional duty of customs(CVD) and special additional duty of customs (SAD) would continue
100
150
500
750
100
10%
Foreign Investment
projects.
For existing projects, FDI up to 100 per cent is allowed; while investment up to 74 per cent under the automatic route and beyond 74 per cent under the government route.
FDI up to 49 per cent is allowed in the domestic airlines sector under the automatic route, but not by of foreign airline companies.
(b) No foreign airlines would be allowed to participate directly or indirectly in the equity of an Air Transport Undertaking engaged in operating Scheduled and Non-Scheduled Air Transport Services except Cargo airlines.
(c) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services.
Scheduled Air Transport Service/Domestic Scheduled Passenger Airline 49% FDI (100% for NRIs) Automatic Non-Scheduled Air Transport Service 74% FDI (100% for NRIs), Automatic up to 49% Government route beyond 49% Helicopter services/seaplane services requiring DGCA approval 100% Automatic Other services under Civil Aviation sector Ground Handling Services(subject to sectoral regulations and security clearance) -74% FDI, (100% for NRIs), Automatic up to 49%, Government route beyond 49% and up to 74 % Maintenance and Repair organizations; flying training institutes; and technical training institutions 100% Automatic
Other conditions:
(i) Persons resident outside India, other than Foreign Institutional Investors (FIIs), can invest in the capital of Asset Reconstruction Companies (ARCs) registered with Reserve Bank only under the Government Route. Such investments have to be strictly in the nature of FDI. Investments by FIIs are
per cent of each tranche of scheme of SRs, subject to the condition that
investment by a single FII in each tranche of SRs shall not exceed 10 per cent of the issue. (iii)Any individual investment of more than 10% would be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Conclusion
Future Trends
Consolidation in aviation sector
The rise in the number of alliances in aviation industry will help in further growth of aviation sector in India.
Number of passengers is on the rise
With passenger boardings expected to double by 2025, and aircraft operations expected to triple by the same time
Price is paramount in selecting carrier:
Due to the Internet and round-the-clock search capability, airfares are fully transparent to the public and travelers are choosing the lowest price option. Air travel is now a commodity business, and legacy carriers will have to adapt further to a low-cost/low-fare environment in order to survive
Growing Capacity:
Indian carriers are placing orders for new aircraft for delivery in the coming period, without clear plans to retire older planes. They are also adding significant numbers of regional jets. The air taxi fleet is also expanding rapidly
Outsourcing:
Private airlines are known to hire foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines, in senior management positions. Further, they outsource such functions as ground handling, check-in, reservation, aircraft maintenance, catering, training, revenue accounting, IT infrastructure, loyalty and programme management. Airlines are known to take on contract employees such as cabin crew, ticketing and check-in agents.
THANK YOU
References
http://india.gov.in (Government of India) http://www.bcasindia.nic.in/ (beaureau of Civil aviation security) http://dgca.nic.in/ (Directorate General of Civil Aviation) Wikipedia Ministry of Civil Aviation Various Journals