Organizational Development Topic:

Date of Submission: 18h July 2011

Presented By: Arjun N Dikshit Nishant Pandey P V Pradeep Prashant Mishra Vinoth Walgmode ISBE SS-10-12 FIN-2 ( 3RD TRIMESTER)

1953: NATIONALISATION OF AIRCRAFT INDUSTRY Assets of 9 existing companies transferred to two entities in the aviation sector controlled by the Government in  Indian Airlines, primarily serving domestic sectors  Air India, primarily serving the international sectors IMPLICATIONS  Aviation became a preferred mode of transport for elite class  Restricted Growth of Aviation Industry  High Cost structure  Underdevelopment of infrastructure

1986: Private Sector Players permitted as Air taxi operators. Jet, Air Sahara, NEPC, East West, Modiluft, etc started service. 1994: Private Carriers permitted to operate scheduled services. Six operators granted license, however only Jet and Air Sahara able to service. 2003: Entry of low cost carriers. Air Deccan, Spice Jet, Go Air, Indigo. IMPLICATIONS  Aviation is now affordable with check fares and discount schemes.  Various Operators with different business model.  Huge growth foreseen in Aviation

Regulating Bodies in the Aviation Sector in India are : Directorate General of Civil Aviation (DGCA) Airports authority of India (AAI) International Civil Aviation Organization (ICAO)

The airlines in India are into three basic SBUs

Passenger flights Cargo MRO The passenger flights are of three types

Full cost carriers Low cost carriers (LCC) Other start-up airlines

LOW COST (SPICE JET, HIGH COST (KINGFISHER, JET LITE) INDIGO) Lower rate in return flights --NA- Food and drink on demand with Free food and drink. consideration.

Refund Rules :
Date change Penalty. Cancellation applicable before departure Baggage allowed ( Adult & Child) After flight refund

Low Cost 750 1500 20 NA

High Cost 750 NA 25 225

PRODUCT

PRICE

PLACE

PROMOTION

PEST Analysis
Political environnent Economic environment Social environment Technological environment

STRENGTH Strong brand value and reputation in the minds of customers. Quality of the service. Quality and Continuous innovation. WEAKNESSES Low Earnings. Under Penetrated Market . High ticket pricing Facing a tough competition from competitors.

S.W.O.T. ANALYSIS
OPPORTUNITIES
The expanding tourism industry. The non penetrated domestic market. International market. Untapped air cargo market.

THREATS
Competitors Infrastructure issues. Fuel price hike. Shortage of Airports Promotions and sponsorship declining.

Changing regulation policies

Increased privatization of airports

Growing Infrastructure developments

Market Size

India has a population of 1.1 billion with an estimated middle class of 300 million.

Demographics

50% of the population is <25 years old. Therefore, the size of the economically active segment will continue to grow for a number of decades (unlike the developed countries and even China). Average GDP growth of 6% p.a. sustained since 1991 and accelerating thereon. The first quarter of FY06/07 registered 9% growth, and the last Budget has established a target of 10%. India has an increasingly open economy, with strong growth in international trade, healthy foreign exchange reserves and increasing foreign direct investment.

Economic Growth

Trade & Investment

The Indian aviation sectors double-digit growth has been the fastest in the world. But the airlines have not made much out of the profitless growth, with most players stepped deep in red.

The industrys wish list includes :

Lowering taxes on aviation turbine fuel (ATF) which is 35% of the operating cost of airlines. As per international standards, it is 10-15% of the operating cost. Reduction in landing charges In India low cost carriers (LCC) pay the same as full service airlines. As per international standards, it is lower for LCCs. Extending exemption of withdrawal tax on lease rentals of aircraft Relaxing fringe benefit tax (FBT) Removing service taxes on first and business-class travellers.

Shortage of Key Airports Lack of Infrastructure facilities at airports Lack of maintenance facility at airport Controlling in the hands of political leaders problems of staff shortage Intense competition by domestic & international players

To improve the services provided by IA and AI To revitalize the promotion mix To prevent poaching problem To bring IA and AI together to create powerhouse To consider privatization of the two airlines To improve the financial conditions of AI and IA

 The growth of Indias aviation sector has the potential to absorb up to US$120 billion of investment by 2020.  However, we must close the gap between the demand for aviation services and the ability of our aviation system to meet that demand.  India must prepare a blueprint for the expansion of system capacity whilst maintaining safety, security and the environment.  India must develop a roadmap for infrastructure development beyond 2010.

 Air Traffic - CAPA research projects that domestic passenger traffic will reach 150-180 million by 2020, with international traffic in excess of 50 million.  Scheduled Aircraft - The total aircraft fleet is likely to reach 1000, including replacement of the current fleet of 312 aircraft, with an estimated value of US$80bn +  General Aviation - Market for 500 Plus aircraft in the Non-Scheduled Category by 2020 and 300 aircraft in the private category use. Estimated Investment of Usd 4 billion.  Airports US d 30 billion plus investment requirement by 2020(Included 9 billion already committed).

The ministry of civil aviation would handle around 280 million passengers by 2020

 Modernization  Policy

of airports

on airport security opportunities

 Employment
Co-pilots

Commercial pilots Training instructors Cabin crew and many more

Suggestions
Reduce Labour Cost Simplify Flight Operations Offer more transparent pricing Put expenditure on infrastructure and development & training of employees Allow all Indian Carriers, Public or Private-to operate International routes. Lower the cost of aviation turbine fuel. Lower the Landing and airport charges. Strengthen and promote short haul tourism for business development, trade and tourism. Encourage of Proactive involvement of overseas investors and technical managers in the privatization of airports. Encourage commercial activities within airports such as hotel, restaurants

Consumer Choice Parameters

THANK YOU

Arjun: 1-5 Vinoth: 6-10 Prashant: 11-15 Pradeep: 16- 20 Nishant: 21- 25