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The Indian Aviation Industry
Ventursol, February 2007, Pages: 22
An analysis of the current state of the Aviation business in India, along with a critical analysis of Low Cost Carriers, their strategies and impact on the Industry. Projections for passenger growth included.
The Aviation industry in India began with the birth of Tata Airlines, through the business relationship between Mr. Nevill Vintcent, a Royal Air Force pilot and Mr. JRD Tata, the first Indian to get an A-license. Tata Airlines became Air India in August 1946. In 1953, the Air Corporation Act nationalized all existing airline assets and established the Indian Airline Corporation and Air India International for domestic and international air services respectively.
These two companies enjoyed monopoly power in the industry until 1991, when private airlines were given permission to operate charter and non scheduled services under the ‘Air Taxi’ scheme to boost tourism. These carriers were not allowed at the time, to fly scheduled flights or issue air tickets to passengers. As a result, a number of private players including Jet Airways, Air Sahara, Modiluft, Damania Airways, NEPC airlines and East West Airlines commenced domestic operations. In 1994, following the repeal of the Air Corporation Act, private players were permitted to operate scheduled services. Ultimately the carriers with more efficient operations and strategies survived and by 1997, only Jet Airways and Air Sahara made the cut from the original group.
The next big change in the industry came in late 2003 with the emergence of India’s first no-frill airlines, Air Deccan. It revolutionized the industry, offering fares as low as INR 500 (USD 10 roughly), compared with Full Service fares offered by the incumbents, averaging about INR 3000 or more. Since then, Spice Jet (restructured Royal Airways and Modiluft), Go Airways and Kingfisher Air have also entered the industry. Paramount Airways is another player, though it is positioned on the other end of the spectrum, as an ‘all business class’ airline. With the further advent of online ticket sales through companies such as makemytrip.com, prices have crashed and tickets are available for as little as INR 0.99. In fact, now many airline tickets can be bought for a price comparable to an upper class railway ticket for the same route.
In December 2004, Indian scheduled carriers with a minimum of 5 years of continuous operations and a minimum fleet size of 20 aircraft, were permitted to operate scheduled services to internationals destinations. On January 11, 2005 the government designated four scheduled Indian carriers (Air India, Indian Airlines, Jet Airways and Air Sahara) to operate international services to and form Singapore, Malaysia, Thailand, Hong Kong, the UK and the USA.
Porter’s Five Forces
Low Cost Carriers (LCCs)
Strategies not employed in India
Appendix I: Air Routes Classification
Appendix II: Companies Mentioned in this report
Appendix III: List of Tables and Charts
- Kingfisher airlines
- Go Air
- Indian Airlines
- Jet Airlines
- Air Sahara
- Damania airways
- NEPC airlines
- East West airlines
- Air Deccan
- Spice jet
- Go airways
- Paramount airways
- Air India
- Royal Airways
- Bombay Dyeing
- UB group
- Tata Airlines
- Airports Authority of India
- Indian Oil Corporation Limited (IOCL)
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