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Indian Aviation Industry- An overview

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International Journal of Academic Research and Development

International Journal of Academic Research and Development

ISSN: 2455-4197
Impact Factor: RJIF 5.22
www.academicsjournal.com
Volume 2; Issue 6; November 2017; Page No. 802-805

Indian aviation industry: An overview

1
Dr. Ipseeta Satpathy, 2 Dr. BCM Patnaik, 3 Sharad Kumar
1
Professor, School of Management, KIIT University, Bhubaneswar, Odisha, India
2
Associate Professor, School of Management, KIIT University, Bhubaneswar, Odisha, India
3
Research Scholar, KIIT University, Bhubaneswar, Odisha, India

Abstract
The present paper is an initiative to understand the concepts of Indian aviation industry and its growth over the period. The
objective of this paper is to undertake an empirical study on service qualities provided in different air ports in India and come up
with some concrete solutions to provide better service quality to passengers and visitors in the different air ports. In this regard
secondary data considered.

Keywords: aviation industry, airport, passenger traffic and air strips

Introduction  To undertake empirical study on service quality provided

Indian aviation sector is growing at an accelerating rate and in airports
the country is getting the benefits of its improved
connectivity. Since its inception the sector has seen many Methodology
changes. The vast geographical coverage of the country and The present study based on secondary sources and for this
its industrial growth makes the aviation sector more purpose various libraries visited for collection of data.
meaningful. The rising working group and economic
improvement of Indian middle class is also expected to boost Growth of Indian aviation sector
the growth of the sector further. As a result of this growing Indian aviation sector has a long history and moved from
demand the Government of India is planning to increase the private sectors to government sector then again in the hand of
number of airports to 250 by 2030.1This improvement in both government and private sectors. With every passing year,
infrastructure has happened to be as a result of improved the sector witnessed significant improvement in the movement
business and leisure travel. The major requirement of the of traffic in both the passenger and cargo segment. According
aviation sector is development of ground infrastructure. The to India Brand Equity Survey Report, 2017 India stands at 9th
Government of India has planned to invest approximately position in terms of market size. During the financial year
US$12.1 billion, out of these private investment is in the tune 2017, the country witnessed 21.5% improvement in domestic
of US$9.3 billion.2 Private investment is one of the important passenger traffic.3If this is the growth rate, the sector is
components to develop the ground infrastructure. It is not expected to become 3rd largest aviation market in the world by
possible for the government to develop a robust nature like 2020.4The growth trajectory of the sector is shown in the
this without the help of private players. More importantly the Figure 1.1.
private players have the expertise to develop a technology
enabled airport which is the need of the hour. Another area
which now a days the government is also focusing is to create
green airport to reduce the environmental impact. To improve
the participation of private players, the government has
decided to increase the FDI upto 49% through automatic route
in case of air transport. Thus, the sector which was mainly
dominated by the government agencies now is going hand in
hand along with the private players. The increased
competition in the market helps to improve the on air as well
as ground services.

Objectives of the study

 To know the concepts of Indian aviation sector Fig 1: Growth Trajectory of Indian Aviation Sector

1 3
India Brand Equity Foundation Report, 2017 India Brand Equity Foundation Report, 2017
2 4
India Brand Equity Foundation Report, 2017 India Brand Equity Foundation Report, 2017

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International Journal of Academic Research and Development

The growth trajectory figure is self explanatory. The figure infrastructure surely benefit the people in the long run.
has been drawn on the basis of certain important parameters Very recently the government of India has realized the
which best describes the sector. The schedule airlines which potential of Public Private Partnership (PPP) model to develop
was flown 199 mn km is expected to cover a distance of 1700 the airports in India. The growing trend has many advantages.
mn km. The number of non scheduled airlines which stands at One of the primary advantages is creation of job in the local
39 is expected to grow upto 112 by the end of financial year market and revenue generation of the government. The
2017. The figure also shows the number of aircrafts owned by government is also in a better position to attract foreign
various airline companies. It was 225 and the same has gone investors to develop the airports. If we look at the vast areas of
to 1657. Most importantly, the number of airports which was airport connectivity and addition of emerging areas it may not
standing at 50 is expected to increase to125 during the possible to develop the entire infrastructure single handedly.
financial year 2017. These huge improvements in airport

Source: India Brand Equity Foundation Report, 2017

Fig 2: Airports and Airstrips in India

In total there are 464 airports are there in India out of these improvement in the last decade after the introduction of low
125 airports are operated by AAI. Out of the 125 airports, 9 cost carriers. The rising income level of Indian middle class is
airports are non operational and 90 are operational. These 90 also happened to be the most important factor which
operational airports can be divided into three different stimulates the growth. The table 1.1 shows the traffic
segments, viz. 66 domestic airports, 7 customs airports and 17 movement across various airports of India along with some of
international airports. The expansion of the sector results in the important parameters which describes the overall
improved passenger flow and the same has seen significant performance of the sector.

Table 1: Passenger Traffic at a Glance

Source: Handbook on Civil Aviation Statistics, 2016 – 17, pp 1

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International Journal of Academic Research and Development

The table shows an incremental growth in domestic as well as travelers are bringing much needed foreign currency in both
international passengers. Number of departing passengers is the segment. So, this aspect should be taken into consideration
increased from 85.20 million in the year 2015 – 16 to 103.75 while airport facilities in various parts of the country.
million in the year 2016 – 17. The revenue passenger
kilometers also increased from Rs.80.97 billion in the year
2015 – 16 to 98.64 billion in the year 2016 – 17. Due to this
significant improvement in the passenger demand, the airlines
also increased the capacity of available seats. The seat
availability which was 97.73 billion in the year 2015 – 16 is
increased to 116.94 billion in the year 2016 -17. The growth
of air travels thus created a need for new business
opportunities and infrastructure requirement. The growth has
been rightly witnessed by the commercial scheduled airlines
and decided to increase the capacity. Since, air travels
becoming cheaper, a section of the consumers become the
target consumers for the airline service providers. The first
time buyers also decided to opt for air travels vis a vis other
mode of travel options that are available. Saving of time and
money may be the most significant factor which helps the
customers to go for alternative options. The huge geographical
spread of the country is another reason and it is only air
transport which has the capacity to reduce the distance to a
great extent. If we look at the passenger traffic carried by
scheduled carriers over the past decade, then this incremental
growth can be witnessed.

Source: India brand equity foundation report, 2017

Fig 4: Top Players in the Indian Market

The figure above is the list of top airline services operating in

the Indian sub continent over a long period of time. Since, its
operation in the year 1953 till 2000 – 2001, Air India and
Indian Airlines are dominated the market as they have the
monopoly business. The single player model has been
changed into open market operations and foreign as well as
private players started entering in the market. Jet Airways was
Source: Handbook on Civil Aviation Statistics, 2016 – 17, pp 1 first of its kind. Soon the other players started entering the
Fig 3: Passenger Traffic Carried by Scheduled Carriers Over the Past Indian market with innovative business model i.e. Low Cost
Decade Carriers. Some of them survived some of them lost in the stiff
competition. At present, it is the low cost carrier model which
The data of the last decade gives us an upward sloping trend is dominating the Indian market. If we look at the vast
line. The line is a clear indication of improvement of air majority of Indian middle class consumers, it is important to
travel. Number of domestic travelers which was 44.4 million make the air travel affordable for them. Cost control is one of
during the year 2007 – 08 is increased to 103.7 million in the the important factors which some of the players are able to
year 2016 – 17. In case of international travelers the number implement. If we look at the market share of various airline
of travelers which was 27.2 million during the year 2007 – 08, operators, Indigo is leading the Indian domestic market with
increased to 54.7 million during the year 2016 – 17. The rate 38% of market share followed by 83.6% of passenger load
of increase is significantly high in the domestic segment as factor. The market share of Jet Airways and Jet Lite jointly
compared to international segment. This shows that travel stands at 18% approximately. Spice Jet stands at 3rd position
pattern of domestic consumers have increased substantially. with 14% market share and approximately 94.5% passenger
As most of the part of the country has been connected by air load factor. This is followed by Air India, which has a market
transport, the tendency of the travel pattern among the share of 13.2% with passenger load traffic at 76%. There are
domestic flyers also increased. In case of international other players as well but their load factor and market shares
travelers the reason for travel is something different from are significantly low but operating at a niche segment of the
domestic travelers. Most of the foreign travelers are visiting Indian market or dominating in any specific geographical
the place either for tourism purpose of for business purpose. regions of the country. Air India, which was number one
So, it is important to look into this matter as well. Unless and player in the Indian market, now stands fourth in terms of
until the tourism as well as investment opportunities are not market. Indigo, this was relatively new in the market, able to
created it will be difficult to attract foreign travelers. Foreign get 38% of the total market share. This shows that customers

804
International Journal of Academic Research and Development

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