Open Sky Policy
Open Sky Policy
Open Sky Policy
Open Sky means unrestricted access by any carrier into the sovereign territory of a country without any written agreement specifying capacity, ports of call or schedule of services. In other words an Open Sky Policy would allow the foreign airline of any country or ownership to land at any port on any number of occasions and with unlimited seat capacity. There would be no restriction on the type of aircraft used, no demand for certification, no regularity of service and no need to specify at which airports they would land.
A Brief Overview
India is poised to be among the top five aviation nations in the world in the next 10 years. Currently, India is the 9th largest civil aviation market. Recent estimates suggest that domestic air traffic will touch 160-180 million passengers a year, in the next 10 years and the international traffic will exceed 80 million passengers a year. The Indian Aviation Industry is exploring opportunities to improve connectivity and is also looking at enhancing the number of Indian carriers to various countries. One of the key achievements of India in the last decade has been to set-up an independent regulator for economic regulation of airports.
Regional connectivity
Declining yields
Gaps in infrastructure
Indigo Airlines
Managing Director-Rahul Bhatia CEO- Aditya Ghosh Grand entry in 2005 at the biennial air-show at the Le Bourget airfield, the biggest event in the aviation industry. Placed an order of 100 Airbus A320 planes. First flight to Imphal from New Delhi on August 4th, 2006. Unlisted Airline not mandatory to make its revenue and profit public. Affordable fares On-time performance Hassel-free travel
Single minded operational focus no frills Ensuring consistency in service across the A320 fleet Ensuring the experience at the airport matches that on-board the plane. Check-in counters - passengers with only cabin baggage can check-in with an Indigo official with a handheld device Seat load factor stood at 93.3 per cent, compared to Kingfisher's 85.9 per cent. Follows the financial leasing model Attention to customer needs increased customer impact
Central training programme unique to IndiGo Merging of three segments Functional skills training Customer service and soft skills training Leadership training at all levels
Advertising campaign marketing meets HR Consequences of being on time Behind the scenes effort to ensure timeliness Recognition of employees efforts Instill pride in working for a low-cost airline
Air India
Founded by J.R.D. Tata in 1932 as Tata Airlines. In 1948 , 49% of the Airline was taken by Government of India. Airline was granted the status of flag carrier under the name Air India International. On 25 August, 1953 the government of India purchased a majority stake in the carrier and Air India International Limited was born. First Airline in the world to have all jet planes.
Performance of Air India Falling domestic market share. Air India has accumulated a debt of Rs. 42,570 crore An operating loss of Rs. 22,000 crore.
Overstaffing: 41000 people work for Air India Largest number of people employed by any airline . The number is double the number of people needed to run the business. Paying salaries to near 41000 people is a big burden on Air India. It is increasing the debt of the airline which is already facing a huge financial loss.
Merging Indian Airlines with Air India was a big mistake. The strike by the pilots was an outcome of the hasty merger and unkept promises of the management. Post merger, the combined loss of both the Airlines rose from 2000 crores to 5000 crores.
Kingfisher
Owned by India's biggest liquor baron, Mr. Vijay Mallya Kingfisher Airlines (KFA) is one of the finest luxury airlines of India. It is a subsidiary of UB Group. Kingfisher operates more than 375 daily flights to 71 destinations, with regional and long-haul international services. The airline started commercial operations on 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi. It started its international operations on 3 September 2008 by connecting Bengaluru with London. In the domestic services there are two full service airlines(Kingfisher First and Kingfisher Class) and one low cost airline (Kingfisher Red). Due to rising losses and cut-throat competition Kingfisher Airlines have decided to dump the low-fare business model and focus instead on catering to the premium, business-class passengers across the country.
YEARWISE PERFORMANCE
# 01 From Apr-05 To Jun-06 Months 15 Total Income 1,352 Cost 1,692 Net Profit -341 EPS -68
02
03
Jul-06
Jul-07
Jun-07
Mar-08
12
09
2,142
1,546
2,562
1,734
-420
-188
-42
-11
04
05
Apr-08
Apr-09
Mar-09
Mar-10
12
12
5,577
5,271
7,186
6,918
-1,609
-1,647
-55
-54
06
07 Total
Apr-10
Apr-11
Mar-11
Jun-11
12
03 75
6,496
1,991 24,375
7,523
2,255 29,870
-1,027
-264 -5,496
-16
n/a
Since inception, Kingfisher Airlines is yet to post profit on annual & total cost basis.
Competition: Cut-throat competition from the other low cost operators like indigo and jet airways have prompted kingfisher airlines to phase out their low cost airline segment. Financial crisis: Delayed salary Fuel (ATF) Dues Aircraft lease rental default Airports Authority of India (AAI) default
Indian Aviation Industry Market Share Indigo and Kingfisher remained the top performers in the Industry on back of good and timely services. Kingfisher currently holds 19.5% percent Indian market share closely followed by Indigo Airlines which has 19.2% market share. Although, the Jet Airways and Jet Lite combinedmarket share is higher at 24.8 percent .
Government Initiatives
(iv)Amendment of the various outdated provisions of Aircraft Rules to keep the provisions abreast with the international standards and developments in the civil aviation sector;
(v) Government of India allows 100 per cent foreign direct investment (FDI) for green field airports, via the automatic route. Moreover, foreign investment up to 74 per cent is permissible through direct approvals while special permissions are required for 100 per cent investment
AIRPORTS IN INDIA
At Present -
Airport Development Process has taken off in the country Two new Green field airports were thereafter approved for
Fuel policy
India's cash-starved airlines will be allowed to import jet fuel directly under a plan approved by a government panel. Due of the federal and state taxes, jet fuel prices in India are among the highest in the world. The move to allow direct imports could reduce costs by 15 to 20 percent
Kingfisher shares surged by their maximum daily limit of 20 percent on the news, while SpiceJet and Jet Airways rose 19.5 percent and 18.2 percent respectively. There are still various problems which have to be dealt with before this plan materializes. Insufficient funds Storage capacity
FDI
A proposal of liberalizing the FDI policy to allow foreign airlines to invest up to 49 per cent in cash-starved domestic aircarriers More FDI has now become a requirement the capital intensive aviation industry to pool in more equity. The aviation sector is riddled with a host of problems and not
Currently Kingfisher Airlines is desperately in need of FDI. Even though Jet Airways has the highest debt among the private airlines, it has sufficient revenues to keep it going There is a view that rich foreign carriers could play havoc with the domestic market. They could artificially lower the price of air travel to kill domestic competition.
Multiple taxation
SWOT ANALYSIS
STRENGTHS:
Growing tourism Rising income levels
Weakness:
Under penetrated Market Untapped Air Cargo Market Infrastructural constraints
OPPORTUNITIES
Expecting investments Expected Market Size
THREATS:
Shortage of trained Pilots Shortage of Airports High prices
SUGGESTIONS
It is high time to come up with a solution of the crisis of the aviation industry, the largest employer of the world in the unorganized sector, as the airlines like Kingfisher and Air India are drowning in losses. There is no need of government bailout private airlines as some of the airlines are partially or fully responsible for their losses. Yet, as the airlines are the backbone of the tourism industry and the thread which links the country, the government has to intervene in the crisis. But government bailout is not the solution as it is the taxpayers money that will be flowing to the private players. Hence it is an unfair step towards the general public.
CONCLUSION
Aviation industry is the backbone of tourism, investment and employment in our country. Therefore, the government should take every step possible in order to make it transparent and clear so that the aviation industry can take advantage of the growing opportunity in this sector. As aviation industry grows, it will lead to more employment opportunities which will indirectly help our country to grow economically.