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PRIVATIZATION OF

INDIAN AIRLINE SECTOR

By
Akshay Gopal 07
Amit Jain 08
Ankur Arora 09
Ankur Dave 10
Anshul Rawat 11
PRIVATIZATION

WHAT IS PRIVATIZATION ALL ABOUT?????????


PRIVATIZATION (Contd…)
•Meaning
•4 Methods
• Share Issue
• Asset Sale
• Voucher
• Privatization from below
•Objective of privatization
•Types of industries
•Global Example
•Proponents
Why in Indian AVIATION Industry?
 To boost the tourism industry.
 1986,the Air Taxi Scheme.
 Private airlines were allowed to operate

charter and non-scheduled services.


 To all authorized airports.
 To decide their fares and flight schedules.
Why in Indian AVIATION Industry?
(CONTD..)

 To facilitate the growth of international trade,


exports.
 Early 1990s.
 Open Sky policy.
 For cargo which allowed international airlines

to operate cargo flights.


 Private operators can bring freighters to the

country for lifting cargo from any Custom


airport.
Why in Indian AVIATION Industry?
(CONTD..)

 Equity participation imports technical know-


how, expertise and management practices,
which are available globally.
 More funds for modernization and expansion.
 Unlimited international network .
 Increased airline capacity.
The Macroeconomic Impact on
Privatization of Indian Airlines
Case1-When the government Gives up assets
of no value and receives liquid assets in return

 Implies that the use of the assets in the private


sector entails a positive social rate of return.
 Economy’s existing resources are used more
effectively.
 Privatization will depress aggregate demand.
 Even if investment is not depressed, privatization
will lead to an increase in potential output.
 This increase in output will increase the gap
between aggregate demand and potential supply.
Case2- When government receives less for
its assets than actual worth
 The mere transfer of ownership does not have to
affect the profitability of additional private sector
investment.
 The expected rate of return to additional
investment doesn’t change.
 Doesn’t significantly affect aggregate demand and
supply.
 Impact on government budget is similar to that of
bond financing.
 Can have an expansionary impact on the economy
in the short run.
Current affairs
•20-25 % Price cut of flights (05-Dec-2010)

•Current Scenario Of Aviation Sector In India

•Mission Of Mr. Prafull Patel – Biggest Aviation Sector In World

•Hyderabad & Bangaluru Airpot

•Employement & Opportunities

•Seprate Terminals for low cost Airlines (Controlling Air


Traffic and Cost)

•No more a loss sector in India….


SWOT - strenghts
 . Quality of the service.

 Route rationalization.

 First airline to have a new fleet of airbuses.

 Quality and continuous innovation


SWOT WEEKNESSES
 Service delivery to metros and other big cities

 Still a not in profit organization.

 High ticket pricing.

 Facing a tough competition from competitors.


SWOT - Opportunities
 The expanding tourism industry.

 The non penetrated domestic market.

 International market.

 Untapped air cargo market.


SWOT - Threats
 Competitors
 Infrastructure issues.
 Fuel price hike.
 Tourism saturation
 Economic slowdown.
 Promotions and sponsorship declining.
SUGGESTIONS
 Reduce the labor cost

 Simplify the flight operations

 Offer more transparent pricing

 Get smart on fuel


conclusion
•Privatization is need for Economic development &
Growth
•More infrastructure should be provided
•Investment of foreign hands in Privatisation can lead
better results
•Reduction in Oil prices can boost aviation sector
THANK YOU

Q/A

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