Presented by:

Anirudha Bera (3031)

Divyan k (3018)
Rakesh kumar (3043)
Rajib k sahoo (3037)
Neeraj Mudgal (3004)
Sourabh Srivastava (3016)
Contents:-

 Introduction
 History of Indian aviation sector
 Present scenario
 About major players in Indian aviation sector
 Reasons About booming aviation sector in India
 Government policy
 Analysis of market share
 Challenges
 Market growth
 Future status
 Sources of data
 Aviation Industry in India is one of the fastest growing aviation industries in the world.
With the liberalization of the Indian aviation sector, aviation industry in India has
undergone a rapid transformation. From being primarily a government-owned industry,
the Indian aviation industry is now dominated by privately owned full service airlines and
low cost carriers. Private airlines account for around 75% share of the domestic aviation
market. Earlier air travel was a privilege only a few could afford, but today air travel has
become much cheaper and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when the first air
flight between Karachi and Delhi was started by the Indian State Air Services in
collaboration with the UK based Imperial Airways. It was an extension of London-
Karachi flight of the Imperial Airways. In 1932, JRD Tata founded Tata Airline, the first
Indian airline. At the time of independence, nine air transport companies were carrying
both air cargo and passengers. These were Tata Airlines, Indian National Airways, Air
service of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and
Mistry Airways. After partition Orient Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air India
International Ltd in collaboration with Air India (earlier Tata Airline) with a capital of Rs
2 crore and a fleet of three Lockheed constellation aircraft. The inaugural flight of Air
India International Ltd took off on June 8, 1948 on the Mumbai-London air route. The
Government nationalized nine airline companies vide the Air Corporations Act, 1953.
Accordingly it established
By 1995, several private airlines had ventured into the aviation business and accounted
for more than 10 percent of the domestic air traffic. These included Jet Airways Sahara,
NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental
Aviation, and Damania Airways. But only Jet Airways and Sahara managed to survive the
competition. Meanwhile, Indian Airlines, which had dominated the Indian air travel
industry, began to lose market share to Jet Airways and Sahara. Today, Indian aviation
industry is dominated by private airlines and these include low cost carriers such as
Deccan Airlines, GoAir, SpiceJet etc, who have made air travel affordable.
But one of the major challenges facing Indian aviation industry is infrastructure
constraint. Airport infrastructure needs to be upgraded rapidly if Indian aviation industry
has to continue its success story.
007 was arguably the best growth period for India's civil aviation sector. Passengers
carried
 Indian Industry
Indian economy is one of the fastest growing in the world. Its GDP growth rate is 9.2%
with a GDP of rupees 177000 crore, which is the fourth largest in the world. India, the
12th largest economy in the world possesses a foreign exchange reserve of USD.177.00
billion. The country is fast adapting to industrialization, the speed of which is measured
as the second fastest in the world. The major industries of India are automobiles,
cement, chemicals, consumer electronics, food processing, machinery, mining,
petroleum, pharmaceuticals, steel, transportation equipment, and textiles.

In the post liberalization era the country has capitalised on its vast pool of educated,
English speaking manpower to become a major power in
outsourcing, Information Technology, financial and biomedical technology research,
banking & insurance, and real estate development.

HISTORY OF INDIAN AVIATION SECTOR

The history of civil aviation in India started with its first commercial flight on
February 18, 1911. It was a journey from Allahabad to Naini made by a French
pilot Monseigneur Piguet covering a distance of about 10 km. Since then efforts
were on to improve the health of India's Civil Aviation Industry. The first
domestic air route between Karachi and Delhi was opened in December 1912
by the Indian State Air Services in collaboration with the Imperial Airways, UK as
an extension of London-Karachi flight of the Imperial Airways.

The aviation industry in India gathered momentum after three years with the
opening of a regular airmail service between Karachi and Madras by the first
Indian airline, Tata Sons Ltd. However this service failed to receive any backing
from the Indian Government.

At the time of independence nine Air Transport Companies were operational in

the Indian Territory. Later the number reduced to eight when the Orient Airways
shifted its base to Pakistan. The then operational airlines were Tata Airlines,
Indian National Airways, and Air service of India, Deccan Airways, Ambica
Airways, Bharat Airways and Mistry Airways.

With an attempt to further strengthen the base of the aviation sector in India, the
Government of India together with Air India (earlier Tata Airline) set up a joint
sector company, Air India International, in early 1948. With an initial investment
of Rs. 2 crore and a fleet of three Lockheed constellation aircrafts, Air India started
its journey in the Indian aviation sector on June 8, 1948 in Mumbai (Bombay)-
London air route.

For many years since its inception the Indian Aviation Industry was plagued by
inappropriate regulatory and operational procedures resulting in either
excessive or no competition. Nationalization of Indian Airlines (IA) in 1953
brought the domestic civil aviation sector under the purview of Indian
Government. Government's intervention in this sector was meant for removing
the operational limitations arising out of excess competition.

Air transportation in India now comes under the direct control of the Department
of Civil Aviation, a part of the Ministry of Civil Aviation and Tourism of
Government of India.

Aviation by its very nature constitutes the elitist part of our country's
infrastructure. This sector has substantial contribution towards the development
of country's trade and tourism, providing easier access to the areas full of
natural beauty. It therefore acts as a stimulus for country's growth and economic
prosperity.

HISTORY
Revolutionized by privatization along with active participation of the foreign
investors, the Indian aviation industry has experienced phenomenal
transformation over the last couple of years. From being a service catering to
the needs of the privileged group only it is now well within the reach of middle
class population. This has been the result of increased competition in the Indian
aviation industry due to the presence of a wide variety of private and public
airlines with their low price tags. It was further helped by the entry of Air Deccan,
the first budget airline in India, offering unbelievable tariffs to the customers.
In the financial year 2005-06 there has been a significant 22.3 percent growth in
passenger traffic in the domestic airports while the aircraft movement recorded
a growth by 14.2 percent.
In terms of the number of flights Jet Airways secures the top position with 8,168
flights operating till June 2005. Indian Airlines is in second position with 7,562
flights. Sahara (3,225 flights), Air Deccan (2,889 flights), Spice Jet (483 flights)
and Kingfisher Airlines (267 flights) come thereafter in the list of domestic and
national carrier operators.

Top Players

Players in Indian aviation industry can be categorized in three groups:

• Public players
• Private players
• Start up players

There are three public players: Air India, Indian Airlines and Alliance Air. The private
players include Jet Airways, Air Sahara,Paramount airways, Go Air Airlines, Kingfisher
Airlines, Spice Jet, Air Deccan and many more. The start up players are those which
are planning to enter into the markets. Some of them are Omega Air, Magic Air, Premier
Star Air and MDLR Airlines
. Rankings in Aviation Sector

Company Score Ranks

Jet Airways 136.9 1
Air India (NACIL) 132.7 2
Kingfisher Airlines 131 3
British airways 131 4
Air Deccan 129.3 5
Luftansa 127.7 6
GoAir 126.2 7
SpiceJet 123.8 8
Indigo 121.2 9
Paramount Airlines 119 10
 REASONS FOR BOOM IN AVIATION INDUSTRY
1.Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident
Indian) investment up to 100 per cent is permissible in domestic airlines without any
government approval. However, the government policy bars foreign airlines from taking a
stake in a domestic airline company.

2.Low entry barriers: Nowadays, venture capital of $10 million or less is enough to
launch an airline. Private airlines are known to hire foreign pilots, get expatriates or retired
personnel from the Air Force or PSU airlines in senior management positions. Further, they
outsource such functions as ground handling, check-in, reservation, aircraft maintenance,
catering, training, revenue accounting, IT infrastructure, loyalty and

programme management. Airlines are known to take on contract employees such as cabin crew,
ticketing and check-in agents.

3.Attraction of foreign shores: Jet and Sahara have gone international by starting operations,
first to SAARC countries, and then to South-East Asia, the UK, and the US. After five years of domestic
operations, many domestic airlines too will be entitled to fly overseas by using unutilised bilateral
entitlements to Indian carriers.

4.Rising income levels and demographic profile: Though India's GDP (per capita) at $3,100
is still very low as compared to the developed country standards, India is shining, at least in metro
cities and urban centres, where IT and BPO industries have made the young generation prosperous.
Demographically, India has the highest percentage of people in age group of 20-50 among its 50
million strong middle class, with high earning potential. All this contributes for the boost in domestic
air travel, particularly from a low base of 18 million passengers.
5.Untapped potential of India's tourism: Currently India attracts 3.2 million tourists every
year, while China gets 10 times the number. Tourist arrivals in India are expected to grow
exponentially, especially due to the open sky policy between India and the SAARC countries and the
increase in bilateral entitlements with European countries, and US.

6.Glamor of the airlines: No industry other than film-making industry is as glamorous as the
airlines. Airline tycoons from the last century, like J. R. D. Tata and Howard Hughes, and Sir Richard
Branson and Dr. Vijaya Mallya today, have been idolized. Airlines have an aura of glamour around
them, and high net worth individuals can always toy with the idea of owning an airline. All the above
factors seem to have resulted in a "me too" rush to launch domestic airlines in India.

Major players:-

INDIAN STARTUP AIRLINE PROFILES

Airline Total Fleet DetailsDelivery Dates Base Launch

Aircraft
on Order

Indigo 100 A320s From late 2006 New Dec. 05/ Feb. 06
Delhi

Air Deccan 68 30 ATR 72s Hopes to operate BangaloreAug. 03

6 ATR 42s 75 aircraft by
32 A320s 2010

Kingfisher 32 5 A380-800s 7 in Apr. 05 BangaloreMay 05

Airlines 5 A350-800s 9 aircraft per
5 A330-200s year until 08
14 A320s (+ Hopes to operate
20 options) 55 by 2010
3 A319s
SpiceJet 25 10 737-800s From 2006 New May 05
(+ 10 Delhi
options)
3 leased
737-800s

Air One 25 2 ERJ 145s n/a BangaloreMay 05

Plans to
acquire 25
more ERJ
145s

Go Air 20 20 A320s or 9 initially leased Mumbai Oct. 05

737s by Oct. 05

11 in second year
of operations
Plans to purchase
20 Airbus for
delivery by 2007

Air-India 21 21 737-800s 7 737-800s - New Mar. 05 - ticket

Express already leased Delhi online sales; Apr.
05 - commence
services
Jet Airways

Capital Structure
Period Instrument Authorized Issued - PA I D U P -
Capital Capital Shares Face Value Capital
From To (nos)
(cr) (cr)
2005 2006 Equity Share 130 86.33 86334011 10 86.33
2004 2005 Equity Share 130 86.33 86334011 10 86.33
2003 2004 Equity Share 100 72.09 72088900 10 72.09

BSE: 532617 NSE: JETAIRWAYS Reuters: N.A N.A

Source : Asian CERC

v
Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
 12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 141.92 141.92 86.33 86.33 86.33
Equity Share Capital 72.09 72.09 86.33 86.33 86.33
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 69.83 69.83 0.00 0.00 0.00
Reserves -74.66 -112.08 1,664.56 2,057.53 2,018.48
Revaluation Reserves 540.87 387.57 259.27 162.02 132.44
Networth 608.13 417.41 2,010.16 2,305.88 2,237.25
Secured Loans 200.54 60.34 60.00 206.02 742.46
Unsecured Loans 3,581.89 3,149.65 2,904.84 4,689.58 5,313.84
Total Debt 3,782.43 3,209.99 2,964.84 4,895.60 6,056.30
Total Liabilities 4,390.56 3,627.40 4,975.00 7,201.48 8,293.55
Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 5,016.93 5,130.88 5,162.79 4,312.07 5,713.83
Less: Accum. Depreciation 1,532.56 2,050.21 2,593.46 2,249.58 2,416.34
Net Block 3,484.37 3,080.67 2,569.33 2,062.49 3,297.49
Capital Work in Progress 300.79 46.12 71.32 2,725.66 3,994.52
Investments 59.70 233.42 1,595.73 187.23 68.93
Inventories 341.00 347.44 332.52 405.25 438.99
Sundry Debtors 223.06 234.44 252.31 433.15 603.90
Cash and Bank Balance 471.95 12.53 49.07 1,524.84 33.99
Total Current Assets 1,036.01 594.41 633.90 2,363.24 1,076.88
Loans and Advances 171.15 446.90 347.20 1,148.66 1,262.79
Fixed Deposits 0.00 357.41 1,175.17 579.41 1,062.65
Total CA, Loans & Advances 1,207.16 1,398.72 2,156.27 4,091.31 3,402.32
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 661.47 853.00 1,079.89 1,400.06 2,221.55
Provisions 0.00 278.53 337.76 465.15 248.16
Total CL & Provisions 661.47 1,131.53 1,417.65 1,865.21 2,469.71
Net Current Assets 545.69 267.19 738.62 2,226.10 932.61
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 4,390.55 3,627.40 4,975.00 7,201.48 8,293.55
Contingent Liabilities 0.00 121.10 3,097.06 9,736.40 6,624.43
Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61
Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 141.92 141.92 86.33 86.33 86.33
Equity Share Capital 72.09 72.09 86.33 86.33 86.33
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 69.83 69.83 0.00 0.00 0.00
Reserves -74.66 -112.08 1,664.56 2,057.53 2,018.48
Revaluation Reserves 540.87 387.57 259.27 162.02 132.44
Networth 608.13 417.41 2,010.16 2,305.88 2,237.25
Secured Loans 200.54 60.34 60.00 206.02 742.46
Unsecured Loans 3,581.89 3,149.65 2,904.84 4,689.58 5,313.84
Total Debt 3,782.43 3,209.99 2,964.84 4,895.60 6,056.30
Total Liabilities 4,390.56 3,627.40 4,975.00 7,201.48 8,293.55
Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 5,016.93 5,130.88 5,162.79 4,312.07 5,713.83
Less: Accum. Depreciation 1,532.56 2,050.21 2,593.46 2,249.58 2,416.34
Net Block 3,484.37 3,080.67 2,569.33 2,062.49 3,297.49
Capital Work in Progress 300.79 46.12 71.32 2,725.66 3,994.52
Investments 59.70 233.42 1,595.73 187.23 68.93
Inventories 341.00 347.44 332.52 405.25 438.99
Sundry Debtors 223.06 234.44 252.31 433.15 603.90
Cash and Bank Balance 471.95 12.53 49.07 1,524.84 33.99
Total Current Assets 1,036.01 594.41 633.90 2,363.24 1,076.88
Loans and Advances 171.15 446.90 347.20 1,148.66 1,262.79
Fixed Deposits 0.00 357.41 1,175.17 579.41 1,062.65
Total CA, Loans & Advances 1,207.16 1,398.72 2,156.27 4,091.31 3,402.32
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 661.47 853.00 1,079.89 1,400.06 2,221.55
Provisions 0.00 278.53 337.76 465.15 248.16
Total CL & Provisions 661.47 1,131.53 1,417.65 1,865.21 2,469.71
Net Current Assets 545.69 267.19 738.62 2,226.10 932.61
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 4,390.55 3,627.40 4,975.00 7,201.48 8,293.55
Contingent Liabilities 0.00 121.10 3,097.06 9,736.40 6,624.43
Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 141.92 141.92 86.33 86.33 86.33
Equity Share Capital 72.09 72.09 86.33 86.33 86.33
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 69.83 69.83 0.00 0.00 0.00
Reserves -74.66 -112.08 1,664.56 2,057.53 2,018.48
Revaluation Reserves 540.87 387.57 259.27 162.02 132.44
Networth 608.13 417.41 2,010.16 2,305.88 2,237.25
Secured Loans 200.54 60.34 60.00 206.02 742.46
Unsecured Loans 3,581.89 3,149.65 2,904.84 4,689.58 5,313.84
Total Debt 3,782.43 3,209.99 2,964.84 4,895.60 6,056.30
Total Liabilities 4,390.56 3,627.40 4,975.00 7,201.48 8,293.55
Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 5,016.93 5,130.88 5,162.79 4,312.07 5,713.83
Less: Accum. Depreciation 1,532.56 2,050.21 2,593.46 2,249.58 2,416.34
Net Block 3,484.37 3,080.67 2,569.33 2,062.49 3,297.49
Capital Work in Progress 300.79 46.12 71.32 2,725.66 3,994.52
Investments 59.70 233.42 1,595.73 187.23 68.93
Inventories 341.00 347.44 332.52 405.25 438.99
Sundry Debtors 223.06 234.44 252.31 433.15 603.90
Cash and Bank Balance 471.95 12.53 49.07 1,524.84 33.99
Total Current Assets 1,036.01 594.41 633.90 2,363.24 1,076.88
Loans and Advances 171.15 446.90 347.20 1,148.66 1,262.79
Fixed Deposits 0.00 357.41 1,175.17 579.41 1,062.65
Total CA, Loans & Advances 1,207.16 1,398.72 2,156.27 4,091.31 3,402.32
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 661.47 853.00 1,079.89 1,400.06 2,221.55
Provisions 0.00 278.53 337.76 465.15 248.16
Total CL & Provisions 661.47 1,131.53 1,417.65 1,865.21 2,469.71
Net Current Assets 545.69 267.19 738.62 2,226.10 932.61
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 4,390.55 3,627.40 4,975.00 7,201.48 8,293.55
Contingent Liabilities 0.00 121.10 3,097.06 9,736.40 6,624.43
Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61

Jet Airways

BSE: 532617 NSE: JETAIRWAYS ISIN: INE802G01018

Industry : Transport

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78
Excise Duty 0.00 0.00 0.00 0.00 0.00
Net Sales 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78
Other Income 0.00 94.74 41.56 366.74 315.61
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Total Income 2,942.10 3,542.16 4,379.57 6,060.47 7,373.39
Expenditure
Raw Materials 0.00 50.07 71.96 63.12 0.00
Power & Fuel Cost 650.40 741.78 1,051.73 1,678.93 2,427.64
Employee Cost 263.45 282.24 374.74 567.81 938.55
Other Manufacturing
851.42 553.39 570.57 777.67 1,239.56
Expenses
Selling and Admin Expenses 278.03 611.80 749.05 1,084.22 1,274.31
Miscellaneous Expenses 415.03 61.71 58.57 90.34 140.60
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 2,458.33 2,300.99 2,876.62 4,262.09 6,020.66
 Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover 2,942.10 3,447.42 4,338.01 5,693.73 7,057.78
Excise Duty Mar0.00
'03 Mar0.00 '04 Mar0.00 '05 Mar0.00'06 Mar0.00 '07
Net Sales 2,942.10
12 mths 3,447.42
12 mths 4,338.01
12 mths 5,693.73
12 mths 7,057.78
12 mths
Other Income
Operating Profit 0.00 1,146.43
483.77 94.74 1,461.39
41.56 1,431.64
366.74 1,037.12
315.61
Stock
PBDITAdjustments 0.00 1,241.17
483.77 0.00 1,502.950.00 1,798.38
0.00 1,352.730.00
Total Income
Interest 2,942.10
256.13 3,542.16
525.47 4,379.57
461.31 6,060.47
691.24 7,373.39
909.70
Expenditure
PBDT 227.64 715.70 1,041.64 1,107.14 443.03
Raw Materials
Depreciation 0.00
473.27 50.07
515.15 71.96
457.00 63.12
406.41 0.00
414.10
Power & Fuel Off
Other Written Cost 650.40
0.00 741.78
0.00 1,051.730.00 1,678.93
0.00 2,427.640.00
Employee Cost
Profit Before Tax 263.45
-245.63 282.24
200.55 374.74
584.64 567.81
700.73 938.55
28.93
Other Manufacturing
Extra-ordinary items 125.07 0.54 18.82 41.01 1,239.56
24.49
851.42 553.39 570.57 777.67
Expenses
PBT (Post Extra-ord Items) -120.56 201.09 603.46 741.74 53.42
Selling and Admin Expenses 278.03 611.80 749.05 1,084.22 1,274.31
Tax -1.19 15.03 190.14 270.22 23.42
Miscellaneous Expenses 415.03 61.71 58.57 90.34 140.60
Reported Net Profit -244.45 163.11 391.99 452.04 27.94
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Value Addition 2,458.33 2,250.92 2,804.66 4,198.97 6,020.66
Total Expenses 2,458.33 2,300.99 2,876.62 4,262.09 6,020.66
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Mar '03 Mar '04 Mar '05 Mar '06 Mar '07
Equity Dividend 0.00 0.00 25.90 51.80 51.80
Corporate Dividend Tax 12 mths
0.00 12 mths
0.00 12 mths
3.63 12 mths
7.27 12 mths
8.80
Per share data
Operating (annualised)
Profit 483.77 1,146.43 1,461.39 1,431.64 1,037.12
Shares in issue (lakhs)
PBDIT 720.89 1,241.17
483.77 720.89 1,502.95
863.34 1,798.38
863.34 1,352.73
893.34
Earning Per Share (Rs)
Interest -33.91
256.13 22.63
525.47 45.40
461.31 52.36
691.24 3.13
909.70
Equity Dividend (%)
PBDT 0.00
227.64 0.00 1,041.64
715.70 30.00 1,107.14
60.00 60.00
443.03
Book Value (Rs)
Depreciation -0.36
473.27 -5.55
515.15 202.80
457.00 248.32
406.41 235.61
414.10
Other Written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax -245.63 200.55 584.64 700.73 28.93
Extra-ordinary items 125.07 0.54 18.82 41.01 24.49
BSE: 532617 NSE: JETAIRWAYS Reuters: N.A N.A
PBT (Post Extra-ord Items) -120.56 201.09 603.46 741.74 53.42
Jet Airways
Tax -1.19 15.03 190.14 270.22 23.42
Reported Net Profit
BSE: 532617 -244.45
NSE: JETAIRWAYS 163.11 391.99 452.04
ISIN: INE802G01018 27.94
Total Value Addition 2,458.33 2,250.92 2,804.66 4,198.97 6,020.66
Industry : Transport
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity
Profit &Dividend
Loss account 0.00 0.00 in25.90
------------------- 51.80 51.80
Rs. Cr. -------------------
Corporate Dividend Tax 0.00 0.00 3.63 7.27 8.80
Per share data (annualised)
Shares in issue (lakhs) 720.89 720.89 863.34 863.34 893.34
Earning Per Share (Rs) -33.91 22.63 45.40 52.36 3.13
Equity Dividend (%) 0.00 0.00 30.00 60.00 60.00
Book Value (Rs) -0.36 -5.55 202.80 248.32 235.61

BSE: 532617 NSE: JETAIRWAYS Reuters: N.A N.A

MARKETING STRATEGIES OF SOME BIG AVIATION COMPANIES
Kingfisher Airlines Limited is an airline based in Bangalore, India. It is a major Indian
airline operating 218 flights a day and has an

[edit] Fleet

The Kingfisher Airlines fleet consists of the following aircraft as of 02 October 2007:

Kingfisher Airlines Fleet [1]

Passengers
Aircraft Total (Kingfisher Routes Notes
First/Kingfisher Class)

13
Domestic short
ATR 72-500 (22 66 (0/66)
haul
orders)

3 Short-medium
Airbus A319-100 144 (0/144) IAE Engines
(1 order) haul

Airbus A319- Short-medium

1 Corporate Jet
100CJ haul

13
174 (0/174) Short-medium
Airbus A320-200 (49
134 (20/114) haul
orders)

199 (0/199) Short-medium

Airbus A321-200 8
151 (32/119) haul

(15 Medium-long Entry into

Airbus A330-200
orders) haul service: 2008

Airbus A340- (10 Entry into

Ultra long haul
500HGW orders) service: 2008

(20
orders)
Airbus A350-800
(10
options)

(10 Entry into

Airbus A380-800 Long haul
orders) service: 2010

• The airline was the first in India to initially, and to continue, to operate with all
new aircraft.[citation needed]
• On 18 February 2005 Kingfisher Airlines signed a contract with Airbus for three
Airbus A319 aircraft, adding to the 10 Airbus A320 aircraft (plus twenty options)
 ordered in January 2005. The first of the A319s will be delivered in December
2005, complementing the A320s on routes to smaller cities in India.[2]

The Airbus A380 during its World Tour flight 2006-2007

• On June 15, 2005 it became the first (and only) Indian airline to order the Airbus
A380. It placed orders for 5 A380s, 5 Airbus A350-800 aircraft and 5 Airbus
A330-200 aircraft in a deal valued at over $3 billion. Delivery of the A330s is due
to start in late 2007, followed by the A380s in 2010 and the A350s in 2012.[2]
• On November 20, 2005 at the Dubai Air Show, Kingfisher Airlines announced
that it would be buying 20 ATR 72-500s (plus 15 options). The deal is estimated
to be worth $500 million dollars with the deliveries starting from March 2006.
The last of the 20 planes would be handed over to Kingfisher Airlines by 2008.
The first aircraft from that order was delivered to the airlines on March 31,
2006.[citation needed]
• On November 21, 2005 at the same air show, Kingfisher Airlines placed an order
to acquire 30 more A320s in a deal estimated to be worth $2 billion. Engine
making joint venture International Aero Engines will supply the engines for the
planes. Deliveries for the planes are likely to start from 2008.[citation needed]
• On January 13, 2006 an Airbus A319 of Kingfisher Airlines was the first aircraft
in that class to land on the short older runway at Mangalore airport.[3]
• On the April 24, 2006, Kingfisher signed a contract for five Airbus A340-500
HGWs. The airline plans to use this for its Bangalore-San Francisco and Mumbai-
New York route. Delivery is expected for 2008.[4]
• Kingfisher has sold two Airbus A321s to Pegasus Aviation Finance in a sale and
lease-back deal. Pegasus says in a statement that the two new-build A321-200s
that are being prepared for delivery to Kingfisher will be the first of the stretched
A320-family variant in India. Kingfisher already leases one A320 from Pegasus.[5]
• Kingfisher was also the first Indian airline to bring the latest super jumbo Airbus
380 to India. A 380 arrived on 6 may 2007 in New Delhi and in Mumbai on 8th
May as part of Kingfisher's second anniversary celebrations
• On 20 Jun 2007 Kingfisher airlines announced to buy Airbus aircraft including an
extra 15 A350-800 XWB jets worth $3 billion. The order also includes five four-
engine A340-500 planes, 10 A330-200 wide-body models and 20 single-aisle
A320-family jets. The order is worth a total of $7.2 billion at list prices.
Kingfisher had already ordered 5 of the original version A350 and has upgraded
these orders to the redesigned A350 XWB model
A Kingfisher-sponsored Toyota F1 car: "Fly Kingfisher"

Kingfisher Airlines is an official sponsor of the Panasonic Toyota F1 Team.[6] Kingfisher

Airlines has entered a 2 year agreement to be a sponsor of Toyota F1 beginning in 2007.
The "Fly Kingfisher" logo appeared on the sides of the Toyota F1 Car and on the driver's
overalls and helmet during the 2007 season.[6] However, due to the fact that Kingfisher
Airliners' owner Dr. Vijay Mallya focused on the new F1 team Force India which was
formed after Dr. Mallya's 2007 acquisition of Spyker F1 team, Toyota and Kingfisher
Airlines' ended the contract on January 2, 2008.[7]

The airline started operations on 9 May 2005[1], following the lease of 4 Airbus A320
aircraft. As of July 2007, Kingfisher operates only on domestic routes, however it has
announced plans to start flights to the USA with Airbus A340 and Airbus A380 aircraft.
The airline is owned by the United Breweries Group. (which also owns the popular
Indian beer of the same name). The airline promises to suit the needs of air travellers and
to provide reasonable air fares. Kingfisher Airlines' main "luxury" component is its In-
Flight Entertainment System, a first among Indian airlines.[citation needed]. The airlines in-
flight Mobile Phone and Internet Services will be provided by OnAir starting 2008 for
longhaul flights. In October 2007, the airline announced Deepika Padukone as its brand
ambassador.

GOVT REGULATIONS
The benefits of lax regulations in the Aviation sector are being enjoyed by consumers
around India. By removing more regulations the industry would become more
competitive which would mean good news for consumers, but bad news for corporations
with bad managers. The stories in the media about the proposed changes and new
regulations in the Aviation sector are strikingly similar to the screenplay of The Aviator
(great movie).

No Flying Overseas: Air Deccan and Kingfisher are being denied the entry to fly
overseas despite their repeated pleas. A official from the ministry of Aviation said that,
existing carriers like Sahara and Jet who are operating on overseas route are incurring
losses, hence he (the official) doesn't see the logic in allowing Deccan and Kingfisher to
fly overseas. This is way too much paternalism, since when did the government start
caring about a company's profitability? Why don't they cut taxes? Thats a better idea, but
the Sarkaar is a magnet for bad ideas. Besides the official should know that the cost
structure determines the profitability of a company, a loss for Sahara could very possible
mean profit for Air Deccan because of the Deccan's low cost structure. But who needs
valid reasons when you have the might and sanction of the big bad government.
Regulate Entry: The aviation ministry in order to protect the existing airline cartel
members has directed Aircraft Acquisition Committee (didn't know that this department
even existed) to make entry norms more stringent. The committee will analyze details
like model of aircraft and planned routes to ensure that airlines have a sound business
model. Of course this is necessary because airlines don't bother about providing a return
on investments, its like the saying goes "baap ka paisa". The real reason is because more
supply means less profits for existing players hence the need to choke entry with the
excuse of keeping the airline sector healthy.

The only rationale for government involvement in this sector is the common reason that
the private sector wont operate routes to remote places. Despite government involvement
we still have a plethora of remote places with no air connectivity. Provision of service
is/was determined based on the vote bank potential. However a voucher system can
address these concerns. Instead of having national carriers like Air India and Indian
Airlines, the govt. can issue vouchers to the so called "needy" groups who can use it with
private operators. Same thing can be done for routes, if the government wants a particular
route that the private sector doesn't operate due to lack of profits. The government can
subsidize these routes and give it to the private players. So what should we do with
Indian Airlines and Air India? Merger? De-merger?

POLICY

The South-East Asian regional grouping has invited the Indian government to
join the Asean open-sky agreement that initially proposes allowing unlimited
flights between capital cities. During the second stage, members would also be
entitled to operate unlimited flights to the secondary cities in these areas. If India does
join the open sky agreement, it would offer Indian airlines the opportunity of launching
unlimited flights to Singapore, Bangkok, Kuala Lumpur, Yangon and Manila among
others. A decision on this is likely to be made by the end of this month. The proposed
regional open sky agreement is to be implemented in 2010. Currently, the open-sky
agreement with Asean allows the designated airlines of India to operate daily services to
the capitals of 10 member states.

The draft bill for the formation of the Airports Economic Regulatory Authority
(AERA) is ready and will soon be placed before the Union Cabinet. Subsequently, the
bill will be placed before Parliament. According to Mr Ajay Prasad, Union civil aviation
secretary, the proposed authority will be a three-member body. Apart from the chairman,
there will be two other individuals with experience in this sector.

Airports
The mode of development for the modernisation of the Chennai and Kolkata
airports is expected to be decided in a month’s time. The views of both the state
governments and other stakeholders would be considered before taking a final decision
on airport modernisation. While the Tamil Nadu government wanted Chennai airport to
be modernised through public-private participation (PPP), the West Bengal government
had insisted that the work be done solely by the Airports Authority of India (AAI). Also, as
against his earlier stance, the civil aviation minister, Mr Praful Patel, has also welcomed
the West Bengal government's initiative in setting up a greenfield airport in Kolkata.
However, the minister has added that the greenfield airport should not interfere with the
operations of the existing airport.

The Ministry of Civil Aviation has already received 25 project reports for
upgradation of the 35 non-metro airports. The remaining 10 reports are due by the
end of this month. Once the reports are completed, the ministry will be inviting
expressions of interest from private players interested in working with AAI in this regard.
Work had already begun in places like Srinagar, Dibrugarh, Udaipur and Visakhapatnam.
The estimated outlay for the upgradation of the 35 airports is expected to be around Rs
40 billion. Meanwhile, the International Civil Aviation Organisation has also given
clearance for the proposed greenfield airport in Navi Mumbai, subject to certain
conditions being met.

AAI has prepared a report for the Sikkim greenfield airport. The cost of the airport
will be Rs 3.40 billion. The Sikkim state government has assured Rs 1 billion and also
the land required for construction. During the Tenth Five-Year Plan period, AAI will be
spending Rs 1.25 billion on the modernisation, upgradation and improvement of airport
facilities in the North-east.

GMR Hyderabad International Airport Limited (GHIAL), which is developing the

new international greenfield airport in Hyderabad, has entered into two in-flight
catering concessional agreements with LSG Sky Chef and Sky Gourmet. LSG Sky
Chef is a 100-per cent subsidiary of Lufthansa, and the world's largest provider of airline
catering and in-flight solution, while Sky Gourmet Catering Private Limited operates
under the trade name of "skygourmet" and is one of the leading airline catering
companies in the country with operations spread across Mumbai, Delhi, Bangalore and
Pune. The in-flight catering concessions involve financing, constructing, operating and
maintaining in-flight kitchen facilities for catering to the in-

AIRLINES

The deadline for the proposed merger of the two state-run airlines, Air India and
Indian, has been fixed as March 31, 2007. Consultants – Accenture India Limited - are
in the process of preparing both short-term and long-term reports for the same after
studying the changing dynamics of the global and domestic aviation sector. Meanwhile
the initial public offer (IPO) of Indian has been temporarily shelved. An IPO will now be
considered only after the merger of Indian and Air India as the chances of getting a
better valuation will increase after the merger.

Indian is to reintroduce a daily flight between Delhi and the Khajuraho sector
from September 15, 2006. The flight will be operated with an Airbus 320 aircraft. The
newly reintroduced flight will operate on the Delhi-Khajuraho-Varanasi sector and offer
more than a 1,000 seats a week.

Air Deccan plans to introduce direct daily flights from Delhi to Kulu starting from
October 17, 2006. The airline will fly its 48-seater ATR aircraft on the route. Air Deccan’s
fare on this sector starts at Rs 74 (plus taxes), and moving through various price points it
goes up till the last day, as against a fixed fare of Rs 4,150 (plus taxes).

Emirates Airlines is open to the option of picking up a stake in an airline in India

provided the government relaxes investment norms for foreign airlines. Emirates
has a code share agreement with Jet Airways and has a joint venture with Sri Lankan
Airlines. Over the last one year, the airline has also added 6,000 seats from India. The
airline’s current fares are at least 20 per cent lesser than what they were a year ago.
Meanwhile the airline also plans to launch eight flights a week from Bangalore from
October 29, 2006. This is being done to service the medical tourism boom in Bangalore.
As part of the airline’s inaugural offer, a return fare will cost Rs 14,000. Return fares to
New York begin at Rs 38,400 and for the European countries, Rs 20,000. All travel will
be through the airline's hub which is in Dubai.

Air India has awarded a contract worth $70 million to France-based Thales for
installation of an advanced passenger entertainment system on the airline’s 23
Boeing aircraft to be inducted from February next year. As per the agreement, the
entertainment system would comprise Thales Top Series digital audio and video on-
demand entertainment systems at every seat. In addition, a 23-inch display system
would be installed in the First Class followed by 15 inch and 10.6 inch in Business and
Economy classes. Air India had earlier signed up with Thales to install a similar system
on the six Boeing 747-400 aircraft at a cost of $35 million.

Meanwhile, Air-India is all set to pick up stake in the proposed $100-million

maintenance, repair and overhaul (MRO) facility of the US-based aircraft
manufacturer Boeing Company in Nagpur. Air-India's stake in the facility will be in the
form of contribution of its engineering assets and infrastructure located at its base in
Mumbai as well as its human resources. The airline will hire an independent firm to value
its engineering infrastructure and human resources to ascertain the proposed stake in
the MRO project.

Air India Express, India’s first international budget airline, will link Amritsar and
Mangalore to Dubai from the next month. By introducing this service, it will fulfill the
long pending demand of travellers from these regions. The flight will take-off on October
2, 2006. Two weekly flights will fly between Amritsar and Dubai. A large chunk of
travellers from Punjab go to Dubai for employment purposes and they
have been seeking a direct link between the border district and Gulf nation. These flights
would be progressively stepped up in the near future depending upon the strength of
passengers.

PROMOTIONAL SCHEMES

Paramount Airways has announced the launch of an evening flight on the

Chennai-Madurai sector. The service will be available from September 15, 2006. The
airline currently operates two morning flights on the sector. The fare starts at Rs 1,999.
The airline will also be connecting Madurai and Hyderabad via Chennai with an all-
inclusive starting throughfare of Rs 5,949. A 50-per cent discount on full fare to senior
citizens and special group rates for college and school students have also been
announced. Further, a discount of 50 per cent to all disabled passengers has been
introduced and disabled children below 12 years will be eligible to fly free.

FINANCE

According to reports, AAI plans to raise around Rs 40 billion from the debt
market for the several modernisation projects that it will be undertaking in the near
future. A senior official of the civil aviation ministry said that Rs 40 billion is the upper
limit for the fund-raising capability of AAI. At a later stage AAI might also float bonds.
However, AAI has not yet finalised the amount that will be raised. The authority, which
has already got an AAA rating from Crisil, is presently preparing its cost involvement for
the proposed modernisation of 35 non-metro airports. Apart from the airport, other
facilities such as hotels and roads will also be developed at these airports in partnership
with private companies.

MISCELLANEOUS

Toulouse-based Avions de Transport Regionale (ATR) is eyeing a significant

presence in India. Aiming at proximity with its domestic clients like Air Deccan and
Kingfisher Airlines, ATR, a $540-million equal partnership firm promoted by European
Aeronautic Defence and Space (EADS) and Alenia Aeronautica, is launching a customer
support office in Bangalore and a spare parts distribution centre in New Delhi. Both the
centres are expected to become operational in 2006. In addition, ATR is also looking at
setting up a maintenance centre in Bangalore in collaboration with Hindustan
Aeronautical Limited, Air Deccan or Kingfisher Airlines. The company is also in talks with
some domestic airlines to launch ATR cargo aircraft in India as well as to establish
training centres with Air Deccan in Bangalore and with Kingfisher Airlines in Mumbai.
From the beginning of 2005, ATR has sold 140 aircraft worldwide, including 65 to Indian
carriers.

Data
Tourist charter operations under Open Sky Policy

Average number
Number of flights Number of of passengers
Airport operated passengers flown flown per flight
Delhi 23 5,838 254
Goa 518 121,999 236
Trivandrum 23 2,096 178
Others 43 5,417 126
Total 607 135,350 226

CHALLENGES FOR AVIATION INDUSTRY

The growth in the aviation sector and capacity expansion by carriers have posed challenges to
aviation industry on several fronts. These include shortage of workers and professionals, safety
concerns, declining returns and the lack of accompanying capacity and infrastructure. Moreover,
stiff competition and rising fuel costs are also negatively impacting the industry.

1. Employee shortage: There is clearly a shortage of trained and skilled manpower in the
aviation sector as a consequence of which there is cut-throat competition for employees which, in
turn, is driving wages to unsustainable levels. Moreover, the industry is unable to retain talented
employees.

2. Regional connectivity: One of the biggest challenges facing the aviation sector in India is to
be able to provide regional connectivity. What is hampering the growth of regional connectivity is the
lack of airports.

3.Rising fuel prices: As fuel prices have climbed, the inverse relationship between fuel prices
and airline stock prices has been demonstrated. Moreover, the rising fuel prices have led to increase
in the air fares.

4.Declining yields: LCCs and other entrants together now command a market share of around
46%. Legacy carriers are being forced to match LCC fares, during a time of escalating costs.
Increasing growth prospects have attracted & are likely to attract more players, which will lead to
more competition. All this has resulted in lower returns for all operators.

5. Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to
support growth. While a start has been made to upgrade the infrastructure, the results will be visible
 only after 2 - 3 years.

6. Trunk routes: It is also a matter of concern that the trunk routes, at present, are not fully
exploited. One of the reasons for inability to realize the full potential of the trunk routes is the lack of
genuine competition. The entry of new players would ensure that air fares are brought to realistic
levels, as it will lead to better cost and revenue management, increased productivity and better
services. This in turn would stimulate demand and lead to growth.

7. High input costs: Apart from the above-mentioned factors, the input costs are also high. Some
of the reasons for high input costs are:-
Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increasing
manpower costs due to shortage of technical personnel.

GROWTH PROSPECTUS OF AVIATION SECTOR

The Indian aviation industry has witnessed remarkable growth in recent years, with key drivers
being positive economic factors, including high GDP growth, good industrial performance, and
corporate profitability and expansion. Other factors include higher disposable incomes, growth in
consumer spending, and availability of low fares.

As of May 2006, private carriers accounted for around 75% share of the domestic aviation market.
During April-September 2006, the total aircraft movements witnessed an increase of 29.6% year
on year to 494.92 thousand aircraft movements, as compared to 318.89 thousand during April-
September 2005. The total air passenger traffic in September 2006 has shown an increase of
31.1%, as compared to 2005.

FUTURE GROWTH

The aviation sector too appears to have fallen victim to the slowdown fever. the growth in the domestic aviation sector
has dipped sharply. from a record 32% plus growth last calendar year ,it has now fallen to 11.5% mainly because of fare
hikes and a high base impact. during the first 2 months of 2008 the seat factor of almost all domestic carriers has
declined. according to date released by the directorate general of civil aviation (dgca),domestic airlines carried 75.56 lakh
passengers during January February registering growth of 11.53% over 67.75 lakh passengers in the corresponding
period last year. the market share of Indian, jet airways and jet lite increased to 14.4%,23.2% and 7.4% in February from
13.9%,22.7% and 6.8% respectively in January. as the base of the aviation sector has expanded significantly the growth
has moderated. airfare in terms of increased fuel surcharge has increased and its impact is showing on the overall growth
of the sector. fuel surcharge has increased by Rs 700 to Rs1650.
 RECENT DEVELOPMENT

Recent Developments in Aviation Sector

Modernization of airports

• Policy on merchant airports

• Growth in MRO segment:
• Airport security policy
• Augmentation of fleet by various airlines
• Foreign equity participation in air transport services

• Boom in Indian aviation sector is likely to generate more jobs

Airport Privatization in India:

Lessons from the Bidding Process in Delhi and Mumbai

ABSTRACT

Modernization of Delhi and Mumbai airports had been considered as early as

1996 by the
Airports Authority of India (AAI). In June 2003, the AAI board approved a
modernization
proposal. These airports accounted for 47% of the passenger traffic, 58% of
cargo traffic
and 38% of aircraft movement in 2003-04. They generated one third of all
revenues earned
by the AAI. Both Delhi and Mumbai airports handled twice as many aircraft
movements as
they were originally designed for, resulting in congestion for both aircrafts
and passengers.
The bidding process began in May 2004 with an original completion date of
September
2004. However, due to a variety of reasons, the process got delayed and the
bids were
finally received by September 2005. The evaluation process of the bids was
questioned at
various levels. There were many reviews of this with inputs from experts.
The final decision
was made in January 2006 by the Empowered Group of Ministers (EGoM)
after
compromising on some of its own set parameters for one of the airports. One
of the losing
bidders called this an arbitrary decision making process and challenged the
decision in
court. After two stages of legal battle, the bidder finally lost the case in
November 2006 and
the original awardees retained their position. Work is now progressing at
these airports.
This paper focuses on the bidding process and brings out the lessons learnt.
W.P. No. 2007-05-01 Page No. 2
IIMA INDIA Research and Publications

Airport Privatization in India:

Lessons from the Bidding Process in Delhi and Mumbai1
1. Introduction
In June 2003, the Airports Authority of India (AAI) board approved a
modernization
proposal through the privatization route for Delhi and Mumbai airports.
The bidding
process began in May 2004 with an original completion date of
September 2004.
However, due to a variety of reasons, the bids were finally sought and
received by
September 2005. The evaluation process of the bids was questioned
at various levels.
There were many reviews of this with inputs from experts.
The major policy decisions were made by the Empowered Group of
Ministers (EGoM).
There were other supporting committees involved in the bidding
process. Exhibit 1 gives
the scope and members of these committees. The final decision was
made in January
2006 by the EGoM after compromising on some of its own set
parameters for Mumbai
airport. One of the losing bidders called this an arbitrary decision
making process and
challenged the decision in court. After two stages of legal battle, the
bidder finally lost the
case in November 2006 and the original awardees retained their
position. Work is now
progressing at these airports.
This paper focuses on the bidding process and brings out the lessons
learnt. The paper
draws significantly from a series of cases written on the subject by the
authors [Jain,
Raghuram and Gangwar, 2007].
 Early Steps Towards Privatization

Modernization of Delhi and Mumbai airports had been considered as

early as 1996 by the
AAI. In 1998, the Prime Minister had made a declaration that world
class airports should
be set up in the country. A task force on infrastructure recommended
in 1999 that a long
term lease for outsourced management should be considered. They
were not in favour of
corporatization. In June 2003, the AAI board approved a modernization
proposal costing
approximately Rs 30 billion for Delhi and Mumbai airports. The AAI
Amendment Bill
was passed by the parliament authorizing AAI to transfer the
operations and management
of its existing airports by way of long term lease to private players.
These were expected
to run for a period of at least 30 years, with an option to extend for a
further 30 years.
However, air traffic control would remain the responsibility of AAI and
security that of
the government. The Act was notified as effective from July 01, 2003.
In September 2003, a cabinet meeting of the then National
Democratic Alliance (NDA)
government approved a restructuring of the Delhi and Mumbai
airports on a long term
lease by adopting joint venture route with 74 per cent equity of a
private consortium and
26 per cent of AAI. They also constituted the EGoM for implementing
the decision. The
Ministry of Civil Aviation (MoCA) constituted the IMG in October 2003
to assist the
W.P. No. 2007-05-01 Page No. 3
1Prepared by Rekha Jain, G Raghuram, and Rachna Gangwar.
We thank Meghna Mathur for the research assistance provided.
This paper is an outcome of the series of cases written on the subject by the
authors.
IIMA INDIA Research and Publications
EGoM. The then EGoM met on November 09, 2003 under the chair of
the Finance
Minister.
The EGoM approved the appointment of ABN Amro as the financial
consultants (FC) on
December 22, 2003. An Invitation to Register an Expressions of
Interest (ITREOI) for
acquisition of 74 per cent equity stake in the Joint Venture Company
(JVC) was issued on
February 17, 2004. Last date of submission of expression of interest
(EOI) as a response
to the ITREOI was June 04, 2004. Exhibit 2 gives excerpts from the
ITREOI, including
government objectives and decisions, and bid structure. AAI’s overall
objective was to
complete the transaction for both the airports not later than
September, 2004. Exhibit 3
gives a macro economic perspective on the rationale for restructuring
and modernization
of Delhi and Mumbai airports as given in the ITREOI.
Exhibit 3 also describes the aviation oversight functions which were
distributed between
MoCA, AAI, Directorate General of Civil Aviation (DGCA) and the
Bureau of Civil
Aviation Security (BCAS). There were 449 airports/airstrips in the
country. Commercial
air services were possible only to 122 AAI approved airports. Eleven of
these were
international, 83 were domestic civil airports and 28 were civil
enclaves at defence
airfields. Of these, commercial airlines operated only through 60
airports. The remaining
were unutilized, at best handling occasional charter aircraft
operations. Only 11 out of the
122 airports generated profits.
DELHI AND MUMBAI AIRPORTS

The Delhi and Mumbai airports accounted for 47% of the passenger
traffic in 2003-04.
They were even more significant in terms of cargo traffic, accounting
for 58% of the
share. Catering to this, the aircraft movements share was 38%. These
airports generated
one third of all revenues earned by the AAI. Both Delhi and Mumbai
airports handled
twice as many aircraft movements as they were originally designed
for, resulting in
congestion for both aircrafts and passengers.

In 2003-04, Delhi airport handled 10.4 million passengers, of which

58% were domestic.
The total cargo traffic was 296 thousand tons, of which 31% was
domestic. The main
source of revenue at Delhi airport was aeronautical services (42%).
Non-aeronautical
services included cargo (26%), and commercial and others (32%).
In 2003-04, Mumbai airport handled 13.3 million passengers, of which
60% were
domestic. The total cargo traffic was 326 thousand tons, of which 28%
was domestic. The main source of revenue at Delhi airport was
aeronautical services (50%). Nonaeronautical services included cargo
(17%), and commercial and other (33%).
During the early period of the tenth plan (2002-07), passenger traffic
at airports had
grown at an average rate of 7% per annum. Government was
expectingrowth
rate of 16% per annum by 2010, given the “Open Skies” policies and
the response by the
private sector in establishing new airlines, including low cost carriers.

Nearly 97% of the country's foreign tourists arrived by air, mostly

through the Delhi and
Mumbai gateways. Tourism was the nation's second largest foreign
exchange earner.
While cargo carried by air weighed less than 1% of the total cargo
exported/imported, it
accounted for nearly 20% of the total value.

A survey by the International Air Transport Association (IATA) revealed

that for the year1999, Delhi and Mumbai airports ranked amongst the
three least favored airports in theAsia Pacific region in each of the 19
service elements considered. The overall ratings for Delhi and Mumbai
were 2.6 and 2.3 respectively on a 5 point scale, while the average for
airports in the Asia Pacific region was 3.5 and for world airports was
3.8. Copenhagen, Singapore's Changi and Helsinki ranked among the
top for overall passenger satisfactionout of the 57 airports covered in
the survey, with a rating of about
 DOMESTIC AIRPORS MAP OF INDIA
Indian Airlines

Due to the immense increase in the demand for air travel, India's economy is flourishing. The credit
for this goes to its tourism and hotel industry. The evergreen tourist places in India are Kerala, Goa,
Mumbai, Delhi, Orissa, Kolkatta, Bangalore and Kashmir.

There are many domestic airports in the country. Almost all the important cities in India have
domestic airports.

There are more than 5 international airports in India and more than 65 domestic airports. Domestic
Airports can be categorized into four divisions: Domestic Airports, Model Domestic Airports, Civil
Enclaves and Others.

In India there are 37 Domestic Airports, 13 Model Domestic Airports and 13 Civil Enclaves. Cochin
and Keshoo are the two other airports.

[Buy this map in different sizes or resolutions, please scroll down for the Order Form.]
SOURCES OF COLLECTED DATA
www.google.com www.iima.com
www.indianaviation.com www.ministryof finance.com
www.jetairways.com www.wikipedia.com
www.kingfisher.com