THE AIRLINE INDUSTRY IN INDIA
Gautam ACHARYA Solicitor (England and Wales), Advocate (India)
Media Obsessions
Reported by the Indian media everyday:
1. Bollywood: Latest movie/love pairing/star child launch/endorsement 2. The Indian Cricket Team/Indian Premier League: Latest match/twist/tangle/slander 3. Aviation (in India): Airline merger/Aircraft purchase/Airport opening/New route establishment
An Evolving India Society: Nineties and the Naughties
Genesis of the Indian Airline Industry
1932: Mr. J.R.D.TATA flies a De Havilland Puss Moth from Karachi to Bombay as part of the first Tata Sons Ltd. flight to deliver mail carried by British Imperial Airways 1948: Govt. of India acquires 49% stake in Tata Airlines, designates it a flag carrier and renames it Air India International (“AII”) 1953: Jawaharlal Nehru, in friendly transaction, convinces the Tata Group to let the Govt. of India acquire a majority stake in AII and nationalizes air transport 1953: Indian Airlines formed by merging eight former independent domestic airlines 1960: India enters the jet age with an Air India B707; USA and India are connected for the first time with an Indian airline 1989: Indian Airlines becomes one of the first airlines to induct the A320 into its fleet 1990: East West Airlines becomes the 1st private airline since 1953
Forecast: Clear skies?
Crowding the Skies
1948-1953
1991-1993
2003
2005-2006
Problems Plaguing Airlines in India
? ? ? ? ? ? ?
Infrastructure (Or the lack thereof) GDP Growth- Estimated that it could be 12 percentage points higher if infrastructure were adequate Coalition Politics- Difficult to bring about change Fiscal Deficit- Inordinate amount spent on debt service Lower FDI- India’s $6Bn compared to China’s $62Bn in 2004 Bureaucracy- 89 days to secure permits to start a business in India vs. 41 in China and 20 in Turkey (World Bank Report) Weak State Owned Airline- Distressed State airline syndrome
What Airline Model must India Adopt?
It Certainly is NOT…
? ? ? ?
Pure Low Cost: Air travelers want more value for their money North American Hub and Spoke: Not enough distance between airports Point to Point only: Inefficient Regional Jet Feeder: Not enough critical mass
India will therefore develop it’s own unique model
Realizing India?s Aviation Potential Requires
Cost efficient investment in infrastructure ? Sensible capacity management and timing of investment ? Reasonable taxation ? Freedom to do business ? Effective use of technology „Simplifying the Business?
?
The best way to make a good speech is to have a good beginning and a good ending… …and have them close together.
-Mark TWAIN
THANK YOU
doc_625171175.pdf
Gautam ACHARYA Solicitor (England and Wales), Advocate (India)
Media Obsessions
Reported by the Indian media everyday:
1. Bollywood: Latest movie/love pairing/star child launch/endorsement 2. The Indian Cricket Team/Indian Premier League: Latest match/twist/tangle/slander 3. Aviation (in India): Airline merger/Aircraft purchase/Airport opening/New route establishment
An Evolving India Society: Nineties and the Naughties
Genesis of the Indian Airline Industry
1932: Mr. J.R.D.TATA flies a De Havilland Puss Moth from Karachi to Bombay as part of the first Tata Sons Ltd. flight to deliver mail carried by British Imperial Airways 1948: Govt. of India acquires 49% stake in Tata Airlines, designates it a flag carrier and renames it Air India International (“AII”) 1953: Jawaharlal Nehru, in friendly transaction, convinces the Tata Group to let the Govt. of India acquire a majority stake in AII and nationalizes air transport 1953: Indian Airlines formed by merging eight former independent domestic airlines 1960: India enters the jet age with an Air India B707; USA and India are connected for the first time with an Indian airline 1989: Indian Airlines becomes one of the first airlines to induct the A320 into its fleet 1990: East West Airlines becomes the 1st private airline since 1953
Forecast: Clear skies?
Crowding the Skies
1948-1953
1991-1993
2003
2005-2006
Problems Plaguing Airlines in India
? ? ? ? ? ? ?
Infrastructure (Or the lack thereof) GDP Growth- Estimated that it could be 12 percentage points higher if infrastructure were adequate Coalition Politics- Difficult to bring about change Fiscal Deficit- Inordinate amount spent on debt service Lower FDI- India’s $6Bn compared to China’s $62Bn in 2004 Bureaucracy- 89 days to secure permits to start a business in India vs. 41 in China and 20 in Turkey (World Bank Report) Weak State Owned Airline- Distressed State airline syndrome
What Airline Model must India Adopt?
It Certainly is NOT…
? ? ? ?
Pure Low Cost: Air travelers want more value for their money North American Hub and Spoke: Not enough distance between airports Point to Point only: Inefficient Regional Jet Feeder: Not enough critical mass
India will therefore develop it’s own unique model
Realizing India?s Aviation Potential Requires
Cost efficient investment in infrastructure ? Sensible capacity management and timing of investment ? Reasonable taxation ? Freedom to do business ? Effective use of technology „Simplifying the Business?
?
The best way to make a good speech is to have a good beginning and a good ending… …and have them close together.
-Mark TWAIN
THANK YOU
doc_625171175.pdf