Description
It explains about Industry Trends aviation industry, PEST Analysis of aviation Industry. It also includes Competitor Analysis, SWOT analysis, Company Description, General Information about air india, it's Finance performance, SWOT analysis and Various Strategies employed.
COMPANY ANALYSIS REPORT ON AIR INDIA Industry Analysis Industry Trends The aviation industry has been facing a number of challenges globally. The recent financial crisis and high fuel prices have been a matter of concern. There has been a sharp fall in the number of passengers travelling by air globally. Passengers have also switched from business class travel to economy class travel and budget airlines leading to a decline in the profit margins for the aviation industry. India has been no exception to this situation. This has led to all the players suffering heavy losses. The combined debt of the aviation industry in India is expected to be around Rs.70000 crore. The employees of airlines like Air India and Kingfisher Airlines have not been paid their salaries for several months leading to protests and agitations from them. PEST Analysis Political Factors: Political factors have a lot of influence on the aviation sector in India. For example, the recent happenings like the sacking of DGCA Bharat Bhushan may lead to undesired consequences for the aviation sector. Excise duty and sales tax on ATF also plays a crucial role. In case of the state run carriers, they have to reserve seats for the travel of politicians and the payments for the travel are not made on time. Economic Factors: Due to the recent financial crisis, air travel has decreased (as stated above) as it is perceived luxurious. Social Factors: In India, travel by air is seen as a privilege enjoyed by the rich. However, recently, concepts like budget airlines have been implemented to serve the low income groups. The airlines also have to consider the preferences of its major clientele (eg. The food served on board). The safety regulations in place can also influence the number of air passengers. Technological Factors: Facilities like in-flight entertainment can play a deciding factor in one’s choice of airline.
Services like online booking, SMS notifications, customized meals are also being provided by many operators. Competitor Analysis Jet Airways Jet Airways flies to 52 domestic and 22 international destinations. They have a fleet of 101 aircrafts (12 Airbus 330-200, 20 ATR 72-500, 11 Boeing 737-700, 46 Boeing 737-800, 2 Boeing 737-900, 10 Boeing 777-300 ER). Jet Airways has partnerships with companies from various fields such as car rental, e-retail, hotels, lifestyle, retail, telecommunication as well as other airlines. The ticket prices of Jet Airways are one of the most expensive. Jet Airways has won awards for its in-flight entertainment system. SWOT Analysis Of Aviation Industry Strengths: Air travel continues to be the preferred medium of travel for long distance as well as quick travel. Helicopters are also required by oil companies for their oil rig operations. Weaknesses: It is still considered as a means of travel for the rich. Airlines are facing enormous debts. Employee problems due to non-payment of dues. Opportunities: Airlines can try and expand their business towards the low income group. Threats: Fierce competition amongst the various players may lead to fare wars reducing the profit margin. High fuel prices in domestic markets.
Company Analysis Company Description Air India is India’s flag carrier airline. Its objective is to provide air transport services and carry out all other forms of aerial work, whether on charter terms or otherwise, and to carry out any other trade or business that is associated with or auxiliary to such business. It provides courier and freight services. Its Engineering Services arm provides aircraft maintenance services for both Boeing and Airbus aircrafts. It has partnered various organizations in the field of hospitality, telecommunications and lifestyle, where one can redeem the points earned by the frequent flyer program. Hotel Corporation of India, which owns the Centaur Hotels, is also a subsidiary of Air India Limited. General Information Indian Airlines was founded by Mr. J.R.D. Tata in July 1932 (then known as Tata Airlines). The maiden flight of the airlines on October 15, 1932 carried mail from Karachi to Mumbai. Today, it operates a fleet of 100 Airbus and Boeing aircrafts to a total of 110 destinations across Asia, Europe and North America. Air India Limited’s Fleet:
Aircraft type Operational Fleet Wide Body B777-200LR B777-300ER B747-400 A330-200 Wide Body Total 8 12 3 23 2 2 2 2 8 12 5 2 27 Owned Sale & Lease Back Dry Lease Total
Narrow Body A320 A319 A321 Narrow Body Total 12 19 20 51 6 0 0 6 0 5 0 5 18 24 20 62
Regional Aircraft CRJ-700 ATR42 0 0 0 0 4 7 4 7
Regional Aircraft Total Total Fleet
0 74
0 8
11 18
11 100
Its headquarters Air India Building, is located at Nariman Point, Mumbai. As of June 2012, Air India had 26962 employees. 100 per cent of the Air India shares are held by Air India Limited. Air India’s Management: Name Mr. Rohit Nandan Mr. V. K. Sharma Mrs. K. M. Unni Mr. S. Venkat Mr. G. D. Brara Mrs. Urmila Subbarao Air India Limited’s Subsidiaries: ? ? ? ? ? ? Air India Air Transport Services Limited Air India Charters Limited Air India Engineering Services Limited Airline Allied Services Limited Vayudoot Limited Hotel Corporation of India Limited Designation Chairman and Managing Director SBU Head-MRO (Engines & Components) SBU Head-MRO (Airframe) Director – Finance Director – Commercial Chief Vigilance Officer
Financial Performance The total revenue for Air India Limited for the year 2010-11 was Rs. 142,551 million up from Rs. 130,556.8 million in 2009-10. But the accumulated losses of Air India Limited went up from Rs. 54,890.9 million in 2009-10 to Rs. 123,542.6 million in 2010-11. Its segment-wise decomposition is as follows: The accumulated losses of Air India Air Transport Services Limited went up from Rs. 25,225,204 in 2009-10 to Rs. 27,010,306 in 2010-11. The accumulated losses of Air India Charters Limited went up from Rs. 7146.9 million in 2009-10 to Rs.11059.1 million in 2010-11. The accumulated losses of Air India Engineering Services Limited went up from Rs. 934231 in 2009-10 to Rs. 950978 in 2010-11. The accumulated losses of Airline Allied Services Limited went up from Rs. 5,537,727,300 in 2009-10 to Rs. 5,828,953,305 in 2010-11.
The accumulated losses of Vayudoot Limited went up from Rs. 2,579,397,585 in 2009-10 to Rs. 2,579,817,779 in 2010-11. The accumulated losses of Hotel Corporation of India Limited went up from Rs. 349,386.30 thousand in 2009-10 to Rs. 442,606.87 thousand in 2010-11. SWOT Analysis Of Air India Strengths: Air India Limited’s operational revenues went up by around 9.5% in 2010-11. Weaknesses: On-going problems between the management and the employees due to non-payment of dues. Mismanagement of leasing of planes causing losses to the tune of Rs. 4300 crore. As of March 201, Air India has an accumulated debt of Rs. 42570 crore. Opportunities: There has been an increasing demand for budget carriers. Air India can try to cash in on the trend. Domestic air traffic in India has increased by 12.3 % in February 2012 compared to last year. The global traffic for February showed an 8.6 per cent improvement in passenger demand and a 5.2 per cent rise in cargo demand compared to the same month in the previous year. Threats: ATF prices are higher in India compared to the international markets. Air India faces tough competition from low cost carriers such as Indigo Airlines, Spice Jet, Go Air and JetLite. Strategies Employed By The Company In The Past Two Years Code Sharing Air India has entered into code sharing agreements with 11 airlines, viz, Air Mauritius Airlines, Asiana Airways, Austrian Airlines, Ethiopian Airlines, Kuwait Airways, Lufthansa, Singapore Airlines, South African Airways, Sri Lankan Airlines, Swiss Airlines and Turkish Airlines. A code share flight is a flight that is marketed by one carrier and operated by another. The ticket would be booked on the flight number of the airline that you have booked your travel, however it may be operated by another carrier. This shall enable Air India to increase its load factor and decrease its operational losses.
Interlining And Frequent Flyer Programme Agreements Air India has entered into interlining and frequent flyer programme agreements with Singapore Airlines and Lufthansa. Interlining allows a single ticket to be issued to a passenger who has to travel by two different airlines during his travelling itinerary. The transportation of his luggage and flight delays would be taken care of by the airlines. Interlining agreements would enable Air India to provide better customer service attracting a number of customers in the process. Shifting Pricing Strategy Till December 2011, Air India used to sell its tickets at fares lower than those of the budget carriers. This was leading to a fierce competition in fares at a time when ATF costs were rising leading to a decline in profit margins. In December 2011, Air India decided to price its tickets around Rs. 150 more than those offered by the budget carriers. By paying an additional Rs. 150 as compared to the budget carriers, a person travelling by Air India would get free food, in-flight entertainment and better seating, none of which is available in the budget carriers. This increased the profit margins while Air India fares remained attractive at the same time. Mobile Bookings Air India made mobile booking facility available from March 2012 using a one-time downloadable Ngpay software. This facility will help Air India to reach to passengers in tierII and tier-III cities, who may not have ready access to the Internet. Sale-and-Leaseback Air India is planning to sale and lease back 27 Boeing 787 Dreamliners when they are delivered (were supposed to be delivered in 2009, delayed by 3 years). The 250-seater Dreamliner, which is made of composite material, is lighter and is considered 20% more fuelefficient than other aircraft. These features are expected to give substantial cost savings to airlines. Under a sale-and-leaseback arrangement, an airline buys an aircraft, sells it to a leasing company and leases back the planes. This arrangement enables the airline to operate the aircraft, without the purchase debt in its books.
doc_291502684.docx
It explains about Industry Trends aviation industry, PEST Analysis of aviation Industry. It also includes Competitor Analysis, SWOT analysis, Company Description, General Information about air india, it's Finance performance, SWOT analysis and Various Strategies employed.
COMPANY ANALYSIS REPORT ON AIR INDIA Industry Analysis Industry Trends The aviation industry has been facing a number of challenges globally. The recent financial crisis and high fuel prices have been a matter of concern. There has been a sharp fall in the number of passengers travelling by air globally. Passengers have also switched from business class travel to economy class travel and budget airlines leading to a decline in the profit margins for the aviation industry. India has been no exception to this situation. This has led to all the players suffering heavy losses. The combined debt of the aviation industry in India is expected to be around Rs.70000 crore. The employees of airlines like Air India and Kingfisher Airlines have not been paid their salaries for several months leading to protests and agitations from them. PEST Analysis Political Factors: Political factors have a lot of influence on the aviation sector in India. For example, the recent happenings like the sacking of DGCA Bharat Bhushan may lead to undesired consequences for the aviation sector. Excise duty and sales tax on ATF also plays a crucial role. In case of the state run carriers, they have to reserve seats for the travel of politicians and the payments for the travel are not made on time. Economic Factors: Due to the recent financial crisis, air travel has decreased (as stated above) as it is perceived luxurious. Social Factors: In India, travel by air is seen as a privilege enjoyed by the rich. However, recently, concepts like budget airlines have been implemented to serve the low income groups. The airlines also have to consider the preferences of its major clientele (eg. The food served on board). The safety regulations in place can also influence the number of air passengers. Technological Factors: Facilities like in-flight entertainment can play a deciding factor in one’s choice of airline.
Services like online booking, SMS notifications, customized meals are also being provided by many operators. Competitor Analysis Jet Airways Jet Airways flies to 52 domestic and 22 international destinations. They have a fleet of 101 aircrafts (12 Airbus 330-200, 20 ATR 72-500, 11 Boeing 737-700, 46 Boeing 737-800, 2 Boeing 737-900, 10 Boeing 777-300 ER). Jet Airways has partnerships with companies from various fields such as car rental, e-retail, hotels, lifestyle, retail, telecommunication as well as other airlines. The ticket prices of Jet Airways are one of the most expensive. Jet Airways has won awards for its in-flight entertainment system. SWOT Analysis Of Aviation Industry Strengths: Air travel continues to be the preferred medium of travel for long distance as well as quick travel. Helicopters are also required by oil companies for their oil rig operations. Weaknesses: It is still considered as a means of travel for the rich. Airlines are facing enormous debts. Employee problems due to non-payment of dues. Opportunities: Airlines can try and expand their business towards the low income group. Threats: Fierce competition amongst the various players may lead to fare wars reducing the profit margin. High fuel prices in domestic markets.
Company Analysis Company Description Air India is India’s flag carrier airline. Its objective is to provide air transport services and carry out all other forms of aerial work, whether on charter terms or otherwise, and to carry out any other trade or business that is associated with or auxiliary to such business. It provides courier and freight services. Its Engineering Services arm provides aircraft maintenance services for both Boeing and Airbus aircrafts. It has partnered various organizations in the field of hospitality, telecommunications and lifestyle, where one can redeem the points earned by the frequent flyer program. Hotel Corporation of India, which owns the Centaur Hotels, is also a subsidiary of Air India Limited. General Information Indian Airlines was founded by Mr. J.R.D. Tata in July 1932 (then known as Tata Airlines). The maiden flight of the airlines on October 15, 1932 carried mail from Karachi to Mumbai. Today, it operates a fleet of 100 Airbus and Boeing aircrafts to a total of 110 destinations across Asia, Europe and North America. Air India Limited’s Fleet:
Aircraft type Operational Fleet Wide Body B777-200LR B777-300ER B747-400 A330-200 Wide Body Total 8 12 3 23 2 2 2 2 8 12 5 2 27 Owned Sale & Lease Back Dry Lease Total
Narrow Body A320 A319 A321 Narrow Body Total 12 19 20 51 6 0 0 6 0 5 0 5 18 24 20 62
Regional Aircraft CRJ-700 ATR42 0 0 0 0 4 7 4 7
Regional Aircraft Total Total Fleet
0 74
0 8
11 18
11 100
Its headquarters Air India Building, is located at Nariman Point, Mumbai. As of June 2012, Air India had 26962 employees. 100 per cent of the Air India shares are held by Air India Limited. Air India’s Management: Name Mr. Rohit Nandan Mr. V. K. Sharma Mrs. K. M. Unni Mr. S. Venkat Mr. G. D. Brara Mrs. Urmila Subbarao Air India Limited’s Subsidiaries: ? ? ? ? ? ? Air India Air Transport Services Limited Air India Charters Limited Air India Engineering Services Limited Airline Allied Services Limited Vayudoot Limited Hotel Corporation of India Limited Designation Chairman and Managing Director SBU Head-MRO (Engines & Components) SBU Head-MRO (Airframe) Director – Finance Director – Commercial Chief Vigilance Officer
Financial Performance The total revenue for Air India Limited for the year 2010-11 was Rs. 142,551 million up from Rs. 130,556.8 million in 2009-10. But the accumulated losses of Air India Limited went up from Rs. 54,890.9 million in 2009-10 to Rs. 123,542.6 million in 2010-11. Its segment-wise decomposition is as follows: The accumulated losses of Air India Air Transport Services Limited went up from Rs. 25,225,204 in 2009-10 to Rs. 27,010,306 in 2010-11. The accumulated losses of Air India Charters Limited went up from Rs. 7146.9 million in 2009-10 to Rs.11059.1 million in 2010-11. The accumulated losses of Air India Engineering Services Limited went up from Rs. 934231 in 2009-10 to Rs. 950978 in 2010-11. The accumulated losses of Airline Allied Services Limited went up from Rs. 5,537,727,300 in 2009-10 to Rs. 5,828,953,305 in 2010-11.
The accumulated losses of Vayudoot Limited went up from Rs. 2,579,397,585 in 2009-10 to Rs. 2,579,817,779 in 2010-11. The accumulated losses of Hotel Corporation of India Limited went up from Rs. 349,386.30 thousand in 2009-10 to Rs. 442,606.87 thousand in 2010-11. SWOT Analysis Of Air India Strengths: Air India Limited’s operational revenues went up by around 9.5% in 2010-11. Weaknesses: On-going problems between the management and the employees due to non-payment of dues. Mismanagement of leasing of planes causing losses to the tune of Rs. 4300 crore. As of March 201, Air India has an accumulated debt of Rs. 42570 crore. Opportunities: There has been an increasing demand for budget carriers. Air India can try to cash in on the trend. Domestic air traffic in India has increased by 12.3 % in February 2012 compared to last year. The global traffic for February showed an 8.6 per cent improvement in passenger demand and a 5.2 per cent rise in cargo demand compared to the same month in the previous year. Threats: ATF prices are higher in India compared to the international markets. Air India faces tough competition from low cost carriers such as Indigo Airlines, Spice Jet, Go Air and JetLite. Strategies Employed By The Company In The Past Two Years Code Sharing Air India has entered into code sharing agreements with 11 airlines, viz, Air Mauritius Airlines, Asiana Airways, Austrian Airlines, Ethiopian Airlines, Kuwait Airways, Lufthansa, Singapore Airlines, South African Airways, Sri Lankan Airlines, Swiss Airlines and Turkish Airlines. A code share flight is a flight that is marketed by one carrier and operated by another. The ticket would be booked on the flight number of the airline that you have booked your travel, however it may be operated by another carrier. This shall enable Air India to increase its load factor and decrease its operational losses.
Interlining And Frequent Flyer Programme Agreements Air India has entered into interlining and frequent flyer programme agreements with Singapore Airlines and Lufthansa. Interlining allows a single ticket to be issued to a passenger who has to travel by two different airlines during his travelling itinerary. The transportation of his luggage and flight delays would be taken care of by the airlines. Interlining agreements would enable Air India to provide better customer service attracting a number of customers in the process. Shifting Pricing Strategy Till December 2011, Air India used to sell its tickets at fares lower than those of the budget carriers. This was leading to a fierce competition in fares at a time when ATF costs were rising leading to a decline in profit margins. In December 2011, Air India decided to price its tickets around Rs. 150 more than those offered by the budget carriers. By paying an additional Rs. 150 as compared to the budget carriers, a person travelling by Air India would get free food, in-flight entertainment and better seating, none of which is available in the budget carriers. This increased the profit margins while Air India fares remained attractive at the same time. Mobile Bookings Air India made mobile booking facility available from March 2012 using a one-time downloadable Ngpay software. This facility will help Air India to reach to passengers in tierII and tier-III cities, who may not have ready access to the Internet. Sale-and-Leaseback Air India is planning to sale and lease back 27 Boeing 787 Dreamliners when they are delivered (were supposed to be delivered in 2009, delayed by 3 years). The 250-seater Dreamliner, which is made of composite material, is lighter and is considered 20% more fuelefficient than other aircraft. These features are expected to give substantial cost savings to airlines. Under a sale-and-leaseback arrangement, an airline buys an aircraft, sells it to a leasing company and leases back the planes. This arrangement enables the airline to operate the aircraft, without the purchase debt in its books.
doc_291502684.docx