AIRLINES INDUSTRY OVERVIEW
Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries.
In the past decade, air travel has grown by 7% per year. Travel for both business and leisure purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations. Governments in developing countries realized the benefits of tourism to their national economies and spurred the development of resorts and infrastructure to lure tourists from the prosperous countries in Western Europe and North America. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future.
Business travel has also grown as companies become increasingly international in terms of their investments, their supply and production chains and their customers. The rapid growth of world trade in goods and services and international direct investment has also contributed to growth in business travel.
Worldwide, IATA, International Air Transport Association, forecasts international air travel to grow by an average 6.6% a year to the end of the decade and over 5% a year from 2000 to 2010. These rates are similar to those of the past ten years. In Europe and North America, where the air travel market is already highly developed, slower growth of 4%-6% is expected. The most dynamic growth is centered on the Asia/Pacific region, where fast-growing trade and investment are coupled with rising domestic prosperity. Air travel for the region has been rising by up to 9% a year and is forecast to continue to grow rapidly, although the Asian financial crisis in 1997 and 1998 will put the brakes on growth for a year or two. In terms of total passenger trips, however, the main air travel markets of the future will continue to be in and between Europe, North America and Asia.
Airlines' profitability is closely tied to economic growth and trade. During the first half of the 1990s, the industry suffered not only from world recession but travel was further depressed by the Gulf War. In 1991 the number of international passengers dropped for the first time. The financial difficulties were exacerbated by airlines over-ordering aircraft in the boom years of the late 1980s, leading to significant excess capacity in the market. IATA's member airlines suffered cumulative net losses of $20.4bn in the years from 1990 to 1994.
Since then, airlines have had to recognize the need for radical change to ensure their survival and prosperity. Many have tried to cut costs aggressively, to reduce capacity growth and to increase load factors. At a time of renewed economic growth, such actions have returned the industry as a whole to profitability: IATA airlines' profits were $5bn in 1996, less than 2% of total revenues. This is below the level IATA believes is necessary for airlines to reduce their debt, build reserves and sustain investment levels. In addition, many airlines remain unprofitable.
To meet the requirements of their increasingly discerning customers, some airlines have to invest heavily in the quality of service that they offer, both on the ground and in the air. Ticket less travel, new interactive entertainment systems, and more comfortable seating are just some of the product enhancements being introduced to attract and retain customers.
A number of factors are forcing airlines to become more efficient. In Europe, the European Union (EU) has ruled that governments should not be allowed to subsidize their loss-making airlines. Elsewhere too, governments' concerns over their own finances and recognition of the benefits of privatization have led to a gradual transfer of ownership of airlines from the state to the private sector. In order to appeal to prospective shareholders, the airlines are having to become more efficient and competitive.
Deregulation is also stimulating competition, such as that from small, low-cost carriers. The US led the way in 1978 and Europe is following suit. The EU's final stage of deregulation took effect in April 1997, allowing an airline from one member state to fly passengers within another member's domestic market. Beyond Europe too, 'open skies' agreements are beginning to dismantle some of the regulations governing which carriers can fly on certain routes. Nevertheless, the aviation industry is characterized by strong nationalist sentiments towards domestic 'flag carriers'. In many parts of the world, airlines will therefore continue to face limitations on where they can fly and restrictions on their ownership of foreign carriers.
Despite this, the airline industry has proceeded along the path towards globalization and consolidation, characteristics associated with the normal development of many other industries. It has done this through the establishment of alliances and partnerships between airlines, linking their networks to expand access to their customers. Hundreds of airlines have entered into alliances, ranging from marketing agreements and code-shares to franchises and equity transfers.
The outlook for the air travel industry is one of strong growth. Forecasts suggest that the number of passengers will double by 2010. For airlines, the future will hold many challenges. Successful airlines will be those that continue to tackle their costs and improve their products, thereby securing a strong presence in the key world aviation markets.
MAJOR PLAYERS IN INDIAN AIRLINE INDUSTRY[/b]
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Aviation sector is also a lucrative segment in Indian business. As world's top aviation companies like Airbus and Boeing are eyeing to leverage this country as their hub for Maintenance, Repair and Overhaul (MRO), the next 10 years would see the presence of a number of top airlines companies in India at a large number. It's also expected to generate over 6,00,000 jobs in the same time period. Following are some of the top airlines companies in India:
v Jet Airways
v Jet Lite
v Kingfisher Airlines
v Air India
v Indian Airlines
v IndiGo
v SpiceJet
v GoAir
v Paramount Airways
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Company’s Profile[/b]
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Kingfisher Airlines
IATA
IT
ICAO
KFR
Callsign
KINGFISHER
Founded
2004
Hubs
Bangalore International Airport,
Chhatrapati Shivaji International Airport, Indira Gandhi International Airport, Sardar Vallabhbhai Patel International Airport
Frequent flyer program
King Club
Fleet size
158 (incl. 126 in order)
Destinations
29
Parent company
UB Group
Company slogan
Fly The Good Times
Headquarters
Bangalore, India
Key people
Dr. Vijay Mallya, CMD
Mr. Hitesh Patel, EVP
Mr. Rajesh Verma, EVP
Mr.A. Raghunathan, CFO
Website: http://www.flykingfisher.com/
Kingfisher Airline is a private airline based in Bangalore, India. The airline is owned by Vijay Mallya of United Beverages Group. Kingfisher Airlines started its operations on May 9, 2005 with a fleet of 4 Airbus A320 aircrafts. The airline currently operates on domestic routes. The destinations covered by Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, Kolkata, Pune, Agartala, Dibrugarh, Mangalore and Jaipur.
In a short span of time Kingfisher Airline has carved a niche for itself. The airline offers several unique services to its customers. These include: personal valet at the airport to assist in baggage handling and boarding, accompanied with refreshments and music at the airport, audio and video on-demand, with extra-wide personalized screens in the aircraft and three-course gourmet cuisine.
Kingfisher Airlines currently operates with a brand new fleet of 8 Airbus A320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the first airline in India to operate with all new aircrafts. Kingfisher Airlines is also the first Indian airline to order the Airbus A380. UB holdings Ltd, has acquired 26% stake in the budget airline Air Deccan and has option to buy further of 20% stake from the secondary market.
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KINGFISHER AIRLINE INTRODUCTION[/b]
Kingfisher Airlines is a subsidiary of the UB Group, one of the largest beverage companies in the world. The branding of the airline is linked to that of Kingfisher Beer, India’s largest brewery.
The airline, which is headed by the charismatic Dr Vijay Mallya, took to the skies in May 2005, and attracted attention for its high quality product with personal in flight entertainment in every seat; custom interior designs for each aircraft; valet assistance at airports and complimentary hot food and beverages. The airline initially operated a single class service but subsequently introduced a highly acclaimed First Class, allowing it to compete with Jet Airways for the high yield corporate market. In addition to its A320 family aircraft used on domestic routes, Kingfisher Airlines also operates ATR-72 turboprops on regional sectors.
Under current Indian regulations, which require airlines to operate 5 years domestic service before being granted international rights, Kingfisher will not be permitted to operate overseas until 2010. However, the airline has very clear international ambitions, with an order book for 45 wide body aircraft, including A330s, A340s, A350s and A380s.
In just over two years, Kingfisher Airlines has achieved a market share of 10% and has one of the most aggressive expansion plans of all Indian carriers during 2007. In Jun-07, it dramatically increased its influence in the market with the acquisition of a 26% shareholding in India’s largest LCC, Air Deccan, for approximately USD130 million, and an open offer for a further 20%. Through schedule coordination and joint operations in ground handling, training, and maintenance, the carriers are projecting annual cost savings of over USD70 million.
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