AVIATION INDUSTRY by PRIYANKA P R

INDUSTRY ANALYSIS

AVIATION INDUSTRY (PUBLIC SECTOR)

INDIA is one of the fastest growing aviation markets in the world .The airport authority of India (AAI) manages a total of 127 airports in the country, which include 13 international airports,7 custom airports,80 domestic airports and 28 civil enclaves. There are over 450 airports and 1091 registered aircraft in the country.

The genesis of civil aviation in India goes back to December 1912 when first domestic air route between Karachi and Delhi became operational. In the early 50s , all airlines operating in the country were merged into either Indian airlines or Air India and by the virtue of the Air Corporations Act(ACA) 1953,this monopoly continued for the next 40 year.

The Directorate General of Civil Aviation (DGCA) controlled every aspect of aviation including granting flying licenses, pilots, certifying aircrafts for flights, and issuing all rules and procedures for governing Indian airports and airspace.

Finally AAI was assigned the responsibility of managing all national and international airports and administering every aspect of air transport through air Traffic Control. In 1990s , aviation industry in India saw some important changes. The ACA was abolished to end the monopoly of the public sector and airlines were reintroduced with the liberalization of the Indian aviation sector , the industry has witnessed a transformation with the entry of the privately owned full service airlines and law cost carriers. Some of the key drivers for the sector and an over view of the outlook for the industry giving forward including government initiatives that are likely to play a role in shaping the future of the industry.

BASIC CONDITIONS OF AVIATION INDUSTRY
The Indian Aviation market is booming .The estimated growth of domestic passenger segment is at 50% per annum and growth for international passenger segment is 25%. The international cargo is likely to grow at a rate of 12%.
During the period April-September 2006, international and domestic passengers recorded a growth of 15.8% and 44.6% respectively leading to overall growth of 35.5%. Moreover the international and domestic cargo recorded growth of 13.8% and 8.7% respectively resulting in overall growth of 12% .

RELEVANCE
Some of the factors have resulted in higher demand for air transport in India include growing middleclass and their purchasing power, low airfares offered by low cost carriers like Air Deccan, growth of tourism industry in India, increasing out bound travel from India. Moreover the thriving economy of the country has resulted in formation of vast populace of middleclass thus increasing the demand of air travel.

CLASSIFICATION OF AVIATION SECTOR

The Indian aviation sector can be broadly divided into the following main categories;
1. Scheduled air transport service, which includes domestic and international airlines.
2. Non-scheduled air transport service, which includes charter operators and air taxi operators.
3. Air cargo service, which includes air transportation of cargo and mail.


Scheduled air transport service:
It is an air transport service undertaken between two or more places and operated according to a published timetable. It includes:
1. Domestic airlines, which provide scheduled flights within India and to select international destinations.
2. International airline, which operate scheduled international air services to and from India.
Non-scheduled air transport service:
It is an air transport service other than the scheduled one and may be on charter basis and/or non-scheduled basis. The operator is not permitted to publish time schedule and issue tickets to passengers.
Air cargo service:
It is an air transportation of cargo and mail. It may be on scheduled or non-scheduled basis. These operations are to destinations within India. For operation outside India, the operator has to take specific permission of Directorate General of Civil Aviation demonstrating his capacity for conducting such an operation.

At present, there are 2 scheduled private airlines (Jet Airways and Air Sahara), which provide regular domestic air services along with Indian Airlines. In addition there are 47 non-scheduled operators providing air-taxi/non-scheduled air transport services.
Apart from this, the players in 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, Kingfisher Airlines, Spice Jet, Air Deccan and may more. The start up players are those planning to enter the markets. Some of them are Omega Air, Magic Air, Premier Star Air and MDLR Airlines

GROWTH PROSPECTS OF INDIAN 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.
Centre for Asia Pacific Aviation (CAPA) predicts that domestic traffic will grow at 25 per cent to 30 per cent a year until 2010 and international traffic will grow by 15 per cent, taking the overall market to more than 100m passengers by the end of the decade. Indian carriers have 480 aircraft on order for delivery by 2012, which compares with a fleet size of 3010 aircraft operating in the country today.

SWOT ANALYSIS

Strength
1.Growing tourism: Due to growth in tourism, there has been an increase in number of
the international and domestic passengers .The estimated growth of domestic passenger segment is at 50% per annum and growth for international passenger segment is 25%.

2.Rising income levels: Due to the rise in income levels , the disposable income is also higher which are expected to enhance the number of flyers.

Weaknesses
1.Under penetrated Market: The total passenger traffic was only 50 million as on 31st Dec 2005 amounting to only 0.05 trips per annum as compared to developed nations like United States have 2.02 trips per annum.
2. Untapped Air Cargo Market : Air cargo market has not yet been fully taped in the Indian market and is expected that in the coming years large number of players will have dedicated fleets.
3. Infrastructural constraints: The infrastructure development has not kept pace with the growth in aviation services sector leading to a bottleneck. Huge investment requirement for physical infrastructure for airports.

Opportunities
1.Expecting investments: investment of about US $30 billion will be made.
2.Expected Market Size: Average growth of aviation sector is about 25%-30% and the expected market size is projected to grow upto 100 million by 2010.

Threats
1.Shortage of trained Pilots: There is a shortage of trained pilots, co-pilots and ground staff which is severely limiting growth prospects.

2.Shortage of Airports: There is a shortage of airport facilities, parking bays, air traffic control facilities and takeoff and landing slots.

3.High prices: Though enough number of low cost carriers are already existing in the industry, majority of the population is still not able to fly to other destinations.

CHALLENGES FOR AVIATION INDUSTRY
The growth in 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 of airports.

3.Rising fuel prices : as fuel prices have climbed , the inverse relationship between fuel prices and airlines 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 of escalating costs. Increasing growth prospects have attracted and 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 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.


REASONS FOR AVIATION SECTOR BOOM

1.Foreign equity allowed: Foreign equity up to 49% and NRI investment up to 100% 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 program management. Airlines are known to take on contract employees such as cabin crew , ticketing and check –in agents.

3.Rising income levels and demographic profile: Though India’s GDP (per capita) at $3,100 is still very low as compared to the developed standards , India is shining , at least in metro cities
the idea of owning and urban cities, 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.Glamour of the airlines: No industry other than film making industry is as glamorous as the airlines . Airlines tycoons from the last century , like J.R.D. TATA and Howard Hughes , and Sir Richard Branson and Dr. Vijaya Mallya have been idolized . Airlines have an aura of glamour around them , and high net worth individuals can always toy with an airline

SCOPE

The Indian aviation industry has shown continued growth in recent years with key drivers being positive economic factors (including high GDP growth), industrial performance ,corporate profitability/expansion , higher disposable incomes ,and growth in consumer spending as well as wider availability of low fares.

CURRENT SCENARIO:
The current growth rate in domestic and international travel exceeds 25%, the highest in the world . In the period 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.




EMPLOYMENT OPPURTUNITIES IN AVIATION INDUSTRY

The aviation sector is growing at a fast pace .Due to this , the number of aircrafts being used is on the rise and so is the need for pilots ,ground staffs and cabin crew .The aviation sector would require 7,500-8000 pilots and an equal number more air cabin crew by 2010.Heavy pay packets are being given away to pilots having a commercial pilot license(CPT)
Even an amateur pilot can start his career with a salary of Rs 2.5-3 lakhs a month with a commercial airline . With the sudden increase in the number of airlines ,pilots are in great demand.

Aviation sector provides the following types of oppurtunities:
• Commercial pilot
• Co-pilot
• Air cargo pilot
• Expat cabin crew
• Air traffic controller
• Cabin safety instructor
• In-flight managers
• In-flight base managers
• Cabin services instructor
• Cabin crew
• Training instructor
• Maintenance controllers
• Licensed aircraft maintenance engineering
• Quality control manager
• Cargo officers
• Guest service agent
• Ground staff







RECENT DEVELOPMENTS IN AVIATION SECOR

• 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

1.MODERNIZATION OF AIRPORTS
The Airport Authority of India (AAI) is undertaking the development and modernization of all 35 non-metro airports in the country simultaneously and work is due to be completed by March 2010. Wholly owned subsidiaries of AAI are being created for the development and operation of these airports .According to the AAI, it has already awarded work orders for terminal buildings at 13 airports , and for airside development ,including runway , taxiway ,apron, fire station, control tower ,and isolation bay, at 19 airports.
Two Greenfield airports at Bangalore and Hyderabad are being developed under PPP format .The first phase is planned to be finished by end -2008.
With these developments in aviation infrastructure , we may also see some airports making money not purely on passenger traffic , but also by means of cargo, logistics ,and real estate projects being developed adjacent to airports.
2.POLICY ON MERCHANT AIRPORTS
In a step that could allow 100 percent foreign direct investment(FDI) in the development of airport infrastructure , the government is fast moving towards finalizing a policy on merchant airports . Under this new concept, merchant airports will be built entirely by private parties with their own resources ,without any government funding .Under the proposed policy ,the government would allow entrepreneurs to set up and operate airports on the basis of commercial viability .However , these airports would function subject to safety and security oversight of the government.
As such a project would require huge investments , the government might adopt a more liberal and license-based approval procedure ,besides allowing 100 percent FDI in such airports Merchants airports would also be beneficial in developing new cargo hubs , thereby providing a thrust to cargo and freight handling.


3.GROWTH IN MRO SEGMENT
The advent of low cost airlines , ever increasing passenger traffic and fleet expansion in the Indian aviation sector has opened up a whole new business avenue for global aircraft companies un maintenance , repairs of aircraft . Boeing and airbus have announced their plans for MRO facilities in India.
It is predicted that India would need over 935 aircraft over the next 20 years . Such a large expansion also means growth in MRO activity . It is considered more prudent to have these facilities within the country rather than outside for saving . Growth in the MRO segment in India is estimated at 10.2 per cent , and is expected to outpace growth in Asian and global markets . The total MRO market in the country is around $405 million and is likely to touch $1.06 billion by 2014. By then , India’s contribution to Asia’s MRO market is expected to grow to seven per cent .

4.AIRPORT SECURITY POLICY
The main objective of civil aviation security continues to be safeguarding of civil aviation operations against unlawful interference and to avoid causing inconvenience to passengers. The Ministry has taken a number of steps to strengthen sense of security among the air-passengers making Indian aviation sector one of the safest in the world. More emphasis is given on passenger security. Systems like integrated registered baggage screening system, which facilitates the process of registered baggage handling in a safe and secure way, intrusion detection alarm system, biometric based integrated passenger profiling system (BIPPS), which will ensure identity of the passengers, have been introduced.

5.AUGMENTATION OF FLEETS BY VARIOUS AIRLINES
With both full-service and low- cost airlines now pursuing fleet-expansion plans, the world's aircraft manufacturers are focusing on India as a lucrative market. Alongside Boeing and Airbus, regional jet makers Bombardier and Embraer , as well as European turboprop maker ATR, have all benefited from the boom in the country's civil aviation sector. Alliance Air, the fully-owned subsidiary of Indian, is expanding its fleet of regional aircraft in a bid to revamp its operations as a no-frills carrier. The ageing Boeing 737 fleet of the airline is being phased out and one aircraft has already been dropped from the fleet for conversion into a freighter. The revised business strategy is in line with Indian's plan to induct two wide-bodied Airbus A330 aircraft and the impending merger with Air India

6.FOREIGN EQUITY PARTICIPATION IN AIR TRANSPORT
The Domestic Air Transport Policy approved by the government provides for foreign equity participation up to 49% and investment by Non-Resident Indians (NRIs) up to 100% in the domestic air transport services. Foreign airlines are, however, not permitted to pick up equity directly or indirectly.

Moreover, the flow of foreign investment into aviation is likely to get smoother as the government is planning to fix a higher foreign direct investment (FDI) ceiling for five sub-sectors of the industry. The FDI ceiling for the sectors would be higher than the 49% allowed in airlines now.

7.BOOM IN AVIATION SECTOR IS LIKELY TO GENERATE MORE JOBS
According to a recent study by Associated Chambers of Commerce and Industry (Assocham), the boom in the aviation sector is likely to generate nearly 2.5 lakhs jobs by the year 2010. The study says that the civil aviation sector is also set to become a Rs 35,000-crore industry by the same time. These jobs will rise on account of the modernization of Delhi and Mumbai international airports and the revamping of 35 non-metro airports. With the sudden increase in the number of airlines and other consolidations and expansion plans, pilots are in tremendous demand. India would require approximately 7,500-8,000 pilots and an equal number or more air cabin crew by 2010.
Aviation sector in India is growing at a whopping 25% per annum, creating a large number of jobs. There is presently a shortage of trained pilots. The industry is expected to add 130 airliners to its current fleet of 270 airliners, which would, in turn, increase manpower demand. The job opportunities include that of flight dispatchers, cabin crew, airline managers , airport managers and ground handling personnel.
There is already a shortage of pilots in the sector and so is that of commanders and captains. Currently, 2,500 pilots are working with airlines in India, of which 475 are expat pilots. The doors of the cockpit are now open to the women as well. The number of women joining aviation sector is on the rise. From one or two women in a batch of 100 students, the number has now increased to 10 or 12. Indian currently has 76 women pilots, and the number is rising with every new batch. As per the statistics, forty of Air Deccan's 496 pilots are women. Kingfisher, which has 26 women from a total of 390 pilots, also got its first woman captain just recently. Even though more and more women are opting for this career, the shortage still continues. Due to this paucity of pilots, airlines in India are largely dependent on expatriate pilots.


CONTRIBUTION TO AVIATION ECONOMY


India is famous for TOURISM. There are many things for seen like Historical places, Indian culture, temples, so many of foreign people come here and see these places and because of domestic airline they easily can reach there in different places . Aviation industry is also help in developing Indian Economy.

SOME PUBLIC AIRLINE SERVICES IN INDIA

AIR INDIA
Air India Limited is the national flag carrier airline of India, flying a worldwide network of passenger and cargo services. Air India is state-owned, and administered as part of the National aviation company of India limited which was created in 2007 to facilitate Air India's merger with Indian Airlines. The main bases of operation of the airline are Mumbai's Chhatrapati Shivaji International Airport and Delhi's Indira Gandhi International Airport
Air India is the 16th largest airline in Asia , serving 25 destinations worldwide, and, with its affiliated carriers, serves over 100 cities. Air India has code share agreements with twelve other international airlines. In 2010, Air India is expected to join Star Alliance, the world's largest airline alliance.
EXPANSION

In 1970, Air India moved its offices to downtown Mumbai/Bombay. The next year, the airline took delivery of its first Boeing 747-200B named Emperor Ashoka and registered VT-EBD. This coincided with the introduction of the 'Palace In The Sky' livery and branding. A distinctive feature of this livery is the paintwork around each aircraft window, in the cusped arch style of windows in Indian palaces. In 1986 Air India took delivery of the Airbus A310-300; the airline is the largest operator of this type in passenger service. In 1988, Air India also took delivery of two Boeing 747-300Ms in mixed passenger-cargo configuration. In 1989, to supplement its "Flying Palace" livery, Air India introduced a new "sun" livery that was mostly white but had a golden sun on a red tail. Only applied to around a half of Air India's fleet, the new livery did not succeed, as the Indian flying public complained about the phasing out of the classic colours . The new livery was dropped after two years and the old scheme was returned.
In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-400 named Konark and registered VT-ESM made history by operating the first non-stop flight between New York City and Delhi. In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to its second US gateway at O'Hare International Airport in Chicago. In 1999, the airline opened its dedicated Terminal 2-C at the newly renamed Chatrapati Shivaji International Airport in Mumbai.
In 2000, Air India introduced services to Shanghai, as well as to Los Angeles and Newark. On May 2004, Air India launched a wholly-owned low cost airline called Air India Express. Air India Express connecting cities in India with the Middle East, Southeast Asia and the Subcontinent. Air India expanded its international routes to include non-stop flights from Ahmedabad and also expanded its international operations from Bangalore and Hyderabad.
On 8 March 2004, International Women's Day, the airline operated an "All Women Flight" from Mumbai to Singapore . Captain Rashmi Miranda, who became Air-India's first female Commander in November 2003 and Captain Kshmata Bajpai piloted the flight, an Airbus A310-300 aircraft. The flight dispatch activities relating to this flight were also coordinated by a female Flight Dispatcher, Vasanti Kolnad. The Safety Audit on board was also conducted by another woman, Harpreet D Singh. The airline has seventeen female pilots, including five trainee pilots.
In 2007, the Government announced that Air India would be merged with Indian Airlines. As part of the merger process, a new company called the National Aviation Company of India Limited (or NACIL) was established, into which both Air India (along with Air India Express) and Indian Airlines (along with Alliance Air) have been merged. Once the merger is complete, the airline - which will continue to be called Air India - will continue to be headquartered in Mumbai.
Star Alliance announced on 13 December 2007 that it had invited Air India to join as a member .Air India is set to become a full Star Alliance member in 2010.
India has the world's fastest growing airline industry . However, increasing fuel prices resulted in a 4% decline in air traffic in June 2008 .Increasing competition of other major Indian carriers like Jet Airways and Kingfisher airways has pushed Air India to third place in India in terms of market share. In July 2008, it was reported that Air India was seeking US $ 534 million in aid from the Indian government to cover its losses. In the wake of rising fuel prices, the airline decided to hike its air fare in June 2008.
On 1 March 2009 Air India made Frankfurt Airport its Global Aviation Hub for its North American.

FINANCIAL CRISIS
Around 2006-07, the airlines began showing signs of financial distress. The combined losses for Air India and Indian Airlines in 2006-07 was Rs 771 crores. After the merger of the airlines, this went up to Rs 7200 crores by March 2009. This was followed by restructuring plans which are still in progress . In July 2009, SBI capitals market limited was appointed to prepare a road map for the recovery of the airlines.


AWARDS AND RECOGNITION

• Preferred International Airline award for travel and hospitality from Awaz Consumer Awards 2006
• Best International West Bound Airline out of India for three successive years by Galileo Express Travel World Award
• Best Corporate Social Responsibility Initiative. by Galileo Express Travel World Award
• Best Short-Haul International Airline by Galileo Express Travel World Award 2008
• Amity Corporate Excellence Award instituted by the Amity International Business School, Noida , Uttar Pradesh to honour Corporates with distinct vision, innovation, competitiveness and sustenance.
• Reader’s Digest Trusted Brand Award
• Dun and Bradstreet Award(D&B)- first in terms of revenue out of the top airline companies out of India
• Best South Asian Airline award by readers of TTG Asia, TTG China, TTG Mice and TTG-BT Mice China, all renowned Mice and business travel publications.
• Cargo Airline of the Year at the 26th Cargo Airline of the Year Award.
• The Montreal Protocol Public Awareness Award was awarded to Air India by the United States of America for environmental protection, especially in the ozone layer.
• World's First All-Jet Airline- June 1962
• World's Largest Operator of AIRBUS A310-300.
• Air India's security department became the first aviation security organization in the world to acquire ISO 9002 certification (31 January 31 2001).
• Air India's Department of Engineering has obtained the ISO 9002 for its Engineering facilities for meeting international standards.


INDIAN AIRLINES

Indian Airlines or Indian is an airline based in Delhi, India and focuses primarily on domestic routes, along with several international services to neighbouring countries in Asia. Indian Airlines is state-owned, and is administered by the Ministry of Civil Aviation. It is one of the two flag carriers of India, the other being Air India. Its main bases are Delhi's Indira Gandhi International Airport, Mumbai's Chhatrapati Shivaji International Airport, Chennai’s Anna International Airport and Kolkata's Netaji Subhash Chandra Bose International Airport. Though the company that owns and operates the airline continues to be named Indian Airlines Limited, on 7 December 2005, the airline was rebranded as Indian or for advertising purposes as a part of a program to revamp its image in preparation for an initial public offering (IPO). The airline operates closely with Air India, India's national carrier. Alliance Air, a fully-owned subsidiary of Indian Airlines, was renamed Air India Regional.
In February 2007, the Government of India approved plans to merge Indian Airlines with Air India. In May 2007, India's Ministry of Civil Aviation announced that Air India Limited (AI), India's national flag carrier and Indian Airlines Limited (IA), the government owned domestic airline, would merge with effect from July 15, 2007. The new airline formed by the merger was to be called 'Air India,' and would operate in both the domestic and international sectors. The proposal to merge AI and IA had been first mooted in the 1990s. In February 1999, a Parliamentary Standing Committee on Transport and Tourism had recommended the merger of AI and IA in its report on the 'Functioning of Air India'.
Indian Airlines Limited is wholly owned by the Government of India through a holding company and has 19,300 employees as of March 2007.Its annual turn-over, together with that of its subsidiary Alliance Air, is well over Rs.4000 crores (around US$ 1 billion). Together with its subsidiary, Alliance Air, Indian Airlines carries a total of over 7.5 million passengers annually.
On 22 February 2007, the Group of Ministers (GOM) approved the merger of state-owned carriers, Air India and Indian Airlines. Operating under the name Air India, the two airlines formally became one entity on 15 July 2007 upon receiving the new Boeing 777-200LR with the new livery of the merged airline. The new airline's headquarters will remain in Mumbai, and will have a fleet of over 130 aircraft.
In December 2007, Air India was invited to join the Star Alliance . Since Indian Airlines is in the midst of merging with Air India, it too will effectively be a member.

TRENDS IN INDIAN AVIATION SECTOR

1.Consolidation of aviation sector:
The rise in the number of alliances in aviation industry will help in further growth of aviation sector in India. The Jet-Sahara merger is probably just the beginning. The recent 26% stake acquisition by the Dr. Vijay Mallya (United Breweries group) in the low-cost carrier Deccan Aviation is further confirmation that the Indian aviation industry is looking forward to more consolidations
2.The number of passengers travelling on air on the rise:
With passenger boardings expected to double by 2025, and aircraft operations expected to triple by the same time, the number of passengers traveling by air is on rise.
3. For the traveling public, price is paramount in choosing a carrier:
Due to the Internet and round-the-clock search capability, airfares are fully transparent to the public and travelers are choosing the lowest price option. Air travel is now a commodity business, and legacy carriers will have to adapt further to a low-cost/low-fare environment in order to survive. Even business travelers, who have been less price-sensitive, are resisting fare increases. The only premiums that travelers are willing to pay for are time-of-day and direct flights, not the brand.

4. Capacity is growing without much constraint:
Indian carriers are placing orders for new aircraft for delivery in the coming period, without clear plans to retire older planes. They are also adding significant numbers of regional jets. The air taxi fleet is also expanding rapidly. Kingfisher Airlines has already ordered 5 Airbus A380 aircrafts that will operate on international routes.

5. Cost structures will continue to handicap legacy carriers as they compete with newer airlines, as well as with overseas carriers:
Low cost carriers are posing great threats to legacy carriers, as a result of which they are restructuring their pricing policies. Apart from this, they are also facing competition from overseas players.

6. Oil prices are not expected to fall:
The public sector oil marketing companies (OMCs) have raised the prices of Aviation Turbine Fuel (ATF) by 3.5 per cent, in line with the rise in international oil prices. This is likely to trigger a marginal increase in airfares.

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

FUTURE OF AVIATION INDUSTRY

National Conference on “Indian Civil Aviation Sector: Future Directions” is jointly organized by Indian Institute of Tourism and Travel Management, Gwalior and Indian Tourism Congress. Civil Aviation forms a very important infrastructure segment in boosting tourism, trade and commerce, as well as, in enhancing overall international competitiveness. There are tremendous business opportunities for companies in the business of Tourism, Travel, Air Cargo, leisure, Aircraft Manufacture, Airline Service, and Infrastructure Development & Designing etc. There are certain agenda points which need to be addressed in the context of growth of the industry such as: Airlines & Airports: Building Synergies for Optimizing Growth of tourism, Liberalization of Air Services - The Way Forward, Moving Towards a Better Infrastructure: Investment Opportunities in the Indian Context and Human Resource Development: Tapping Tourism Business Potential. The objectives of the conference are to discuss the changing dimensions of aviation industry in India, to evolve with strategies for imminent challenges to the tourism industry, to discuss the impact of different aviation policies on the tourism sector and to highlight the role of industry-institute interface for the betterment of tourism and aviation sector.
The conference is open to academicians, researchers, industry experts, professionals and practitioners from Aviation, Tourism and Hospitality organizations etc.