DOING BUSINESS

IN
INDIA
ASSIGNMENT

BY:
RAHUL GUPTA 18021141087
PREETI ISRANI 18021141083
RAJESH KUMAR 18021141088
NITIN KUMAR 18021141076
SARBARTHA RAY 18021141099
ANISH Kr. GUPTA 18021141133
ROHIT KHANNA 18021141092
Indian Aviation Industry

The civil aviation industry in India has emerged as one of the fastest growing industries in the
country during the last three years. India is currently considered the third largest domestic civil
aviation market in the world. India is expected to become the world’s largest domestic civil
aviation market in the next 10 to 15 years, as per Mr. Jayant Sinha, Union Minister of State for
Civil Aviation, Government of India.
According to International Air Transport Association IATA, India will displace the UK for the
third place in 2025.
The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as
low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines,
advanced information technology (IT) interventions and growing emphasis on regional
connectivity.

Some major initiatives undertaken by the government are:

 Allocation to Civil Aviation Ministry has been tripled to Rs 6,602.86 crore (US$ 1,019.9
million) under Union Budget 2018-19.
 In February 2018, the Prime Minister of India launched the construction of Navi Mumbai
airport which is expected to be built at a cost of US$ 2.58 billion. The first phase of the
airport will be completed by end of 2019.
 The Government of Andhra Pradesh is to develop Greenfield airports in six cities-
Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem and Kothagudem under
the PPP (Public-Private Partnership) model.
 Airport Authority of India is going to invest Rs 15,000 crore (US$ 2.32 billion) in 2018-
19 for expanding existing terminals and constructing 15 new ones.
 Regional Connectivity Scheme (RCS) has been launched under the policy

India’s aviation industry is largely untapped with huge growth opportunities, considering that air
transport is still expensive for majority of the country’s population, of which nearly 40 per cent
is the upwardly mobile middle class.

The industry stakeholders should engage and collaborate with policy makers to implement
efficient and rational decisions that would boost India’s civil aviation industry. With the right
policies and relentless focus on quality, cost and passenger interest, India would be well placed
to achieve its vision of becoming the third-largest aviation market by 2025.
 Market Share in the

Indian Aviation Industry

Market Share in the

Indian Aviation Industry

Misc., 20.30%

IndiGo,
40.90%

SpiceJet,
12.30%

Air India,
12.80%
Jet Airways,
13.70%

IndiGo Jet Airways Air India SpiceJet Misc.

IndiGo
IndiGo is a low-cost airline headquartered at Gurgaon, Haryana, India. It is the largest airline in
India by passengers carried and fleet size, with a 41.3% domestic market share as of June 2018.

As per the Regulatory data released by the authorities, Low-fare airline IndiGo (Interglobe
Aviation Ltd) retained its No.1 spot in terms of market share among India’s air passenger careers
in May, carrying 4.85 million people during the month. The low-fare airline commanded a
40.9% market share in May, against 39.8% in April, and 41.2% in May 2017.

Success:
• Largest airline in India by passengers carried and fleet size.
• Best airline for being punctual

Why IndiGo Is A Market Leader

• Five Reasons :
1. Low cost, Single model: While Kingfisher and once market-leading Jet Airways bought
rivals, flew multiple plane models and struggled to mix full-service and low-fare options,
IndiGo stuck with its policy of offering one class of no-frills service on a single type of
plane. Indigo has chosen to stick to the world's best-selling single-aisle aircraft, the
Airbus A320.

2. Selling and back planes: it maintains a young fleet by selling and leasing back its
planes. IndiGo uses six-year sale and leaseback agreements, so the airline is constantly
replacing its aircraft. This prevents the need for overall checks and major repairs, which
means IndiGo understands how to work the margins.

3. Quality and Turnaround time: The third reason is Bhatia's obsession with detail and
quality. IndiGo's executives, including staff at the check-in counters, air crew and sales and
marketing staff are hired only after Bhatia meets each of them individually. Besides, the
airline also employs far fewer people, with one of the industry's leanest work forces.
 The airline also broke industry standards with simple things like turnaround time. This is
the time taken for a plane to be ready for the next flight between landing and take off.
IndiGo boasts of a turnaround time of less than 30 minutes.

Obviously less time on the ground means more time in the air which also reduces
fuel burning.

4. It’s all about customer focus: The airline's biggest edge over others is its focus on
customer focus. "Would you like to be on time or would you like to be three hours late and
have the nicest champagne and caviar on board," Bhatia had asked earlier this year in an
interview with ET. Fliers want on time journey at reasonable prices and this has helped
IndiGo inch past stalwarts to reach this milestone.

5. Using technology smartly: Unlike manual systems used by other airlines, IndiGo planes
are equipped with a digital link system for transmission of short, simple messages between
aircraft and ground stations via radio or satellite called Aircraft Communications Addressing
and Reporting System (ACARS). Before every IndiGo flight departs an automatic message is
triggered from the aircraft to its operations control center - and immediately the same
departure time gets recorded in the software. Similarly, the moment the flight lands an
automatic message is triggered from aircraft to control center. Hence, the on-time
performance is diligently monitored for every flight in real time.

SWOT ANALYSIS

STRENGTHS:

• 1. Indigo Airlines has strong backing promoters and is one of the largest low cost carriers
in India
2. Only LCC to make consistent profits
• 3. Indigo Airlines has one of the major airlines in India in terms of market share
• 4. Indigo Airlines has entered international markets has boosted its brand value
• 5. Good advertising and marketing strategies have increased its brand recall
• 6. Excellent offerings and on-board services provided by Indigo Airlines
• 7. More than 10000+ employees are with Indigo serving more than 40 million passengers
• Weaknesses
• 1. Indigo airlines has limited market share growth due to intense competition
• 2. Still has to establish itself on international destinations.
• Opportunities
 • 1. Opening up of International routes can boost business of Indigo
2. Largest market share among LCCs in Indian Market
3. Middle class taking to the skies can be a huge opportunity for Indigo airlines.
• THREATS

• 1. Plenty of new LCCs to compete with for Indigo airlines

2. Rising Labor costs and changing govt. policies
3. Rising Fuel Costs can affect business margins for Indigo

Jet Airways (India)

The Joy of Flying

• The Naresh Goyal-controlled Jet Airways (India) Ltd came a distant second, with 13.7%
market share, flying 1.63 million passengers during the month, data from Directorate
General of Civil Aviation (DGCA) showed. Jet Airways is a major Indian international
airline based in Mumbai. In October 2017, it was the second-largest airline in India
after IndiGo with a 17.8% passenger market share .
• Naresh Goyal is an Indian businessman and founder Chairman of Jet Airways. He started
operating Jet Airways in 1993.
• Main hub at Chhatrapati Shivaji International Airport and secondary hubs at Chennai
International Airport, IGI Airport, Kempegowda International Airport and Netaji Subhas
Chandra Bose International Airport.

Success
• In march 2005, Jet Airways Ltd. became the first Indian airline to issue shares to the
public, when it made a successful debut on NSE & BSE simultaneously. The much
awaited ,Initial Public Offering (IPO) raised Rs.1899 crore, through the sale of 1.72 cr
shares of Rs.10 each. The issue price was set to Rs.1100 but the lowest price shares were
traded for on either of the bourses was Rs.1155. At the end of the first day of trading, the
closing price exceeded Rs.1300, which was a gain of around 18% over the issue price.
• Analyst said the retiring its high cost debts would bring down Jet Airways debt equity
ratio from around 5.4:1 before the IPO to 1:1, which would prove to advantageous to the
airline in securing further loans on favourable terms and in negotiating lease agreements
for new aircraft.
• In 200, the company also acquired “Air Sahara” for a whooping $500Mn & relaunched it
as “JetLite”.
 • Taking advantage of the Government of India FDI policy, Naresh led Jet Airways to
successfully conclude a strategic partner deal with Etihad Airways in 2013. Etihad was
given 24% equity stake in Jet Airways, in against for $379Mn.

Problems
• The ride has not been entirely smooth for Jet Airways. A market shared that picked at
46% in 2006 has seen to be dramatically falling.
• Situations worsened further by mid2014 when a heavily bleeding Jet, posted a loss of
Rs.3667 crores (2013-14).
• The other problems of the airline included their confusing business model of running
both a low cost & a full-service carrier. This left customer unsure at times about what to
expect on a Jet flight. Would the meal be complementary or would they have to pay?
• Then was the seat configuration that wasn’t uniform the number of business class seats
varied from 8 to 16. This used to be a huge operational challenge for the management on
how & where to deploy which aircraft.

Kingfisher
India, the world’s fastest growing aviation market, is also one of the toughest to operate in, as
carriers are forced to sell tickets below cost to attract a fast-growing middle class. Kingfisher
Airlines, started by Indian tycoon Vijay Mallya in 2005, was one of the nation’s leading carriers
until it was grounded in 2012 amid mounting debt, while Air India Ltd. is surviving on repeated
taxpayer bailouts of billions of dollars.

Success of Kingfisher
• Kingfisher airline low-cost class on domestic route
• Three Global award at the skytrax world airline award in 2010
• Brand leadership award
• India’s only 5 star airline, rated by skytrax & 6th airline in the world.

SWOT Analysis
• Strengths

– Strong brand value & reputation in the mind of customer

– Quality of the service
– Route rationalization
– First airline to have a new fleet of airbuses
– Quality & continuous innovation
 • Weakness

– Still not in a profit organization

– High ticket pricing
– facing a tough competition from competitor

• Opportunities

– The expanding tourism industry

– The non-penetrated domestic market

• Threats

– Competitor
– Infrastructure
– Fuel price hike
– Economic slow down

Failure of Kingfisher

• The airline commenced operation in 2005 it reported loses. The acquisition of loss
making bangalore – based air deccan in 2007 made the matter worse
• Kingfisher airline to stem losses & suffered a loss of over $10 billion (Us$150 million)
for three consecutive years
• In Dec 2011 for the second time in two months Kingfisher accounts were frozen by the
Mumbai income tax department for not payment of dues.
• On 20 Oct 2012 Kingfisher’s licence was suspended by the Directorate General of Civil
Aviation after it failed to address the Indian regulator’s concerns about its operation.
WHAT ARE THE MAIN REASONS THAT KINGFISHER AIRLINES
WENT OUT OF THE BUSINESS?
Kingfisher had started it’s airlines services in May 2005 with huge expectations, investors also
had faith on Vijay Mallya because he was running United beverages group(Kingfisher Beer)
successfully. He had a good relationship with top politicians in India, his personal wealth was
more than 7000 crores at that time.

Vijay mallya is glamorous in nature, he knows how to live life, like a king,
every air traveler expected their travel to be like a king’s journey in kingfisher airlines.

In India air travelers were expecting international flight standards in

hospitality, initially, kingfisher started as a premium airlines service with well established
standards and good flights, later they focused on low cost airline service, suddenly they acquired
Air Deccan and started international flight services 2008, after 4 years of its international
services, Kingfisher stopped it’s airline services because of huge debt, and they are not in a
position to pay the employee salaries, Airport charges, Fuel bills to the oil companies, and bank
loan payments.

REASONS FOR THE DOWNFALL OF KINGFISHER AIRLINES

 FREQUENT CHANGES ON FOCUS: Kingfisher first launched all economy class

with food and entertainment system, later on they shifted focus to luxury business class
on their aircraft, a lot of travelers appreciated the hospitality, aircraft condition and its
ambiance when Kingfisher focus was on luxury. After acquiring the Air Deccan they
suddenly shifted their focus on low-cost air traveling, frequent changes in the hospitality
and aircraft ambiance made travelers lose their interest in the brand, they didn’t focus on
highly profitable routes in domestic area.

 ACQUISITION FOR EXPANSION: As per the international airline policy, any

airlines should have minimum five years of domestic experience in their respective are to
get the international route licenses. But to expansion in the international airline,
Kingfisher merged with Air Deccan but they never tried to syndicate these two
companies to improve their profits with its merger. Without knowing the ground reality
of airline industry, they stepped into the international routes where the competition is
very high compared to domestic airways. Less than 5 years of experience, acquisition and
expansion started throwing kingfisher into downfall.

 LACK OF MANAGEMENT: There was no single CEO continued for one year, there
was a frequent change in the top level of management. Mr. Mallaya had never taken any
serious interference in day-to-day operations, Kingfisher was a gift to Siddhartha
Mallaya(son of Vijay Mallaya) by his father on his birthday, Siddhartha Mallaya doesn’t
have maturity age to run the business because he was busy in making kingfisher calendar.
So, the lack of expertise and experience in the airline industry, lack of management
caused the downfall of kingfisher airlines.

 HIGH OPERATIONAL COST: Operational costs of the airline industry are very
high compared to any industry, company have to buy licenses for the routes, company
should invest in the aircraft maintenance, salaries for employee are very high. Airport
charges fees for landing and parking, aircraft fuel frequently changes as per the
 international crude oil rates, the government collects huge taxes from the airline
companies, there is a lot of competition between airline companies, all these high
operational costs without good profit margin caused the kingfisher to downfall.

CONCLUSION
• IndiGo
• IndiGo stuck to it’s low-cost, single class model unlike rivals Jet Airways and
Kingfisher Airlines.
• IndiGo’s selling and leasing back planes helps in maintaining its Balance Sheet.
• Kingfisher Airlines
• Parting Personal image/preferences over the interest of organization and all
stakeholders.
• Failure to understand the aviation industry and thinking that the success of one
can easily be replicated in the other.
• Failure to understand and estimate the changing trends, consumer preferences and
cost curtailing to improve profitability.