aviation industry plays a key role in economic development, growth of tourism and social development. The Indian Aviation industry has witnessed a turbulent phase over the last few years. In the recent years, the industry saw the emergence of the low cost carriers and liberalisation of government norms which impacted the global aviation industry. More recently, the global economic downturn of 2008 dealt a severe blow to the aviation industry the world over. The article gives a brief overview of the growth and trends in the industry. Importance to economy
The revenue of international airlines industry has increased from 476 billion USD in 2009 to 567 billion USD in 2011, a 9. 3% year-on-year increase. This industry employs 56. 5 million workers and accounts for US $2. 2 trillion of the global GDP. Indian Aviation industry contributes to 0. 5% of the India’s GDP and generates 1. 7 million jobs. Technological Trends Major cost items for airlines are fuel, labour and maintenance. Airlines are able to reduce the cost/increase profit by adopting innovations such as more fuel efficient planes, reducing turnaround time, extra charges for less cramped seats, excess luggage etc.
and providing ticketing facilities online. Analyst View The industry is facing major challenges in form of increasing fuel prices, depreciation in rupee value and high sales tax. But the passengers are going to increase in FY’14. However, the forecast for Indian aviation sector for FY 14 remains bleak. The Jet Etihad deal has reached next step. Foreign airlines entry will depend on the results of this deal. Government has planned to construct 50 low cost Airports. Delhi will be first among them. Mergers & Acquisitions
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Due to high competition and slim profits there has always been an urge in the Aviation industry for mergers and acquisitions. Since it helps the airline to enhance its technology, expand its connectivity and infuse capital. But is merger and acquisition activity in aviation a boon or a curse is the question to be asked, as most of the airlines have faced turbulent times after mergers. Macroeconomic impact There have been very limited reforms to boost the aviation industry post the 1990s liberalisation. High ATF price and soaring landing costs in India are the major setbacks for the aviation sector.
In an attempt to save the ailing industry the government of India introduced FDI in which foreign airlines were allowed to own 49 per cent in domestic carriers. KEY success factor OF THE AVIATION INDUSTRY: key success factors (KSFs) describes main parts of performance that are important for the firm to achieve its objectives and mission. Top level management absolutely considers these factors during the setting overall goals. These key success factors give a widespread knowledge for the entire company.
Therefore, any action that the firm commences must make sure constantly greater performance in these key parts; if not, the firm may not be competent to accomplish its goals and thus may fail to achieve its mission. In the service/Airline industry, predominantly the capital intensive, the key success factors are described below: strong management There must be strong management of everything that is advantageous for the organization. The airline has at all the times evaded, disdained and vogue everything that may increase costs and makes difficult the basic travel plan.
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Management ranks are inclined, healthy compensated and significantly productive. Capable Workforce Highly qualified and competence workforce is very essential in this industry or service-oriented industry. They must possess strong communication skills and soft spoken with customers. There must be training programs focusing to enhance their abilities and skills and these campaigns must be customer-focused and focused on continuous improvement. Staff must be highly paid so they cannot leave the organization and create difference. Service Promotions and In-Flight Services
The promotion in this industry is mainly targeted to enhance the base of loyal customers and also focused to the regular high-revenue customers. The in-house service such as booking ease, aircraft type, aircraft seating space, class of service offerings must be at least industry standards. Business travellers like the simple service; there must be a decent coach cabin that is slightly more spacious. There are no assigned seats, no meals, just beverages and snacks. Therefore, simple service is a major critical success factor. Non-Stop Flying
Destination from one point to another point should be nonstop. This activity minimizes the time that planes take while reaching the destination and it allows airline more to be in the air. It results in good image and increases passengers credibility. Financial Management Thriving management of this factor facilitates airlines to regulate investment for growth. There is accountability of the unit revenue to compute the profitability, which is calculated by revenues minus all the expenses divided by the total seats flown. Efficient Management of Cost
Maximizing revenue by implying creative and competitive pricing structures to attract all the profitable segments and sustaining frequent and profitable customer base is most important key success factor for this industry. Efficient management of cost by focusing on the price hedging during volatile periods and maintaining fuel procurement is an important factor. Route System An airline’s route organization is the most reliable factor. Where to fly and how frequently; are the success factors that must be harmonized to demand, and simultaneously planned to increase the aircraft utilization.
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