Industry Analysis:
Aviation Industry
Submitted to:
Prof. Sushil Kumar Dixit
Submitted By:
Group 4
Aashna Singh – 018/2021
Divya Aggarwal – 022/2021
Deepak Diwakar – 043/2021
Garvit Arora – 047/2021
Himanshu Garg – 053/2021
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Table of Contents
S.No. Topic Page no.
1 Acknowledgement 3
2 About Aviation Industry 4-6
3 PESTEL Analysis 6-8
4 Five forces analysis of the industry 8-10
5 Industry life cycle analysis 10-12
6 Top 5 Aviation industry in India 13
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ACKNOWLEDGEMENT
We would like to express our deep and sincere gratitude to our Strategic Management professor, Dr
Sushil Dixit, for providing us the opportunity to research and providing invaluable guidance throughout
this research. His dynamism, vision, sincerity and motivation has deeply inspired us. He has taught us
the methodology carry out research and present it as clearly as possible. We are really grateful for the
plethora of knowledge that he has provided us.
Next, we would like to thank the Lal Bahadur Shastri Institute of Management for providing us a
platform to come together and work on this project. Furthermore, we would like to extend warmest
thanks to our seniors who helped and guided us on this project.
Last but not the least, we would like to express our gratitude to our parents and friends who have
encourage us throughout the research. We have no valuable words to express our gratitude; however,
our hearts are full from the favours received from every person.
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AVIATION INDUSTRY
A general definition of Aviation Industry setting the boundaries:
The aviation industry is the sector of the economy that makes, maintains, and operates planes and
airports. When it comes to flying, there are many different responsibilities. It includes actions both at
the airport and on board the aeroplane. It includes ground chores that must be completed before the
flight takes off, activities that must be completed during the flight, and activities that must be completed
after the helicopter lands. The aviation industry includes practically all aspects of air travel as well as
the activities that support it. This covers the entire airline sector, as well as aircraft manufacture,
research firms, military aviation, and much more.
The term 'aviation' is most generally used to refer to mechanical air transportation conducted by
aeroplanes. Aeroplanes and helicopters are the two most common types of aircraft, however most
modern definitions of the term "aviation" include the usage of unmanned aircraft, such as drones.
Guillaume Joseph Gabriel de La Landelle, a French pioneer, created the term aviation in 1863. It is
derived from the Latin word avis, which meaning "bird." All actions associated with flying an aeroplane
are referred to as aviation.
It is difficult to overstate the importance of the modern aviation business, but one of the key reasons for
this importance is the sector's globalised nature, which helps to connect continents, countries, and
cultures. As a result, global aviation has played a critical role in providing efficient travel to far-flung
destinations, enriching the lives of many people.
During the previous three years, India's civil aviation industry has become one of the country's fastest
expanding industries. India has become the third largest domestic aviation market in the world. By
2024, it is expected to overtake UK to become the third largest air passenger market.
The aviation industry has also been a significant contributor to global economic success, not just
because tourism has boosted local economies, but also because it has improved global trade.
Meanwhile, the aviation sector directly employs millions of people throughout the world, with positions
ranging from pilots and cabin crew to air traffic controllers and aerospace engineers. Furthermore, the
aviation business has aided in the creation of several jobs in the broader travel and tourism industry.
Source: IBEF
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In FY2021, India’s passenger traffic stood at 115.37 million. From FY16 to FY21, there was a decline
in domestic passenger and international passenger traffic at a CAGR of -9.02% and -28.64%,
respectively, owing to COVID-19-related restrictions on flights in FY21.
Between FY16 and FY21, there was a decline in freight traffic at a CAGR of -1.77% from 2.70 million
tonnes (MT) to 2.47 MT. There was a decline in aircraft movement at a CAGR of -7.79% from 1.60
million in FY16 to 1.20 million in FY21.
Aviation is a field that is constantly changing. This industry operates 24 hours a day, seven days a week,
resulting in shifts in labour, resources, and aircraft. Information technology is critical to the success of
aviation. Here are some of the numerous software utilised by the aviation industry's workforce, starting
with the simulation software used by trainee pilots.
• Aircraft maintenance software that maintains track of on-the-ground maintenance tasks.
• Fuel Management Software that optimises fuel procurement and responds to fuel price
swings.
• Software for network and route performance management that predicts profitable air routes
and allows for speedy decision-making.
• Catering Procurement Software that aids in the smooth execution of the full procure-to-pay
process.
• Catering software that focuses on reducing waste and increasing customer pleasure.
• The Flight Information Display System (FIDS) at airports display detailed flight status in
real time around the clock so that travellers may get the most up-to-date information from
anywhere in the airport as well as on the Internet.
• The Departure Control System (DCS) works hand in hand with the reservation system to
track check-in passengers and generate boarding cards.
Customers can utilise a variety of mobile apps to check flight times, book tickets, redeem points against
fares, and check in on the go. As a result, information technology plays a critical role in maintaining
the seamless running of aviation operations.
Source: IBEF
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The Indian government has been attempting to increase the number of airports to accommodate the
growing aviation traffic. India had 153 operating airports as of 2020. By FY40, India plans to increase
the number of operational airports to 190-200.
Furthermore, the sector's growing demand has increased the number of planes in service. By 2027, the
number of planes is predicted to reach 1,100.
The Government of India's Ministry of Civil Aviation (MoCA) is in charge of formulating policies
and plans to promote and regulate civil aviation, as well as implementing programmes to boost civil
air transport. It also manages airport facilities, air traffic services, and passenger and cargo air
transportation. The Directorate General of Civil Aviation (DGCA), an Indian civil aviation regulatory
organisation, is overseen by the MoCA. This directorate is in charge of looking into aviation mishaps
and occurrences.
The aviation industry is critical to the United States' economic viability, making it a prime target for
terrorists. The industry's complexity and magnitude also make it an appealing target for criminals. The
aviation sector supports the security practitioner in adopting relevant and practical security measures
by understanding the shaky financial structure of airlines. To combat both terrorist and criminal
criminals, aviation security professionals must implement systems, methods, and processes. Aviation
security practitioners use multilayer security systems that work in tandem with the global aviation
industry to tackle these problems.
PESTAL Analysis:
PESTEL Analysis is a strategy framework that breaks down possibilities and risks into Political,
Economic, Social, Technological, Environmental, and Legal elements in order to evaluate a company's
external environment.
Political:
Government policies have a significant impact on aviation in a country. Because it has such a large
impact on its consumers' travel habits, the airline sector is extremely vulnerable to changes in the
political environment The government is responsible for improving aviation infrastructure as well as
fostering growth and sustainability in the industry. The government has opened up areas of aviation to
foreign direct investment, including Airport Transport Services, Airports, Ground Handling Services,
and Aircraft Maintenance Pilot Training Institutes. The Indian government has imposed the Open Sky
Agreement.
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Source: EdrawMax Online
Economic:
The country's economic status and development are important elements that influence aviation demand.
These variables provide unique insight into the country's economic performance and industry
development. As a result, these factors have a direct impact on passenger demand. During a recession,
airline is seen as a luxury, and as a result, spending on air travel is curtailed, resulting in lower airfares.
People delight in travel during periods of prosperity, and prices rise.
Because airline profitability is linked to the value of foreign exchange, the exchange rate is important.
Oil prices are determined by the unpredictability of oil-producing nations. Because India relies heavily
on oil imports, the aviation sector in India is strongly affected by prices of oil.
Another element that affects the economy in the aviation industry is interest rates. The interest rate is
the link between current and future prices of goods. Higher interest rates increase the expected cost of
suffering, which is especially true in the airline business, which has enormous leverage due to high
operating costs. Employees get laid off as a result of this. The industry has had a difficult year in 2019.
In the year 2020, there was a new challenge for the aviation industry due to the global spread of the
coronavirus (COVID-19). As a result of the pandemic, COVID 19 issues set to affect the industry. Due
to this, the daily booking volumes of airline operators were affected. A major challenge that Indian
aviation industry giants are dealing with is the repayment of capitalised lease obligations due to business
risk.
Social:
The aviation sector is crucial to a variety of industries. The Indian airline sector, like other industries,
provides social benefit. The sale of airline tickets increased demand for air travel by lowering the cost.
The Indian passenger group is very cost-conscious. The airline divided its passengers into two
categories: economy and business. Airline firms have offered a slew of new items to entice high-paying
customers, including free meals, seat preferences, and even the ability to change dates and avoid
cancellation fees in certain circumstances. Low-cost models remained the most viable alternative, which
Indigo, Spicejet, and others took advantage of. The advent of social media outlets has also changed how
consumers see contemporary companies in the Indian aviation industry, with services frequently being
criticized. Due to the expansion of airports, many new job opportunities were also created which helped
in decreasing unemployment.
Technological:
• Due to intense rivalry in the airline sector, the latest technology in aircraft must be modified to
survive in a hostile environment. Furthermore, incorporating cutting-edge technology into
planes would minimise fuel consumption while also increasing the efficiency of air operations.
In its operations, the Indian airline sector makes substantial use of technology. Technology is
the enabler; the booking engine has improved, and the internet search experience today is very
efficient, with so many computing messages handled in microseconds to provide the best
possibilities.
• In the Indian aviation industry, innovative technology is used for both the front and back offices.
Ticketing, distribution, and customer support can be handled through mobile applications.
Radio-frequency identification, bag and flight tracking via GPS, and self-service kiosks are just
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a few of the improvements produced in this industry. The companies also need to invest in
technology and bring in continuous changes so that the security of the passengers is ensured.
Advancements in technology have also given power to consumers by giving transparency,
convenience, and cost savings, while also benefiting airlines by cutting costs and expanding
their scale.
In the past, several technological developments have taken place in aviation industry. Having the Wi-
Fi feature while travelling, enhanced the travel experiences.
Environment:
The increase in the number of planes flying in the sky is also responsible for the rise in global warming.
This has a negative impact on our environment. As climate change becomes more prevalent in the public
mind, the passengers keep track of their carbon footprint. As a result, the Indian aviation sector has been
obliged to adopt green flying and is more sensitive to environmental concerns. Because of
environmental concerns, airlines are putting a lot of emphasis on their CSR operations.
Legal:
Air travel is governed by a number of key laws. The way airlines treat their passengers has been
regulated by new laws. There are a few things that airlines should keep in mind when it comes to labour
conditions and flight times. It can assist them in providing a secure and comfortable service. In the
majority of cases, airlines are judged liable for disasters and accidents. They may become entangled in
legal proceedings. It may tarnish their image and have an adverse effect on their business. Each airline's
decision is analysed in terms of delays, safety concerns, and other concerns. Passenger safety is very
important. In this aspect, airlines are held liable for any type of calamity, including aviation crashes.
Five forces analysis for the industry:
Following are the Porter’s five forces in Aviation Industry in India:
1. The Bargaining Power of Suppliers is Low
a) Few suppliers – Boeing and Airbus
b) Manufacturing costs are high
c) Long term contracts, loan agreements
The pinnacle providers presently withinside the global are Boeing and Airbus. The production of
the planes is pretty standardized and the handiest region in which corporations can differentiate is
in phrases of amenities. Airlines can not effortlessly transfer their providers due to the fact they
have got long time contracts. Planes require big capital and maximum corporations are on long time
mortgage agreements. It takes round 2 hundred million greenbacks to supply one plane.
Manufacturers recognize the significance in their enterprise with airlines. Based in this the risk of
bargaining strength of providers is extraordinarily low. However, if the dealer modifications their
mortgage settlement or credit score even marginally then this may imply big losses for airlines. In
this case, the risk of the bargaining strength of providers can end up slight to high.
2. The Threat of Substitutes is Moderate
a) Indian Railways
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b) Busses and local transportation
c) Car rentals and aggregators such as Ola and Uber The aviation industry has a moderate level of
threat from its substitutes
Consumers might also additionally every now and then pick different manner of delivery like trains
and buses to get to their vacation spot due to various motives which include fee and connectivity.
In East India, for example, the community of railway tracks is a ways greater sophisticated. There
are best airports that join the complete kingdom of Sikkim, i.e. Bagdogra and Pakyong. While
airlines surpass in phrases of comfort and every now and then even fee or time, purchasers do pick
trains for motives referred to above. Another chance to replacement is automobile leases and
aggregators. With Ola, Uber presenting outstation offerings, the boom of this section is pushed via
way of means of millennials. The threat is still not as substantial due to the unavailability of data
on demand for services by such passengers.
3. The Bargaining Power of buyers is high
a) Low switching cost for customers
b) Airlines focus on brand building, brand positioning in the aviation industry, every individual
customer is important
c) Airlines emphasize individual customer’s safety and convenience
d) Customers have choices
There is a high level of concern for their safety and convenience. Airlines move the greater mile to
make certain this. Also, a number of attentions is going on logo building, consumer loyalty and
taking pictures marketplace percentage. Many airways including Spice Jet, recognized for its warm
food or Indigo, recognized for its well-timed take-off and arrival, low airfare have all emerge as
specific capabilities to cap the marketplace percentage and benefit consumer loyalty. The clients
alternatively have many picks via aggregator web sites that sell numerous picks primarily based
totally upon time, value and layovers. The clients can tally fees on line and purchase from their
desired airways. In such cases, logo loyalty is low; however, logo positioning continues to be crucial
because the clients can pick from some recognized options. The switching value for clients is low
and consequently the risk to the bargaining energy of clients is excessive.
4. The Threat of Entrant is Low
a) Low cost of switching among customers
b) Economies of scale for profitability
c) Huge capital investment
d) Strong competition
e) Regulations and need for licensing
For any new player in the aviation industry, the capital invested is large and therefore without any
strong customer base the threat of entrant for an already existing player in the industry is low. Not
best does the enterprise want massive capital funding on the entry-stage however additionally for
the duration of the exit. Any enterprise withinside the aviation enterprise will best turn out to be
worthwhile if it’s miles working on economies of scale. Moreover, the risk of a brand- new entrant
will pressurize the already current gamers to fuse their capital to retaliate in opposition to the
competition. Emerging markets inclusive of low pricing airfare, and catering to distinctive wishes
of the patron has been blessings gamers inclusive of SpiceJet and Indigo to bolster their foothold
as a brand-new entrant. Currently, the rising segments inclusive of Premium Economy via way of
means of Vistara provide “premium” offerings because the call suggests, at low-budget prices. Now
the clients have choices, and the value of switching is likewise low. This, however, does now no
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longer enhance the extent of risk due to the fact the clients tend to select famous names. Last
however now no longer the least, any new entrant must take licenses which take approximately one
year. The difficult policies are sufficient for any new entrant to save you them from getting into the
aviation enterprise.
5. Rivalry among Existing players is very high
a) Saturated market
b) Few long- term competitors
c) Equally distributed market share among each player
d) Standardization of aviation industry
e) High exit cost
The contention amongst current gamers could be very excessive due to numerous reasons. The
aviation enterprise is saturated with best key gamers who revel in a similarly allotted marketplace
share. Any new entrant will face extreme opposition, and current gamers might also get driven out
of commercial enterprise because of a loss of capital. Each current participant is in the sport for the
long term because of mortgage agreements with providers or excessive go out costs. The centers
withinside the aviation enterprise is standardized along with the system of buying tickets, flying
and bags take a look at in take a look at out. The airways differentiate themselves primarily based
totally on their emblem positioning and emblem values. One different distinguishing element can
also be services along with food, beverage and wireless centers. The marketplace is presently
saturated and with COVID – many players are that specialize in ramping up their income at the
same time as the opposition stays the same.
Industry life cycle analysis:
The international standard ISO / IEC 15288 has a general character and applies to the field of
aviation technology, which has its own specifics. Mentioned specifics need to be considered
already in breakdown and targeting different stages in the aircraft life cycle. The specifics of
aviation technology include in particular the requirements for flight safety and high reliability
requirements of aviation technology, which is reflected mainly in the specific test requirements
of flight techniques (especially flight test), airworthiness of aircraft, certification of
aeronautical products and operation. Generally it can be life cycle stages of aviation technology
break down as follows
a) Stage of design
b) Stage of definition
c) Stage of development
Development stages / steps from conceptual design to project
- Design of the aircraft (aviation technology)
- Prototype
- Prototype testing (factory tests - FAT tests (Factory Acceptance Test / Testing),
ground test, flight test, certification tests and further testing according to customer
requirements)
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- Approval of a type of aircraft and aviation technology (issue of a type certificate for
an aircraft and its components and consent to the use of products in civil aviation)
d) Stage of production (or buildings),
- In this stage are performed tests to verify the quality of production and can be carried
out tests of test series and other types of tests
e) Stage of tests (testing)
- Verify the airworthiness of the aircraft (certificate of airworthiness),
- SAT Test (Site Acceptance Tests / Testing) - acceptance tests at the installation /
placement of air Product / System
- Further testing according to the requirements and specifics of the customer
f) Stage of operation (use)
- Operate the aircraft in accordance with its Certificate of Airworthiness
g) Stage of support
h) Stage of modernization (or upgrading)
i) Stage of decommissioning
j) if necessary, stage of extension of technical life (may be associated with modernization)
Life cycle of Aviation Industry consists of following stages:
1. Stage of conception
The basic purpose of the design phase is to consider all available options and create preliminary
products. At this stage, it is a matter of understanding the customer's needs and integrating these
needs in a conceptual approach. The need to develop new types of passenger aircraft is driven
primarily by changing global air transport demand and travel habits driven by commercial and
private customer requirements
2. Stage of defining
In the stage of defining, while allowing for development and production, determining the systemic
solutions that meet customer requirements have to be set. A customer consolidates all information
obtained during the stages of design or specify its request. For key requirements - System targets,
in terms of overall security solutions can be considered:
a) Aircraft safety
b) fulfilment customer expectations
c) 100% usability of aviation technology / systems for attaining the main tasks / missions, ability
to operate in all conditions
The main objective of this stage can be as follows:
a) development of the concept and definition of the final solution
b) development of system architecture and system configurations
c) ensure that the materials were selected with knowledge of the laws and to determine their use
in accordance with health, safety and environmental protection
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d) quantification of key performance of systems
3. Stage of development
Any new developed aircraft must replace morally, technically and economically obsolete aircraft
by technical parameters and operating characteristics. It should also ensure that the requirements of
customers are fulfilled and the operators' obligations under existing aviation legislation and
demanding operating conditions, which by transport aircraft are primarily the requirement for
greater seating capacity, enhanced comfort during transportation, reducing the specific fuel
consumption, reduced noise levels and emissions produced. The current and future development
should be considered, in terms of atleast 30 years.
4. Stage of production
At this stage materialized conceptual designs and data obtained in previous stages. The schedule
will be developed for the supply of components needed for the manufacturing process during the
initial stages of this phase. The main aim is to produce a product, test it and, if required, to create
related supporting and auxiliary systems and equipment.
5. Stage of testing
Aviation equipment and components are subjected to a thorough assay programme in order to
ensure that aviation technology performs as expected under certain conditions. Testing includes not
only the evaluation of aviation technology, but also the evaluation and integration of devices,
components, assemblies, and, eventually, the entire aircraft. Modeling, various sorts of analysis,
comparison with current schemes or similar, and finally functional testing can all be employed
during the verification process.
6. Stage of operation
After installing a transitional system in use, the operating stage begins. The goal of this step is to
operate the product in the defined environment, ensuring that all needed parameters are met and
that maximum uptime is achieved. In the case of aviation, technology is given importance on safety.
This stage finishes when the product's ability to meet the needed parameters and service is reduced.
In this situation, roughly half of the operational stage is when you should consider any
modernisation or technical life extension.
7. Stage of support
The purpose of this stage is to provide logistics, maintenance and support services that enable
continuous system operation and maintenance of services. This is to make sure a high level of
reliability of the system perform optimally during the technical life. Maintaining a high degree of
aviation technology reliability is one of the most important jobs in the air transportation system.
Support performance monitoring of the system and its services, as well as the discovery,
classification, and reporting of abnormalities, deviations, and failures of the system and support
services, are all carried out during this stage.
8. Stage of disposal or technical life extension
In the course of its life cycle, aviation equipment reaches a point where it is morally or physically
obsolete. At this time, the life cycle must make a decision based on an analysis of operating costs,
reliability, and value loss. Upgrades, diligent maintenance, the sale of excess aviation technology
to other users, or scrapping are all options in decision-making. Moral obsolescence, which raises
operational costs, and disproportionate environmental impact (noise, pollutants) relative to more
current aircraft engineering can all contribute to the end of technical life.
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Top 5 Aviation Industry in India in terms of Market Share:
1. INDIGO
IndiGo is India's largest passenger airline, with a 44 percent market share. As a low-cost
airline, the firm primarily serves India's domestic air travel market, focusing on our three
pillars of low fares, on-time arrivals, and a courteous and hassle-free experience. It serves
86 locations, including 24 foreign destinations, and offers passengers a basic, unbundled
product, ensuring that it lives up to its unique brand promise. IndiGo began operations with
a single aircraft in August 2006 and has now grown to a fleet of 262 aircraft.
Market Share: 44 %
2. SPICE JET
SpiceJet is India's second-biggest airline by passenger traffic and the largest by regional
connectivity. SpiceJet Limited is a low-cost Indian airline based in Gurgaon, India. With a
market share of 13.7 percent as of March 2019, it is the country's second-largest airline by
number of domestic passengers transported.
Market Share: 13.7 %
3. AIR INDIA
Air India, India's national carrier, is one of the country's largest flight service providers. Air
India flies to 102 domestic and international locations with a fleet of Airbus and Boeing
aircraft. The airline's hub is at New Delhi's Indira Gandhi International Airport, with several
focal cities throughout India.
Market Share: 13.4%.
4. GO AIR
GoAir is India's fourth largest airline, with a 9% passenger market share. GoAir is an Indian
low-cost carrier headquartered in Mumbai. The Wadia Group, an Indian commercial giant,
owns it. It began operations in November 2005 and currently has an Airbus A320 fleet with
all-economy seating. From its hubs in Mumbai, Delhi, Bangalore, Kolkata, Hyderabad,
Chandigarh, and Kannur, the airline operated around 330 daily flights to 36 destinations in
March 2020, comprising 27 domestic and nine overseas destinations.
Market Share: 9%
5. AIR ASIA
On June 12th, 2014, AirAsia (India) began operations. As of January 2020, AirAsia flies
to 21 locations with 29 A320 planes. TATA Sons Private Limited (51%) and AirAsia
Investment Limited (51 percent) are partners in AirAsia India (49 %). AirAsia offers
scheduled domestic and international flights to over 165 locations in 25 countries. For 11
years in a succession, Skytrax has awarded AirAsia the world's top low-cost carrier in
international travel and airline categories, including the most recent accolade for 2019.
Market Share: 5%
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