Indian Aviation Industry Convergence

 

·   Indian aviation industry has entered its consolidation stage and has moved its focus from metro routes to tier II and tier III cities to tap their growing potential. The various concessions and cost benefits has made regional market an attractive segment for the Indian private carriers that are struggling with cut throat competition and price wars in serving the metro routes. SpiceJet took the lead in entering the regional market with Hyderabad, being its first regional hub.

·   In the light of generating more revenues and to support extensive airport upgrade projects, Indian private airports have shifted their investment focus from aeronautical activities (aircraft fueling, ground handling, and aircraft maintenance and repair facilities) to non-aeronautical activities (duty free shops, retailing). Non-aeronautical activities currently constitute 30 percent in the total airport revenues as against the international benchmark of over 70 percent. This investment may result in making Indian airports reach world class standards, however it may end up with exceeding demand over capacity (with airport utilizing more terminal space to add duty-free shops).

·   Indian aviation industry operates nearly 200 Airbus aircrafts and has emerged as the seventh biggest operator of Airbus plane worldwide. The increasing orders and growing fleet size has attracted Airbus to set up a Maintenance Repair and Overhaul (MRO) facility in India in collaboration with Air India. Boeing has also joined hands with Air India to set up an MRO unit in Nagpur that will be operational by 2013. The emergence of MRO units in India will result in lowering maintenance cost for Indian carriers that currently constitutes 15-20 percent of the airline operating cost.