Airlines
industry breakdown
value chain
Inbound Logistics
Route Selection
Yield Management
Fuel
Flight/Crew Scheduling
Aircraft Acquisition
Aircraft Lease
Operations
Ticket Counter/ Kiosk
Gate & Aircraft Operations
Onboard Services
Baggage Handling
Ticket Offices
Outbound Logistics
Baggage System
Flight Connections
Rental Car & Hotel
Reservation System
Marketing & Sales
Promotion/ Advertising
Frequent Flyer
Travel Agent Programs
Group Sales
Electronic Tickets
Service
Lost Baggage Service
Complaint Follow-up
Support Centre
Key Drivers
Revenue
Cost
Growth
Passenger
tickets,
inflight sales
Aviation fuel
(40%)
Post-COVID
trade and
tourism
Freight
services, other
VAS
Equipment
rentals, hangar
cost
(15%)
Rising
disposable
incomes
Tours and
packages
Maintenance
and overhaul
(10%)
Government
policies
Industry Dynamics
Key Customer Segment
Growth
Passenger - Domestic
11-12%
Passenger - International
9-10%
Freight
7-8%
PORTER'S 5 FORCE ANALYSIS
Supplier Power: (High) Aircraft and engine
producers are concentrated oligopolies.
Barriers to Entry: (High) High CAPEX, costintensive and need for economies of scale.
Threat of Substitutes: (Medium) Fast Trains,
Video conferencing reducing the need for
business travel etc.
Buyer Power: (High) Low switching costs for
most
customers
since
relatively
standardized service
Rivalry: (High) Limited differentiation and
opportunities for economies of scale
Industry Challenges
High fuel prices account for 40% of costs.
Government policies and interference to
keep a cap on the ticket prices
Growing climate change awareness leads to
lesser demand.
Post-COVID travel hesitation
sections of the society
in
Financing - High capex, opex industry
certain
Market Trends
Robust Demand: Rising working group and
widening middle-class demography is expected
to boost demand
Opportunities
in
MRO:
Expenditure
in
Maintenance, Repair & Overhaul (MRO) accounts
for 12-15% of the total revenues - it is the
second-highest expense after fuel cost. By 2031,
the MRO industry is likely to grow over $4 billion
from $1.7B in 2021
Policy Support: Foreign investment up to 49% is
allowed under the automatic route. Under Union
Budget 2021-22, the government lowered the
custom duty from 2.5% to 0% on components or
parts, including engines, for manufacturing of
aircrafts by the MoD.
Market Trends
Increasing Investments: Investment to the
tune of INR 420-450 billion is expected in
India's airport infrastructure in the next 3
years
UDAN (Ude Desh Ka Aam Nagrik): Under this
regional connectivity scheme, airfare for a
one-hour journey of 500 km has been
capped at INR 2500
Public-Private Partnerships: $3 billion
investment in greenfield airports in Navi
Mumbai and Goa
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