Aviation Industry Case Study

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Financial position of Aviation industry and its lifecycle Introduction With 100 years of its existence, Indian aviation industry has witnessed severe highs and lows. On one side of teeter-totter, there has been huge increase in the number of companies competing in the industry and at the same time significant growth in number of passengers; on the other side of it majority of industry players struggling with high operating cost. From 2012-13 to 2014-15, just within span of 2 years the two big companies got cash strapped i.e. Kingfisher Airlines and Spice Jet. At the same time the announcement of IPO by Indigo Airlines of worth Rs. 2500 crore throw a light that a lot of growth opportunities is store in this sector. Currently, this industry contributes…show more content…
The overall Pax-km increased by 17% compare to last year vis-à-vis 10 percent increase in ASKM capacity. The limited fleet addition with increase in passenger traffic lead to increase in passenger load factor. The exit of Kingfisher Airlines due to financial difficulties helps other carriers to increase the market share. In 2013-14, companies like Spice Jet and Air India started selling tickets at very cheaper prices to increase the market share thus giving marginal support. At the same time many Indian players were trying to adapt global Low Cost carriers (LCCs) model. The percentage share contribution of LCC in compare to Full Service Carrier (FSC) for domestic route were…show more content…
ATF suppliers need to bear the countervailing duty (CVD) defined under custom tariff act then excise duty and finally sales which vary from state to state for e.g. in Mizoram it is 0% whereas in Rajasthan it is 30%. Also the biggest difficulty airline companies are facing there is non-allowance of credit to ATF which leads to cascade effect of taxes. Till 2012, there was another major problem of monopoly of ATF suppliers. There were three PSU oil companies i.e. Indian Oil Corporation Limited (IOCL), HPCL and BPCL which has ATF fuel station at airports. Due to this monopolies, it leads to import price parity i.e. if prices of crude oil in international market falls the domestic prices also be fall but the suppliers companies were not passed to airline operators. But when price rises, it leads to have higher impact on airline

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