Now, aviation sector is heading for reformation and looks with the entry of Air Asia this sector will become very competitive.
Demand for inducting MBAs is on rise for this industry too. Following general awareness article will help you to understand this industry and may be useful in WAT/Essay/GD and PI also.
Read: Indian aviation scenario with Air Asia
The aviation industry in India has expanded in the recent past, being the fastest in the world. It is growing at a fast pace making it on the ninth position in the world. The aviation market is projected to be the third largest in the world by 2020.
The Foreign Direct investment attracted in this industry in thirteen years is about US$ 456.84 million. This is because of the policies of the Government of India which has liberalized the civil aviation market presenting foreign firm with exports and investment opportunities. So the background of India, showing growth and liberalized policies in the aviation industry is attracting many foreign companies resulting into various joint ventures and collaborations.
Realizing the potential of the growth in the Indian market, backed up by favorable environment, the Malaysian low-cost carrier AirAsia entered into Indian joint venture with the Tata Group on 28th March, 2013.
Tony Fernandes, the CEO of AirAsiahas said that initially he would invest $30 million in the venture with Chennai as its head office. His dream is to make everyone fly in the Indian market where 99.5% of the population has never flown with the cheapest possible tickets. The venture has 30% stake of Tata Sons Ltd., 21% stake of TelestraTradeplace and the rest 49% is with AirAsia.
AirAsia has full chances of success in India because it has strategically planned its steps in the aviation industry. It will offer the low cost tickets to the passengers through a high level of utilization, no free food and beverages would be provided, changes in the bookings may cost heavy price.
The other reasons of its success being AirAsia using only one type of aircraft- the Airbus A320 saving the staff training and aircraft maintenance, it will focus on point to pint flights, the tickets being provided in online and offline mode. The venture with the famous and worthy Indian Conglomerate, Tata Group is another key and positive indicator of success of AirAsia.
AirAsia is believed to cover the huge untapped demand in the potential market with its right pricing and the right product. The advantage of AirAsia over the other market competitors is the distribution and ownership of aircraft which makes the operating costs very less. The fares on AirAsia India will open 12 months in advance which may cajole more revenues. AirAsia has good record of profits internationally and it may also be successful in the Indian market with many potential areas.
However, there are some threats for AirAsia. Being a late entrant and not easy to maintain low prices because of the various costs involved, it may not succeed. Moreover, the market leader, IndiGo which is another low-cost airline will also be a great competition. In just seven years of its launch, it has become the market leader today.
The above factors overall says that the aviation industry may bring in more competition, better resilience, higher service standards, and low fares. The efficiency of the new players may change the landscape creating a new benchmark of the Indian aviation. The long-term outlook for the sector is extremely positive.