Investing in the Region s Airline

Transcription

1 Investing in the Region s Airline A Jet Airways Perspective Wolfgang Prock-Schauer Jet Airways BOM, 20 th Jun 05 Table of Contents Geopolitical and Macroeconomics Trends in India Aviation Vision vs Ground realities Competitive landscape in Indian Aviation Jet Airways Turnaround Jet Airways Perspective Conclusion

2 Geopolitical and Macroeconomics Geopolitical and Macroeconomics Indian Economy India largest Democracy in the world Population : 1.1 billion Growing Middle-Class (income over Rs. 90,000 p.a.) Source NCAER 2005 : 300mill 2010 estimates : 400 mill A group, equivalent to the enlarged European Union & bigger then USA Human Resources : India s biggest advantage Over ~30 mill students complete school every year Government emphasis on Education Availability of Technical and Management Schools English Language Recognized at a major leader in International policy Ideal Geographic location Stabilizing factor in the region Permanent Member of the Security Council?

3 Geopolitical and Macroeconomics Ideal Geographic Position Halfway between Europe and Australasia Halfway between Africa and Asia Ideal Crossroad between major markets Supported by huge home market Macroeconomic Trends Geopolitical and Macroeconomics GDP Growth % : 2005(e) 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% USA EU Japan China India Source : Goldman Sachs GDP Growth % : 2010(f) 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% USA EU Japan China India

4 Trends and facts in Indian Aviation Markets Concentrated in Key Metros Trends & facts in Indian Aviation Domestic Market : 18 mill passengers ( ) Top 10 markets : 45% of total traffic Top 20 markets : 65% Top 30 markets : 75% 70% of Top 30 markets are carried from BOM, DEL, BLR, MAA, CCU International Market : 18 mill passengers ( Top 20 markets : 92% of the total traffic 90% of the Top 20 markets are either carried from BOM, DEL, BLR, MAA, CCU

5 The biggest airport Constitutes 60% of market Trends & facts in Indian Aviation CCU MAA DEL BOM - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 Domestic International Vision vs Ground Realities

6 Parking Bay Domestic International 408 Vision vs Ground Realities A/c op. by Indian Carriers Parking Slots Avlbl Addl Fleet Announced (Firm, Option & Lease)? Addl Parking announced - Short to Medium Term ATC Constraints (eg. BOM) Vision vs. Ground Realities <- Peak Time -> <- Peak Time ->

7 Pilots Current number of pilots in India : over 1,500 Vision vs. Ground Realities Training school output Limited CPL holders every year Slowdown due to loss of instructors Doubling of Fleet by 2010 : plus 200 aircraft 2,400 additional pilots will be required Growth can be achieved in a stepwise approach 1,500 hrs for a First Officer to be eligible for an ALTP License 4,000 hrs and 5 years experience as a First Officer to be a Commander Additional internal process for final selection to be Commander Growth potential can only be achieved With substantial use of Expatriate pilots Revamp of training facilities Competitive Landscape in Indian Aviation

8 Competitive Landscape in Indian Aviation Players in Indian Aviation Full Service Carriers Air India Indian Airlines Jet Airways Air Sahara Market Share : ~90% -Established Infrastructure -Developed Network -Prime Parking Space/Slots -Economies of Scale Start-up Air Deccan Kingfisher SpiceJet Expected Entrants IndiGo Paramount Go Market Share : ~10% - Limited availability of new infrastructure - High Level of Start-up Cost - Tight availability of qualified personnel - Limited scope to reduce cost Jet Airways Turnaround : 2003 to 2005 Turnaround Measures Stabilising Capacity Increase asset utilisation from 9. 5 to 10.2 hrs. Increase load factors from 62% to 71% Introduce Yield Management System & innovative fare schemes Improvement in personnel productivity by 13% Restructuring aircraft leases Automation initiatives (YMS,FFP, Airops ) Stabilizing Industrial Relations Unit Cost per ASK excluding fuel effect (-10%)

9 Jet Airways Turnaround : 2003 to ,000 4,500 Trends in PBT and PAT (INR Mio) 5,821 3,920 3,000 1,631 1,500 1, (2,456) (2,445) (1,500) (3,000) PBT (USD Mill) (56) PAT (USD Mill) (56) Jet Airways Perspective - International Starting International Operations 2004 : Colombo & Kathmandu 2005 : Singapore, Kuala Lumpur, London Heathrow New York (via Brussels) - Planned : Introduction of 3 A s onward : Introduction of A330s and B777 - Firm Commitments for 10 A330s and 10 B777s plus options for 10 each - Plus additional A330s from ILFC on Lease

10 Jet Airways Perspective - Domestic Currently Market Leader : 43 % Strategic Goal to maintain clear market leadership Focus on current markets to increase frequencies Selectively open new destinations Domestic network combined with International Network for seamless travel experience 16 B737s firmed up until 2007 for expansion Jet Airways-Blueprint for Expansion Aircraft deliveries firmed up Key Markets identified Investments in Infrastructure Integrated Training Facilities Additional Simulators Maintenance Hangar Organisation being prepared for major expansion

11 Conclusion 1 India is an exciting aviation market Growth potential can only be achieved if: Airports upgraded significantly and rapidly Terminals and Parking Bays ATC constraints are overcome Availability of Qualified personnel eg Pilots and Engineers Input cost to be brought down to benchmark countries eg. Fuel and Airport Charges (60 70% higher currently) Training and maintenance facilities to be built-up Conclusion 2 The key success factors will be : Established structures and expertise Scalable and efficient systems Cost Effectiveness Properly planned expansion strategies Combining Domestic and International Strengths Solid Financial Base People That s what differentiates an Airline