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Overview
Indian Aviation Industry has been one of the fastest growing aviation industries in the world. Since 2011, domestic traffic has grown at CAGR of 13%, whereas international traffic has grown at a CAGR of 8%. The high economic growth and rising middle class population in India during the last decade presented strong growth opportunities for the Indian aviation sector. In order to augment economic growth and promote sector development, the government initiated several policies and enabling measures to support the creation of high-quality infrastructure and efficient delivery of services. As a result of this, India witnessed double digit growth in air travel over the last decade.
Covid-19 has caused disruptions in economic activities and transport industry, especially aviation, all over the world. The slowdown in the economy has led to significant fall in air travel demand, adding dismay to the sector’s recovery in short to medium term. The Indian aviation industry's capacity and passenger growth have been significantly impacted since the Covid-19 pandemic. The Ministry of Civil Aviation (MoCA) stopped international travel operations with effect from March 23, 2020, and domestic travel operations with effect from March 25, 2020. Post the initial recommencement of operations of the scheduled domestic flights with effect from May 25, 2020, to a limited extent, i.e. maximum one-third of their respective approved capacity of Summer Schedule 2020, the MoCA permitted increasing the capacity to 45% with effect from June 27, 2020, and further to 60% with effect from September 2, 2020. However, the recovery in domestic passenger traffic has been rather subdued, even though there is substantial sequential improvement. With effect from November 11, 2020, the MoCA has increased the permitted capacity to 70% and further to 80% with effect from December 3, 2020. Currently, the Indian airlines are operating domestic flights at around 80% of their pre-Covid levels.
The aviation industry has repeatedly shown the resilience to come back stronger, bolder and smarter from previous crises. The operations at airports have been digitised and technology has provided a complete revamp of the operating model. For example, touchless check-ins, contactless and paper-less immigration, digitisation of cargo processes resulting in paperless transactions. With all the recovery prospects, the domestic passenger demand is expected to reach its pre-Covid levels in a period of 2-3 years in FY 23, whereas international demand recovery is expected to be relatively slower, taking 3-4 years and likely to reach its pre-Covid levels by FY24.
PwC’s Aviation Advisory Services is a dedicated team offering advisory services in the aviation sector and is one of the most renowned advisors in the civil aviation consulting space. The team has been successful in developing its mark in aviation advisory space in a short span of time and serving majority of important stakeholders, both public sector clients including ministry, regulators, state-governments, etc. and private sector clients covering stakeholders such as airport operators, airlines, investors, etc.
Client issues
- Developing the strategy or policy to promote sector (or specific sector stakeholders) growth
- Evaluating the potential demand for an airport with sensitivity analysis to study the impact on demand under several scenarios.
- Assessing the impact of several events on the demand and financials of the client
- Evaluating the feasibility for an airport project in terms of technical, economic and financial viability
- Reviewing the existing strategy or developing new strategy and processes for different activities at an airport and optimising the processes
- Developing the business plan/ strategy to enhance business
- Assisting in preparing the regulatory framework for preparation of tariffs
- Tariff determination, ensuring fair returns to the investors and low cost to service users
- Project structuring to ensure effective risk sharing, maximising private sector participation and discover optimum bids
- Developing robust contractual documents for PPP projects with due consideration to business prospects and project risks
- Understanding the project risks and business potential for bidding successful projects and support in submission of bids by evaluating the bid price through financial analysis
- Support in running/ managing the bid process
How PwC can help
- Sector study: Aviation sector study at country/ regional levels.
- Strategy development: Development of strategies to enhance business or promote aviation sector growth
- Business planning: Preparation of business plan and strategy for airports, airlines, fuel farms, in flight caterers, ground handlers and cargo operators.
- Process mapping and designing: Preparing the process maps for different activities at an airport and suggestions to optimize the process/ enhance operational efficiency.
- Demand assessment and projections: Demand assessment of the airports in domains of passenger traffic, cargo, ATMs, Fuel, Catering services for airlines and other airport commercial operations.
- Feasibility assessment: Preparation of Techno Economic Feasibility Reports for the aviation infrastructure projects.
- entities and government clients for airports.
- Regulatory analysis and tariff determination: Advisory on the regulatory and policy structures governing the airports including assisting agencies in filing of tariffs with the regulator and supporting regulator in tariff determination & finalization of tariff for the airport.
- Financial and economic assessment: Financial viability, economic assessment and financing assessment/ project structuring for aviation infrastructure projects.
- PPP Transaction advisory: Providing Bid Advisory Services (Buy-side) and Transaction Advisory services (Sell-side) to carry out bid process management for private
- Project Management: Assistance in project management/ implementation to mitigate project delays and cost overruns.
- Undertaking the market and demand assessment for various infrastructure projects and delivering robust demand projections.
- Strategy development for promoting sector growth
- Business planning for the airlines covering network assessment, fleet restructuring, financial analysis, among others.
- Business planning/ strategy development for revenue enhancement
- Feasibility study covering financial viability assessment for the greenfield and brownfield projects
- Economic assessment or value for money analysis for the greenfield and brownfield projects
- Assisting in the tariff filing or tariff determination for aeronautical services at airports including undertaking relevant studies with regards to tariff filing/ determination
- Buy-side bid advisory for investors and assistance in submitting the bids for greenfield/ brownfield projects
- Sell-side transaction advisory/ bid process management including project structuring, preparation of bidding documents and assistance throughout the transaction process for airports, airport businesses and other sector stakeholders
- Providing project management/ implementation
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