Porter's 5 Forces Analysis For Aviation Industry

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PORTER’S 5 FORCES ANALYSIS – INDIAN AVIATION INDUSTRY

Threat of New Entrants

1. Setup Cost
As on today, venture capital of $15 Million is enough to launch an airline service. Airlines can also utilize an ACMI lease agreement for extra aircrafts. If you have more aircrafts then you can also offer few aircrafts on lease to other airlines, especially in the peak season to cope-up with traffic and loads.

2. Fuel Price
ATF has been increased many folds from the beginning. In India, companies do not import ATF rather they refine it in their own refineries from imported crude oils. Rising crude oil prices and Government’s fuel regularities policy, it’s becoming expansive day-by-day.

3. Resources

The aviation industry in India suffers a shortfall
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Aviation Education and Skill Building, estimated direct additional employment requirement of the Civil Aviation Sector by 2025 is about 3.3 lakh. All training in non-licensed category will conform to National Skill Qualification Framework standards. MoCA will provide full support to the Aviation Sector Skill Council and other similar organisations/agencies for imparting skills for the growing aviation industry. There are nearly 8000 pilots holding CPL but who have not found any regular employment. MoCA will develop a scheme with budgetary support for Type- rating of Pilots. The detailed scheme will be worked out separately.

Bargaining Power of Suppliers

1. Suppliers market is almost in duopoly of two major players i.e. Airbus & Boeing. There are other players also like Dauphin, Bell, Dronier etc. but they are not able to meet the requirement of these aviation players for their need. Hence, supplier is few and in better position to bargain with their product as they always get customer for their product.

2. IndiGo fleet mostly comprises with Airbus-A320 and switching cost is high due to limited option available in supplier market.

3. Due to shortage of commercial pilots in India, pilot’s availability is concentrated leading to increase their

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