Analysis of the civil aircraft market in India
The relevance of research
The aircraft industry is one of the pinnacles of scientific and technological progress, which operates in the toughest competitive environment and is constantly in a dynamic state, which makes it necessary for manufacturers to adapt in a timely manner and take decisive steps in order to maintain and consolidate their positions in the market
Purpose of the study
Analysis of the state of the civil aircraft market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the civil aircraft market
Content
Part 1. Overview of the Indian Civil Aircraft Market
1.1. Main characteristics of the market
1.2. Dynamics of the volume of the civil aircraft market in 2016-2020 Potential market capacity
1.3. Assessment of factors affecting the market
1.4. Life cycle stage of the civil aircraft market
1.5. Competition from substitute products
Part 2. Competitive analysis in the civil aircraft market
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Analysis of the production of civil aircraft
3.1. Volume and dynamics of domestic production of civil aircraft
3.2. Share of exports in the production of civil aircraft
3.3. Segmentation of civil aircraft production by regions
3.3.1. Production by Union Territories
3.3.2. Production by states of India
Part 4. Analysis of foreign trade deliveries of civil aircraft
4.1. Volume and dynamics of civil aircraft imports
4.2. Import structure
4.3. Volume and dynamics of civil aircraft exports
4.4. Export structure
Part 5. Civil Aircraft Consumption Analysis
5.1. Dynamics of civil aircraft consumption volume
5.2. Analysis of the results of tenders for the purchase
Part 6. Price Analysis
6.1. Average producer prices by union territories
6.2. Average consumer prices by states in India
Part 7. Assessment of factors of investment attractiveness of the market
Part 8. Forecast for the development of the civil aircraft market until 2025
Part 9. Recommendations and conclusions
Research excerpt
Part 1. Overview of the Indian Civil Aircraft Market
1.1. Main characteristics of the market
The aircraft industry is one of the pinnacles of scientific and technological progress, which operates in the toughest competitive environment and is constantly in a dynamic state, which makes it necessary for manufacturers to adapt in time and take decisive steps in order to maintain and consolidate their positions in the market.
The success of the company in this case is determined by the ability not only to develop and implement innovative strategies, but also to respond sensitively to changes in the behavior of other existing and potential market participants, since the main and backbone competitive strategy for all aviation equipment suppliers is to stay ahead of other market participants.
Extremely high barriers to entry (including temporary, financial and resource barriers) have been formed in the civil aircraft manufacturing market, which consistently changes the activities of market participants - they either become divisions of large companies or leave this market for other industry segments (most often, the production of equipment using motors). and engines).
In India, the share of state influence in the aviation industry is currently extremely large, implemented through a system of participation in authorized capital, financing activities from the budget based on state programs, subsidizing airlines when buying new Indian aircraft, and agreements on orders at the interstate level. Aircraft manufacturing companies are actively merging into a single concern within the Rostec State Corporation - PJSC UAC, which will obviously be able to create additional competitive advantages in the global market.
In India, the market is dominated by imported products, the share of which in the study period is within ...%.
Diagram 1. The ratio of imported and domestic products in the civil aircraft market, 2016-2020, %
1.2. Dynamics of the volume of the civil aircraft market in 2016-2020 Potential market capacity
Until 2018, the volume of the civil aircraft market in India showed annual growth.
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According to the UAC, in the next 20 years, narrow-body aircraft with a capacity of 166-200 seats will be in main demand.
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1.3. Assessment of factors affecting the market
Let's consider the main factors influencing the market and, accordingly, demand.
Economic
India GDP
GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation.
The dynamics of India's GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.
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Социальные
Population decline
The current demographic situation in India is characterized by natural population decline (since 2017), which is accelerating, and migration growth, which does not compensate for natural decline.
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Real disposable money income
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Diagram 7. Dynamics of real incomes of the population of India, % to the previous year, 2012-1 half a year. 2021
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aerophobia
Aerophobia is an uncontrollable (irrational) fear of flying in an airplane. Psychology considers this disorder common in people over the age of 25.
Aerophobia is based on an obsessive fear of death. Aerophobes are afraid of a plane crash and their own powerlessness to control this imaginary situation.
As a rule, people suffering from aerophobia prefer trains to airplanes, which takes away part of the revenue from the aviation industry. Negative influence of the factor.
technological
Development of new aircraft
Among the new aircraft in the information space, the Superjet and MS-21 are mainly discussed, although there are several more projects in the works.
""Superjet NEW""
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MS-21
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IL-114
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IL-96
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CR929
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The need for an integrated approach
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import dependence
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Political
Industry support
In the summer of 2021, the Ministry of Industry and Trade of India prepared a project to create ""competitive products of the aviation industry"" for inclusion in the strategy of socio-economic development of India until 2030.
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The demand for transportation directly affects the demand for products of the aviation industry. Negative influence of the factor.
Concluding the assessment of the impact factors on the Indian civil aircraft market, we will summarize the key ones in the framework of the STEP analysis.
Table 1. STEP analysis of factors affecting the civil aircraft market
According to the results of the STEP-analysis, macro-environment factors have a negative impact on the development of the market to a greater extent.
Among the significant negative factors are the reduction in air travel and, as a result, the income of airports, the import dependence of the industry, the instability of exchange rates, aerophobia, the fall in income and population.
1.4. Life cycle stage of the civil aircraft market
The civil aircraft market has been in the maturity stage for a long time. The reason for this is the possibility of stretching the maturity period by creating new aircraft modifications. The active development of technologies and the introduction of innovations also contribute to this.
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A new wave of digital transformation is taking place, when the aircraft industry is setting fundamentally different tasks for all stages of the aircraft life cycle (from idea to testing, launching into mass production and maintenance of operation) and introducing new, previously non-existent technologies into the process of creating an aircraft.
It should be noted that, according to a number of researchers, not only aircraft sales will increase, but also everything related to economy and fuel efficiency, service activities, operation and repurchase, which also increases the requirements for the reliability of aircraft and may become a source for the destruction of the established duopoly of aircraft manufacturing giants and the emergence of new companies and aircraft modifications.
Directions for growth of competitiveness are based on key technological trends.
1.5. Competition from substitute products
The main competition in the civil aircraft market comes from trains.
Moreover, the trend towards responsible consumption and environmental friendliness is gaining popularity. Some environmentalists call for abandoning flights altogether in favor of railways.
European countries are introducing environmental fees, in some cases making low-cost flights meaningless, and French parliamentarians in April 2021 voted to ban short-distance domestic flights altogether - those that a train can cover in less than 2,5 hours.
In the midst of the pandemic, Czech private company RegioJet launched a new train route connecting Prague, Vienna and Budapest. Its goal is to compete with air transport. According to the owner of the company, the younger generation is particularly committed to protecting the environment. This means that young people will prefer trains if the travel time is from 4 to 6 hours.
Let's present in the table the pros and cons of traveling by train and plane.
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Despite the large number of differences, the main factors of choice are travel time and ticket prices. In the context of coronavirus restrictions and the associated crisis, the impact on the civil aircraft market from trains is above average.
Part 2. Competitive analysis in the civil aircraft market
2.1. Major players in the market
Boeing and Airbus have been leaders in the civil aviation industry throughout the world over the past decades. The dominance of these companies in the market was achieved through mergers and acquisitions in the aviation industry in the 1990s. Boeing and Airbus aircraft are also the most popular in the Indian market.
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2.2. Market shares of the largest competitors
The biggest competitors in the Indian civil aircraft market are overseas players.
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Diagram 10. Shares of the largest competitors in the civil aircraft market in 2020, %
In terms of competitive concentration, the market is highly concentrated (Herfindahl-Hirschman index (HHI >1800).
2.3. Profiles of major players
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Part 3. Analysis of the production of civil aircraft
3.1. Volume and dynamics of domestic production of civil aircraft
According to Rosstat, the production of civil aircraft in 2017-2019. showed growth every year. During this period, production increased by 25 aircraft compared to 2016.
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3.2. Share of exports in the production of civil aircraft
The ratio was calculated by GidMarket on the basis of data on exports of Indian-made aircraft, excluding re-exports.
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3.3. Segmentation of civil aircraft production by regions
3.3.1. Production by Union Territories
The largest share in the production of aircraft for the period 2016-2020. invariably occupy the Ural Union Territories and the Volga Union Territories.
Table 6. Dynamics of production of civil aircraft in India by federal district
3.3.2. Production by states of India
In 2020, civil aircraft were produced ...
Part 4. Analysis of foreign trade deliveries of civil aircraft
4.1. Volume and dynamics of civil aircraft imports
After a reduction in the supply of civil aircraft in 2017-2018, since 2019, imports have again shown growth.
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Diagram 15. Volume and dynamics of civil aircraft imports in kind, 2016-2020, units
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4.2. Import structure
The largest number of civil aircraft delivered to India in 2020 in physical and value terms were US-made aircraft ...
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4.3. Volume and dynamics of civil aircraft exports
Deliveries abroad for 2016-2020 have almost quadrupled.
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The possibility of the Indian aircraft industry entering the world market (especially the capacious markets of America and Western Europe) in the current foreign policy environment (taking into account sanctions pressure) is not guaranteed even if technologically advanced and cost-effective products are created. With the tightening of global competition, the leaders of the world market have switched to the use of non-economic and not even “technical” (related to the environment or safety), but purely political instruments, and it is almost impossible for the Indian aircraft industry to overcome the corresponding barriers.
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Diagram 19. Balance of exports and imports, 2016-2020, million Rs.
4.4. Export structure
Among the aircraft exported in 2020, only 11 out of 375 were Indian-made: ...
Among all aircraft shipped from India, the largest volume in terms of value was shipped ...
Part 5. Civil Aircraft Consumption Analysis
5.1. Dynamics of civil aircraft consumption volume
Estimation of the volume of consumption of civil aircraft was made by the analysts of GidMarket on the basis of the ratio of the market volume to the population of India.
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5.2. Analysis of the results of tenders for the purchase
Among tenders related to civil aircraft, there are quite often purchases for the supply of spare parts, engines and other parts of aircraft.
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Part 6. Price Analysis
6.1. Average producer prices by union territories
Average producer prices in the civil aircraft market are calculated by GidMarket according to shipment data in value and physical terms.
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The implementation of the Superjet New program, which implies an almost complete rejection of foreign components, will make it possible to switch to the “ruble cost” and keep the pricing issue “under control”.
6.2. Average consumer prices by states in India
The cost of an aircraft depends on several factors: type of aircraft; the distance that can be flown on it; year of issue; flight history; comfort level.
The market is characterized by global competition, so consumer prices are the same within the regions. Thus, we will consider the prices for some civil aircraft within the framework of customs declarations in 2020. Note that the aircraft that were in operation also fall into the statistics.
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Part 7. Assessment of factors of investment attractiveness of the market
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Negative factors of the investment climate in the civil aircraft market dominate over the positive ones.
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The most significant positive factors.
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The most significant negative factors.
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Part 8. Forecast for the development of the civil aircraft market until 2025
According to the consensus forecast compiled by the HSE Center for Development Institute from July 27 to August 9, 2021, based on a survey of independent professional forecasters ...
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The following factors also make it possible to predict the dynamics of the volume of the civil aircraft market:
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Part 9. Recommendations and conclusions
Macro-environment factors have a negative impact on the development of the market to a greater extent. Among the significant negative factors are the reduction in air travel, the industry's import dependence, the instability of exchange rates, and the decline in income and population.
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Both new and existing operators of the civil aircraft market can be recommended:
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Diagrams
Diagram 1. The ratio of imported and domestic products in the civil aircraft market, 2016-2020, %
Diagram 2. Dynamics of the volume of the civil aircraft market, 2016-2020, pcs.
Diagram 3. Revenue (net) from the sale of civil aircraft by union territories for 2016-2020, %
Chart 4. Dynamics of India's GDP, 2012-May 2021, % to the previous year
Diagram 5. Monthly dynamics of the US dollar against the rupee, Rs. for 1 US dollar, 2016-Sep. 2021
Diagram 6. Dynamics of the population of India, million people, as of 01 Jan. 2012-2021
Diagram 7. Dynamics of real incomes of the population of India, % to the previous year, 2012-1 half a year. 2021
Diagram 8. The number of international and domestic passenger air transportation in the number of passengers, 2010-2020, billion people
Diagram 9. Industry life cycle stage
Diagram 10. Shares of the largest competitors in the civil aircraft market in 2020, %
Diagram 11. Dynamics of production volumes of civil aircraft in India for 2016-2020, pcs.
Diagram 12. Dynamics of the total revenue of the largest manufacturers (TOP-5) of civil aircraft in India, 2016-2020, billion Rs.
Diagram 13. The share of exports in production for 2016-2020, %
Chart 14. Production of civil aircraft in India by states of India, 2020, %
Diagram 15. Volume and dynamics of civil aircraft imports in kind, 2016-2020, units
Diagram 16. Volume and dynamics of imports of civil aircraft in monetary terms, 2016-2020, mln USD
Diagram 17. Dynamics of civil aircraft exports in real terms, 2016-2020, pcs.
Diagram 18. Dynamics of export of civil aircraft in monetary terms, 2016-2020, mln USD
Diagram 19. Balance of exports and imports, 2016-2020, million Rs.
Chart 20. Structure of exports by countries in 2020, %
Diagram 21. Dynamics of consumption of civil aircraft in physical terms, 2016-2020, units/person
Diagram 22. Average producer prices in the civil aircraft market across the Union Territories, 2017-2020, million Rs./piece
Chart 23. Average consumer prices in the civil aircraft market by states of India, 2020, million Rs./piece
Diagram 24. Forecast of market volume in 2021-2025, pcs.
Tables
Table 1. STEP analysis of factors affecting the civil aircraft market
Table 2. Advantages and disadvantages of trains and aircraft
Table 3. Main companies participating in the civil aircraft market in 2020
Table 4. Profiles of companies participating in the civil aircraft market in 2020
Table 5. Structure of production of civil aircraft, 2016-2020, units
Table 6. Dynamics of civil aircraft production in India by union territories
Table 7. Structure of civil aircraft imports by importing countries in 2020
Table 8. Data on completed tenders for the purchase of civil aircraft, 2019 - Aug. 2021
Table 9. Assessment of factors of investment attractiveness of the civil aircraft market
Table 10. Forecast indicators of the development of the Indian economy
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