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National Conferance on Civil Aviation: The Decade Ahead

National Conferance on Civil Aviation: The Decade Ahead. Cargo Handling & Ground Handling What is happening, what to expect ahead. Atilla KORKMAZOGLU Delhi, October 2011. Air Transportion Development.

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National Conferance on Civil Aviation: The Decade Ahead

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  1. National Conferance onCivil Aviation: The Decade Ahead Cargo Handling & Ground Handling What is happening, what to expect ahead Atilla KORKMAZOGLU Delhi, October 2011

  2. Air Transportion Development • Though the ATM has revealed strong growth (6% CAGR between 1970-2010) in the past, only c.5% of world population has experienced air transportation Travel per citizen (2009) Russia, Brasil • The future growth driver will be the improvement in wealth of emerging economies, mainly India, China, Russia and Brasil China India Income per capita($, 2009) 2

  3. Aircraft Manufacturing Aircraft (Unit) • Development in global business relations between countries affects transportation markets positively in the past decade • Demand increased to air transportation while middle class got richer Auto (Thousand units) Ship (GT) Global Manufacturing Volumes Boeing & Airbus Manufacturing • Production orders made top in 2007 and deliveries in 2010, expected to increase in the future ...... Orders Deliveries 3

  4. Airlines Market • Open Skies, Developing Country Airlines , LCC , Crisis , Consolidation of National Carriers put higher pressure on major flagship carriers day by day. LCCs Dominating the Seat Capacity Large Scale Mergers among Airlines UK N.America World EU Asia Pasific 4

  5. Passenger and Cargo Forecast • Long-term passenger forecasts shows a world average of %4-5 percent increase until 2019 India expectations are around %7 Passenger Forecast Cargo Movement Growth Forecast • Long-term cargo forecasts shows an average of • %5,9 percent increase until 2029 for the overall world while India expectation is around % 6,5 • According to the forecasts freighter fleets will grow%69 5 Source: Boeing Reports

  6. GNP Growth Rates GNP Growth Rate India World • MiddleClass of India is between 325-350 mio, expected to be 600 mio in 2025. • Expected to be the 5. biggest consumption market. • Tourism has % 5,6 in GNP. %87 of tourist are airline passengers. • Growth rate of India Economy is higher than the world average • Economical conjunctures affect India less than most of the others... 6 Source: McKinsey Global Institute

  7. Aviation in India - Current • India become the 9th civil aviation market in the last decade • Scheduled route numbers doubled in last 10 years by reaching up to 82 • 72 National Airlines operate at India • Fleet size of 413 aircrafts • High Population per aircraft rate 7 Source: Ministery of Civil Aviation

  8. Aviation in India - Future • Average growing rate for India will be annually %8,2 until 2029 • Becoming the third biggest market in 2029 after US and China 8 Source: ACI publications

  9. Air India; IndiGO; 17,1% 19,2% GoAir; 6,2% Jet Airways; 18,1% SpiceJet; 13,4% Kingfisher; 19,8% Jet Lite; 7,0% • Aviation in India - Domestic Carriers Positioning Domestic Market Shares new players Go AirIndiGO Kingfisher SpiceJet Air India Express • New domestic airlines established after 2005 has reached more than %50 of the domestic market share 9

  10. Ground Handling Services • Ground and cargo handling services include a broad range of activities requiring significant operational and organizational expertise Security Services Exe. Aviation Services Line Maint. Services Ground Handling Fuel Services Ramp Services Pax Services Cargo &Mail Services Station Mgt& Admin 10

  11. Ground Handling Market Participants • Although airlines and airports continue to provide ground handling services, independent ground handlers are gaining share as the other participants (airlines/airports) focus on core business • Ground handling market size is currently close to $50 bn and is expected to reach $150 bn in 2030, which indicates more than 5 % CAGR. Independents - Airlines/Airports 11

  12. Ground Handling Market Key Trends • Who can adopt itself will be the survivor Strong Growth: The growth will be accompanied by pricing pressure Changing Market Participants: Airlines and airports focus on core business and dispose their handling activities Barriers to Entry: Liberalisation facilitates penetration Airlines Purchasing Criteria: Price and quality are the key criteria in selecting the service provider Consolidation: Still fragmented and new M&A activities are expected 12

  13. Ground Handling Market – Rationale for Consolidation Ground Handling Airlines • Network Effect & Economies of Scale • Competitive Advantage • Consolidation and development of independent providers Airports • Airport are moving away from operational control, focusing more on commercial activities • Low profits and rising cost pressures are resulting in focus on core business and outsourcing of GH activities. • Over the last 10 years several airlines • withdrawn from GH activites. • TP Sold , • KL sold Cargo Services Centre, • LH sold Globe Ground, • AA sold WFS • SR/LX sold Swissport • BD sold ground handling activities • AY sold parts of its handling • PAL plans to sell of catering and GH Serv. 13

  14. Ground Handling Company Consolidations • Independent handlers are not strong enough to facilitate large scale the consolidation process • Several owners of independent handers are considering to dispose their airport service • It is expected to see even more consolidations in the next decade PAST TODAY Celebi Budapest AGH Celebi AGI ASIG Boker BBA Menzies Ground Star CSC Aero Ground Odgen MENZIES AVIA PARTNER SWISSPORT Hudson Dynair Swiss Port Aviapartner World Cargo Globe Ground Global Servisair Aer Lingus Handling France Handling SERVISAIR Fraport Sabena Fraport Tristar SEN WFS WFS FCC Globalia SPdH SFS FCC Aeroporto di Roma GROUNDFORCE 14

  15. Leading Ground Handlers – Turnover vs Profit (€mio, 2010) EBITDA Turnover (€mio, 2010) The difference among service providers is not too wide in terms of profitability contrary to turnover and stations network Turnover Locations 15

  16. Air Traffic Figures in India- Past/Today/Future CAGR 9,8 % CAGR 10,6 % • In the past, domestic traffic has been the main driver for the development of aviation in India as well as it will be in the future 16

  17. Air Transport Figures in India- Past/Today/Future • In the last 5 years, Indian airports experienced the drastic growth of the commercial air cargo served • Parallel to improving weight of Indian economy among the world trade, the growth in air freight can be over the expectation which still represents a strong growth 17

  18. Ground Handling & Cargo Handling in India International Airports-private International Airports- government Custom Airports - government Large Domestic Airports - private SRINAGAR • Metro airports already allowed independent handlers to provide ground handling works at respective airports • However, self handling activity of domestic airlines occupies substantial part of ground handling works at most of the metro airports DELHI Handlers: Celebi, BWFS, Air India/SATS, Cambata Traffic : 30 mio pax, 700k ton cargo • MUMBAI • Handlers: Çelebi/NAS • Cambata,Air India • Traffic : 29 mio pax, 670k ton cargo AMRITSAR DELHI JAIPUR GUWAHATI AHMEDABAD KOLKATA Handlers: Bhadra, Air India Traffic: 9 mio pax, 130k ton cargo KOLKATA NAGPUR MUMBAI HYDERABAD • BANGALORE • Handlers: Globe Ground • Air India/SATS • Traffic: 12 mio pax, 220k ton cargo • HYDERABAD • Handlers: Menzies, • Air India/SATS • Traffic: 8 mio pax, 80k ton cargo GOA BENGALURU CHENNAI PORT BLAIR • CHENNAI • Handlers: Menzies, • Air India/SATS • Traffic: 12 mio pax, 390k ton cargo • COCHIN • Handlers : BWFS ,Air India/SATS • Traffic : 4 mio pax, 40k ton cargo CALICUT COCHI THIRUVANNA.

  19. Ground Handling & Cargo in India – Rationale for the privatisation of the services Proven fact from the experiences of EU access of independent/eligible GH companies and limiting the number of self handlers increases the quality & safety at airports, decrease the costs and eliminate the congestion World trend Share of independent GH service provider & Air Cargo Warehouse increases All airports should privatise their GH services & Self handling should diminish at airports in India Increasing capacity needs can only be fullfilled with the help of professional GH services with international service levels New EU Directive proposal Self handling airlines should not outsource their manpower : outsource entire services to eligible handlers or establish their own organization 19

  20. Celebi Aviation Holding in India • Though Celebi’s has short history in India, its activities are expanding and it is expected that India becomes the main base of its aviation related activities in the near future • As of today, India is the largest location of the group in terms of employed staff • Çelebi has already invested 65 million USD for ground handling and air cargo warehouse activities in India and total investment will be some 100 mio USD in 2 years time 20

  21. Celebi Aviation Holding in India – Future Positioning • Çelebi intends to intensify its presence and activities both in ground handling and air cargo warehousing services in India. In this respect, it is targeting • To provide ground handling works at all metro airports in the medium term • To provide ground handling works at international airports of the country which in total covers at least 95% of the international passenger traffic in the long run • To prode warehousing activities at least at four international airports • To become the leading independent airport service providers of the country 21

  22. Thank You.... Teşekkürler...

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