1. Confidential
4/1/2017
ALLIANCES, JVs & REGULATORY HURDLES IN AVIATION INDUSTRY KOCHHAR & CO. Indo-US Resurgence Summit, IACC December 2013

2. The Indian Perspective
Confidential
4/1/2017
The Indian Perspective

3. Hurdles Infrastructure Bureaucracy / red-tapism
Confidential
4/1/2017
Hurdles
Infrastructure
Bureaucracy / red-tapism
Weak State-owned airline
Kingfisher debacle (confidence of investors has taken a tumble)
Taxation
Fuel Prices
Airport Charges 3

4. Sector-specific Legislative Framework
Confidential
4/1/2017
Sector-specific Legislative Framework
Archaic set of laws
Aircraft Act, 1934
Aircraft Rules, 1937
Civil Aviation Requirements & Aeronautical Information Circulars
Bilateral Treaties 4

5. Confidential
4/1/2017
Upside
Untapped potential - currently, under 5% of India’s 1.2 billion people travel by air (IATA)
Open Sky
49% FDI permissible in airlines by international airlines
Proposed reduction in ATF cost and review of tax structure
100% FDI permissible in existing airports (approval required for FDI beyond 74%)
100% FDI under automatic route for Greenfield airports
100% tax exemption for airport projects for 10 years
Proposed multimodal connectivity to facilitate air transportation
Regional connectivity – Tier II and Tier III cities
Encouragement for development of MRO hub 5

6. And thus, emanating from the ‘upside’, we have…
Confidential
4/1/2017
And thus, emanating from the ‘upside’, we have…

7. Alliances & JVs Galore Airlines Airports MRO SQ / Tata Air Asia / Tata
Confidential
4/1/2017
Alliances & JVs Galore
Airlines
SQ / Tata
Air Asia / Tata
Ethiad / Jet
SpiceJet …
Airports
Delhi Airport – JV b/w GMR, Malaysia Airports Holding & Fraport
Hyderabad Airport – JV with Malaysia Airports Holding
Bangalore Airport – Siemens Project Ventures, Germany
MRO
Airbus / NACIL – MRO facility in Delhi
Boeing - JVs with
Air India MRO facility - Nagpur
Tata for manufacture of floor beams for Dreamliner
IISc and IT firms for development of aerospace-related apps 7

8. Looking within the region…
Confidential
4/1/2017
Looking within the region…

9. Confidential
4/1/2017
Asian perspective …
Traditionally export oriented…increasingly becoming reliant on neighbourly trade and tourism
Growth in China and India largely on back of respective domestic consumption
Apart from China and India, countries in the South East Asian region (Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the Philippines) are also surging towards greater economic strength 9

10. Asia’s Growth Potential
Confidential
4/1/2017
Asia’s Growth Potential
* Thailand, Vietnam, Cambodia, Philippines & Malaysia
Source: World Economic Outlook, January 2013
Country
GDP Growth in
(in %)
Predicted Growth in GDP for 2013 (in %)
China :
7.8
8.2
India
4.5
5.9
ASEAN – 5*
5.7
5.5
USA
2.3
2.0 EU
-0.4
-0.2 10

11. Effect on aviation industry
Confidential
4/1/2017
Effect on aviation industry
Extraordinary growth in Asia, has a profound effect on global trade and on the aviation industry in particular
To sustain the growth and profitability, the region’s carriers are vying for the largest order books with aircraft manufacturers 11

12. Innovative Measures, JVs and Alliances
Confidential
4/1/2017
Innovative Measures, JVs and Alliances
In addition to large aircraft orders, Asian carriers have introduced certain innovative measures to sustain growth:
Economically sustainable long-haul low-cost operations
Independent cross-border JV LCCs
Undermines foreign ownership constraints
Flattens regulatory barriers
Circumvents bilateral proscription against right of establishment
Establishing low-cost subsidiaries of FSCs 12

13. Confidential
4/1/2017
The way ahead
The innovative JVs and alliances in the aviation industry in Asia are disrupting the global status quo 13

14. (E): piyush.gupta@kochhar.com
Confidential
4/1/2017
Thank you!
Kochhar & Co.
Piyush Gupta
(T):
(E): 14