APRIL 2013 Sydenham Institute of Management Studies, Research and Entrepreneurship Education
B E A C O N :
A MONTHLY NEWSLETTER FROM SIMCON - SIMSREE CONSULTING CLUB 1.ARTICLE: INDIAN AVIATION INDUSTRY AND CONSULTING
The Indian aviation sector has seen a tremendous rise in the last decade with a great potential for growth in future as well. It is expected that by 2020 traffic at Indian airports will reach 450 million, making it the third-largest aviation market in the world. Some 90 million passengers per annum (mppa) are projected to pass through Delhi alone. The Commercial Indian Aviation industry started in 1932 with Tata Airlines which was renamed as Air India in 1942. But the real growth in the industry started post the 1990 Liberalization policies for the industry which resulted in the emergence of a number of local players in the domestic aviation sector and introduced the whole new segment of low cost carriers.
INDEX INDIAN AVIATION INDUSTRY
COMPANY OVERVIEW: A.T. KEARNEY
CONSULTING WORLD NEWS
The current major players in the Indian market are as follows: Airlines Jet Airways Jet Lite Indigo Airlines Air India SpiceJet Go Airlines Kingfisher airlines
Flight Occupancy Ratio (%) 63.5 66.1 69 65.2 64.4 67.7 58.4 (Source: Directorate General of Civil Aviation)
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(Source: Directorate General of Civil Aviation; data till Sept 2012) Opportunities in Aviation Sector:
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It is now well-acknowledged that economies outside North America and Europe are expected to lead the world in GDP growth. Countries of Asia-Pacific, Latin America and Russia, where long-term GDP growth is forecast above average are expected to have a profound impact on commercial aviation. Global business and tourism rely heavily on air transport. The growth trend in both Passenger and Freight Traffic is as follows:
Passenger Traffic (Source: Airports Authority of India)
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1.ARTICLE: INDIAN AVIATION INDUSTRY AND CONSULTING
Also, the Public private partnership model in the development of airports across the country has helped in developing an excellent air transport framework and has played a major role in the growth of cities like Hyderabad and Bengaluru. Increasing the cap of FDI to 49% has attracted major players like Air Asia which is the largest low cost airline in Asia. Challenges faced by the Aviation Industry With the exception of Indigo, all major airlines have posted losses on a consistent basis over the last few years. Air India and Kingfisher Airlines, for example, are in critical condition. Airline losses approached $2 billion in the year ending March 2012â€” on the back of a $3.5 billion loss over the previous three years. The Centre for Asia-Pacific Aviation (CAPA) believes Indian airlinesâ€™ debt burden will soon reach $20 billion. Volatility in the fuel prices is the foremost challenge faced by the Aviation Sector with fuel forming about 34% of the operating costs on an average globally. In India this cost is further amplified due to the burden of fuel tax, resulting in fuel forming almost 45% of the operating costs, this prevents the Indian Players to have a level playing ground. Lack of focus, faulty M&A decisions and failed mergers are perhaps the top three reasons for poor performance of Indian carriers. In 2007, Kingfisher acquired Air Deccan at 550 crore INR, Jet acquired Air Sahara at 1,450 crore INR and the national carriers (Air India and Indian Airlines) were forcefully merged. What followed was a sequence of largely unsuccessful attempts to integrate the merged entities. Attempts to run two different kinds of services, full-cost carriers as well as low-cost within the same airline created serious problems as there were differences in costs, the turnaround time of aircraft and the distribution models. In essence, each had a different DNA. Even though the recent policies that allow 49% FDI in the Aviation Sector have come in as a lifeline for the loss making airlines, the policy in itself is not enough to ensure foreign participation. Many foreign players feel that India is a lucrative market to serve but not to invest in, the main reason being that the fundamental framework of aviation is weak. Experts believe that for the industry to recover from its current travails and achieve long-term sustainable growth, there is a need to address problems created by high input costs. > Strategic Planning > Ground Operations & Safety > Fleet Planning > Airline Profitability
> Airport Planning & Development > Airport Operations > Traffic forecasting & Development > Business Planning Airline
Air Navigation Ser-
> Safety & Security > Business Planning
> Master Planning > Airspace Optimization > RNAV Procedures Development & Implementation
Consulting Avenues In Aviation
Sources: http://www.pwc.in , http://pgdalatm.nalsar.ac.in , http://www.iata.org
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A.T. Kearney is a global management consulting firm, focusing on strategic and operational CEO-agenda issues for the world's leading organizations across all major industries and sectors. It was founded in 1926 and its head office has remained ever since in Chicago, Illinois. A.T. Kearny & company was formed by splitting Mckinsey & co. in two parts. After 20 years of inception of Mckinsey, Andrew T. Kearny formed this company as separate entity in 1946 after a split with Mckinsey. The company was then brought by EDS in 1995, which was again brought back by its original management in 2006. The company has presence in following areas: Aerospace, Defence, Consumer Retail, Chemicals, Metals and Mining, Healthcare. Global Business policy Council Paul A. Laudicina, chairman emeritus, A.T. Kearney and chairman of GBPC, launched a strategic service for the world’s top CEOs and business-minded thought leaders, called Global Business Policy Council (GBPC). The rationale behind formation of GBPC was , The need for corporate, government, and academic leaders to come together to discuss and progress thinking on key issues—globalization, foreign direct investment, and off shoring, among others—was all the more important in a world of such dramatic geopolitical, economic, social, and technological change. Paul institutionalized the approach by founding the CEO Retreat, a small group of world-class thought leaders assembled to decipher the big issues of the day and to compare notes on strategies to address them. He also launched a number of strategic advisory services at the Council aimed at providing private and public-sector leaders with the kind of long-range vision that they so badly needed. It offers three key services: 1. Meetings that attracts Expertise and insight 2. Global services Location index and FDI confidence index 3. Customized strategic advisory services
PROFILE: Headquarters: Franklin center, Chicago US 1926 Founded: Offices and Global America, Asia Pacific, Middle East,Europe, Africa Presence:
Recent Success Story: Big data , a buzzword in today’s IT solutions , AT Kearney has delivered a successful solution with Big data approach , to one of leading pharmacy retailer which was having a problems with its inventory management & Capital effectiveness . Approach: Solution was divided into two parts rapid one time inventory reduction and gradual reduction also maintenance of low inventory levels . They made two main recommendations, Use advanced processing capabilities to calculate product redeployment between stores in real time, and adopt a tiered strategy in providing service. Impact: The retailer reduced inventory by more than $1 billion and launched two new logistics approaches , The first changed staffing, fulfilment, and delivery processes for prescriptions, centralizing one class of prescriptions and inventories. Centralization reduced costs, inventory levels, stock outs, freed store pharmacists to attend to delivering prescriptions & offering advice to customers. Parent Company Mckinsey & Company Category
Stategic and Operational Management Consulting
Essential Rightness of Advice , Focused on Strate-
References : •http://www.consultant-news.com •http://www.middle-east.atkearney.com
Consulting World News
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GCC Market closes in on $2 bn landmark: A report released today (21st April 2013) by Source Information Services (Source), has found that the combined GCC consulting market grew by 18 per cent between 2011 and 2012, and is now worth just short of $1.9bn. The report also found the Saudi Arabian consulting market, which grew by 34 per cent to $791m, has now emerged as the largest consulting market in the GCC, eclipsing that of the UAE ($553m). Behind Saudi Arabia, the report says that Qatar is the next most exciting market – growing at 14 per cent to $232m. Being awarded the FIFA 2022 World Cup has put wind in the sails of this small country. Julian Hawkins at Deloitte comments: ―Qatar will be huge market for consulting given confidence in the economy and their bold planned developments.‖ Consulting service that is in greatest demand from GCC companies and public sector organizations is operational improvement work (up 38 per cent), technology (up 33 per cent) and HR consulting (up 28 per cent). The report says that the growth in operational improvement serves as a reminder that even in high-growth markets like GCC efficiency remains a high priority for clients. Strategy firms continue to rule the roost, but only just Amongst strategy firms which continue to dominate the GCC market (17 per cent growth to $532m), the Source report says that McKinsey is the firm about which clients are most likely to comment, but they aren’t always positive about the quality of the firm’s work. Booz and BCG are both establishing reputations as strategy firms capable of implementing and other firms, most notably Bain, score much higher than McKinsey, by Source’s measure of client satisfaction. The report also found that the Big Four firms have performed very well recently with their market size increasing 20 per cent to $495m. This is partly because of the network that their audit practice has given them and, more recently, the breadth of services they offer. KPMG is Big Four firm which clients are most likely to mention, but it does attract criticism more than its competitors. PwC is the least likely to be mentioned, but comments about firm are more consistently positive than they are for any other Big Four firm. Big projects are on the up The GCC consulting market is also benefiting from an increasing number of bigger projects. The report says that there are still a large number of small, tightly focused projects around, but there are more big projects and fewer mid-sized projects. All of which points to the idea that it’s not the total number of projects which is growing the market, it’s the number of big projects. Peter Christie, Hay Group concludes: ―More than 50 per cent of our business came from large projects that are more than 4 times the value of our average-size project only two years ago.‖ Atos team wins major new contract with the UK Ministry of Defence 19-Apr-13 Atos, an international IT services company, has today announced that it will lead a team, comprising Vega, a Selex ES company (Finmeccanica group) and Information Services Group (ISG), to become the UK Ministry of Defense's (UK MOD), Defense Communications Networks Services Strategic Partner (DCNS SP). The contract is for £25m over three years with potential to extend to seven and will see the team working closely with the UK MOD's Defense Equipment and Support Information Systems & Services (ISS) team. The DCNS programme will develop the services and organizational strategy for future information & communications systems delivering continuity of service, value for money and enhancing information services that support UK Armed Forces operations worldwide. As Strategic Partner, the Atos team will work jointly with the ISS Programmes to enable the DCNS programme meet the objectives of the UK Government’s ICT strategy; enabling more cost effective information solutions whilst maintaining services for the end user and increasing flexibility. Accenture plans to invest more than $400m in cloud capabilities Accenture has intention to help clients implement digital technologies and drive greater flexibility, innovation and growth. The company is launching the Accenture Cloud Platform in anticipation of the shift in demand toward the public cloud. It is designed to provide services and solutions to help organizations integrate and manage the hybrid cloud environments that span multiple vendor platforms. As part of this strategic initiative, Accenture will invest in cloud technologies, capabilities and training by 2015 to focus on delivering cloud services from its network of providers, as well as blending its own industry solutions and innovations with the third party offerings. Accenture says it has already worked on more than 4,000 cloud projects for clients, including over half of the Fortune Global 100, and has more than 6,700 professionals trained in cloud.
Sources: newsroom.accenture.com , www.consultant-news.com , www.isg-one.com
QUIZZ TIME !!
BELOW ARE ANSWERS TO VOL-5. MARCH_2013
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1. Sir Isaac Newton 2. Robert A. "Bob" McDonald (Chairman, President and CEO of P&G 3. Mortein 4. Tropicana 5. They are all sources of natural dyes used in the fashion industry. Cow’s urine produces Indian yellow color, Octopus– Sepia brown, Lacred/violet, Murex snail – purple and red onions the onion red color
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QUIZZ OF APRIL 2013
1. What is common to Xerox, Lufthansa, Alcatel and Olivetti in the Indian context? 2. This brand was truly born from love, as it was created by a man as a gift for his wife. In the 1950s, former unilever chemist Graham Wulff saw his wife Dinah’s frustration with the thick, waxy beauty creams that came in shoe-polish tins. They left her skin looking greasy, and they certainly didn’t fit with her feminine sensibility. Graham wanted to create a new beauty product for her—one that could not only moisturize her skin, but also leave her feeling beautiful and feminine. Name the brand. 3. What was the first-of-its-kind initiative that is linked to Yamaha’s scooter brand Ray launched in India few months back? 4. Identify both logos from the visuals and name a brand that is connected to both of them 5. In this era where social networks are beginning to dominate the internet space, what have been named after actresses Aishwarya Rai, Dia Mirza, Celina Jaitley and Bipasha Basu?
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