A flight plan for growth

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: As India looks seriously at how the overall civil aviation sector can grow stronger and more profitable, it is an opportune time to look at the possibility of outsourcing in this sector and understand its potential benefits.

Organisations across the globe have preferred outsourcing to restructure their business and bring about huge cost savings for quite a few years now (look at how the BPO business has benefited millions in the call centre industry in India!). Exciting developments, like offshore and cross-border outsourcing, bring new implications to organisations looking to transfer their business processes externally.

Outsourcing also has another linked benefit, and that is in the area of expertise. A company specialising in any area gains tremendous understanding in depth, and the value addition it offers is not just in cost saving but in higher quality of service. Not only do the companies benefit, the consumer also benefits as cost savings are passed on at a higher quality of service!

The growth of the Indian aviation industry has truly been phenomenal over the past few years (some months this year have seen a growth of 50% over last year!) and we have seen the entry of many serious business players into the aviation business. Competition bestows upon passengers a host of varied experiences and fares to choose from. While this is a god-send for the passenger, the low-cost airlines have had to cut heavily on pricing to lure passengers from trains. Increasing fuel prices and back end operational costs is taking its toll on many an operator. As reported recently, quite a few airlines have posted losses in the last quarter and will continue to do so unless they find a way of stemming the outflow and generating abundant revenue streams in addition to reducing operating costs substantially.

The demand for outsourced services in the aviation industry has been accelerated as airline companies focus their bottom line. Outsourcing is critical for low-cost carriers as is done by all airlines world-wide. The key areas where outsourcing must be allowed are MRO, security and ground handling. Just outsourcing these areas can reduce costs by 30-35%!