A study on the effect of privatization on Break-even point in Aviation Sector

Abstract

Break-even is the point where business earns neither a profit nor a loss. The financial method of calculating break-even, called value added or break-even analysis is used to assess the feasibility of a project. Break-even not only accounts for all expenses, it also includes the opportunity costs of the capital required for future project. It is a easy tool for profit planning. The Indian Aviation Industry is among the world’s fastest upward industries. Previously owned by the government, the aviation service sector in India is now privately owned with full service airways and reasonable carrier. Almost 75% of the domestic aviation sector consists of the private airlines. The tools used for the analysis are Profit volume ratio, Contribution and Break-even point. The privatization of major airports leads to modernization and development of airport. The effect of privatization results in the increase in the percentage of the Breakeven point by comparing with the before and after privatization in the Aviation sector.