Aviation Industry in India

Overview of Airlines industry in India

The aviation industry in India is one of those sectors that saw a
constant pace of growth among the other industries in the world
over the past many years. The open sky policy of the government
has helped a lot of overseas players entering the aviation market in
India. From then, it has only been growing in terms of players and
the number of aircrafts. At present, private airlines account for
around 75% portion of the domestic aviation market.

The 9th largest aviation market in the world is India. Taking the help of the statistics from the Ministry of Civil Aviation, approximately 29.8
million passengers traveled to/from India in 2008, showing a surge of 30% from 2007. The prediction stated that international passengers will
touch 50 million by 2015. More opportunities in the aviation industry in India are likely to make way for about 69 foreign airlines from 49
countries. 

Statistics of growth

Passengers carried by domestic airlines from January-April, 2010 were 162.82 lakhs as against 133.41 lakhs in the
corresponding period of year 2009 thereby registering a growth of 22.05%.The total domestic passengers carried by the
scheduled Airlines of India in the month of April, 2010 was 41.88 lakhs. 

Airline-wise details of market share of scheduled domestic airlines for the month of April,
2010 are as follows:

Market Share Seat factor

Airlines Percentage share
(in lakhs) (in %)
Air India (Domestic) 7.62 18.2 72.9
Jet Airways 7.66 18.3 74.2
Jet Lite 3.18 7.6 78.1
Kingfisher 8.98 21.4 75.8
Spice Jet 5.27 12.6 81.0
Paramount 0.13 0.3 85.0
Go Air 2.46 5.9 78.0
IndiGo 6.58 15.7 82.4

Future of Airlines industry in India

The challenges of the Indian aviation industry are cited below:

 Passenger traffic is estimated to grow at a CAGR of over 15% in the coming few years.
 The Ministry of Civil Aviation would handle around 280 million passengers by 2020.
 US$ 110 billion investment is envisaged till 2020 with US$ 80 billion solely for new aircraft and US$ 30 billion for developing
the airport infrastructure.

Major Airports in India

  Sardar Vallabh Bhai Patel International Airport, Ahmedabad

 Bengaluru International Airport, Devanhalli (Benguluru)

 Kozhikode Airport, Calicut

 Chennai International Airport, Chennai

 Cochin International Airport, Cochin

 Indira Gandhi International Airport, Delhi

 Goa International Airport, Dabolim

 Rajiv Gandhi International Airport, Shamshabad (Hyderabad)

 Netaji Subhash Chandra Bose International Airport, Kolkata

 Chhatrapati Shivaji International Airport, Mumbai

 Pune Airport, Pune

 Thiruananthapuram International Airport, Thiruananthapuram

Recent initiatives in Aviation Sector

 Financial Surveillance of Air Operators: The Air Transport Directorate in the Office of the Director General of Civil
Aviation (DGCA) has started an evaluation of the financial health of the scheduled airlines. A one-time
comprehensive audit of NACIL (I) Kingfisher and Jet Airways has also been carried out.

 Transparency in Air Fare Advertising: In order to have transparency in airfare advertising, Rule 135 of Aircraft
Rules 1937 has been amended wherein airlines shall display tariff in a conspicuous manner to show the total
amount payable by a passenger and complete break-up of the total amount, indicating the fare, tax, fees or any
other charge, if any, separately. Scheduled domestic airlines have complied with the provisions of Rule 135.

 Tariff Monitoring: The DGCA has started monitoring tariffs of scheduled domestic airlines. A group has been
constituted comprising tariff analysis experts who carry out the analysis of fares on major routes on daily basis.

 India-EU Civil Aviation Cooperation Programme: Under the Joint Action Plan, a Civil Aviation Cooperation Project-
II has been agreed upon. Its terms of reference (TOR) have been finalized. The project called "Institutional
Capacity Building in the Civil Aviation Section in India" is likely to commence during 2010.

 India-USA Aviation Cooperation Programme (ACP): The India-US ACP was signed in June 2007 with the objective
of promoting safety, operational efficiency and system capacity and facilitating and coordinating aviation industry
training and technical ties between the US and India. The first phase of the ACP was completed in 2008 and its
second phase is under way.

Role of Aviation Industry in India GDP

  


The Role of Aviation Industry in India GDP in the past few years has been phenomenal in all respects. The
Aviation Industry in India is the most rapidly growing aviation sector of the world. With the rise in the
economy of the country and followed by the liberalization in the aviation sector, the Aviation Industry in India
went through a complete transformation in the recent period.

 Role of Aviation Industry in India GDP-Facts

 With the entry of the private operators in this sector and the huge cut in air prices, air travel in India were
popularized
 On February 18, 1911, the first commercial flight was made from Allahabad to Naini by a French pilot named
Monseigneur Piguet
 Role of Aviation Industry in India GDP-Growth Factors

 The growth in the Indian economy has increased the Gross Domestic Product above 8% and this high growth
rate will be sustained for a good number of years
 Air traffic has grown enormously and expected to have a growth which would be above 25% in the travel
segment
 In the present scenario around 12 domestic airlines and above 60 international airlines are operating in India
 With the growth in the economy and stability of the country India has become one of the preferred locations
for the trade and commerce activities
 The growth of airlines traffic in Aviation Industry in India is almost four times above international average
 Aviation Industry in India have placed the biggest order for aircrafts globally
 Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia
 Role of Aviation Industry in India GDP-Future Challenges

 Initializing privatization in the airport activities

 Modernization of the airlines fleet to handle the pressure of competition in the aviation industry
 Rapid expansion plans for the major airports for the increased flow of air traffic
 Immense development for the growing Regional Airports
 Role of Aviation Industry in India GDP-FDI Policy

 The Reserve Bank of India (RBI) announced that foreign institutional investors might have shareholdings more
than the limited 49% in the domestic sector.

 Airports

 Foreign equity up to 100% is allowed by the means of automatic approvals pertaining to establishment of
Greenfield airports
 Foreign equity up to 74% is allowed by the means of automatic approvals pertaining to the existing airports
 Foreign equity up to 100% is allowed by the means of special permission from Foreign Investment Promotion
Board, Ministry of Finance, pertaining to the existing airports


 Air Transport Services

 Up to 49% of foreign equity is allowed by the means of automatic approvals pertaining to the domestic air
transport services
 Up to 100% of NRI investment is allowed by the means of automatic approvals pertaining to the domestic air
transport services
 Civil Aviation Policy

 The Civil Aviation Ministry is evolving a draft Civil Aviation Policy that would increase foreign direct investment
ceiling, liberalize bilaterals and move towards an `Open Sky,' encourage the promotion of Regional Airlines,
lower fares to make aviation affordable and remove price monopolies in respect ofAviation Turbine Fuel (ATF).
 Mission Of Civil Aviation Policy

The main aim of the Civil Aviation Policy is to maintain a competitiveCivil Aviation Environment which ensures
safety and security in accordance with international standards, promotes efficient, cost-effective and orderly
growth of air transport and contributes to social and economic development of the country.
 Strategic Objectives Of Civil Aviation Policy

The objectives of this Civil Aviation Policy are the creation and continued facilitation of a competitive and
service-oriented Civil Aviation Environment in which:
 the interests of the users of civil aviation are the guiding force behind all decisions, systems and
arrangements 
 safe, efficient , reliable and widespread quality air transport services are provided at reasonable prices
 there exists a well-defined regulatory framework catering to changing needs and circumstances
 all players and stakeholders are assured of a level playing field
 private participation is encouraged and opportunities created for investors to realize adequate returns on their
investments
 Regulatory Framework

In the context of a multiplicity of airlines, airport operators (including private sector), and the possibility of
oligopolistic practices, there is need for an autonomous regulatory authority which could work as a watchdog,
as well as a facilitator for the sector, prescribe and enforce minimum standards for all agencies, settle
disputes with regard to abuse of monopoly and ensure level playing field for all agencies. Therefore, a
statutory autonomous Civil Aviation Authority (CAA) will be constituted. The basic objectives of setting up of
the Authority will be to ensure aviation safety, security and effective regulation of air transport in the country
in the liberalized environment.
 Airport Infrastructure

The Government will aim at ensuring adequate world class Airport Infrastructure capacity in accordance with
demand, ensuring maximum utilization of available capacities and efficiently managing the Airport
Infrastructure by increasing involvement of private sector.
 Aviation Support Services

The role of Aviation Support Services like human resource development, maintenance facilities and
manufacture of aircraft is very important, as these are the backbone of Civil Aviation Services. These services
should be available in state-of-art condition in adequate supply in accordance with demand. For this, the role
of private sector needs to be emphasized.
 Co-ordination
 A number of department/ agencies are involved in the development of Civil Aviation Infrastructure and
facilitating the convenience of the traveling public. Inter-linkages with other modes of transport for travel and
trade need to be emphasised.
 An Inter-Ministerial Standing Committee will be constituted for coordination with Ministries of Commerce,
Tourism, Industry, Railways, Surface Transport, Defence, Home Affairs (Immigration and Security), Finance
(Customs) and External Affairs.