AVIATION SECTOR

Presented By

Arun Kumar Dwivedi

 Aviation

Roads Transportation Railways

Ports
Large Increased in infrastructure investments required to sustain growth
 Growth Rate

24% annual growth

 Growth
• Domestic airlines flew 3.67 million passengers in August 2009—an increase of 25 per cent.
• The Centre for Asia Pacific Aviation (CAPA) forecasted that domestic traffic will increase
by 25 per cent to 30 per cent till 2010 and international traffic growth by 15 per cent,
taking the total market to more than 100 million passengers by 2010.

• The government plans to invest US$ 9 billion to modernise existing airports by 2010. The
government is also planning to develop around 300 unused airstrips.

• India ranks fourth after US, China and Japan in terms of domestic passengers volume. The
number of domestic flights grew by 69 per cent from 2005 to 2008. The domestic aviation
sector is expected to grow at a rate of 9-10 per cent to reach a level of 150-180 million
passengers by 2020.

• The industry witnessed an annual growth of 12.8 per cent during the last 5 years in the
international cargo handled at all Indian airports. The airports handled a total of 1020.9
thousand metric tones of international cargo in 2006-07.

• Further, there has been an increase in tourist charter flights to India in 2008 with around
686 flights bringing 150,000 tourists. Also, there has been an increase in non-scheduled
operator permits – 99 in 2008 as against 66 in 2007.
 Low cost services

• Kingfisher Airlines and Jet Airways have converted around half their
capacity into low-cost services. While, government carrier Air India
plans to launch a low-cost model in the domestic skies. It already has
a low-cost airline called Air India Express which operates on
international routes.
• Jet Airways has also increased the number of low-cost seats in the
system by around 50 per cent.
• Low cost carriers (LCCs) such as Indigo and SpiceJet have increased
the total number of seats by 40 per cent and 53 per cent, respectively,
in the past year.
• SpiceJet is also working on a plan to start international operations
next year, making it the third private Indian carrier after Jet Airways
and Kingfisher to fly overseas.
 Some Facts
• In the present scenario around 12 domestic airlines
and above 60 international airlines are operating in
India
• 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
 Domestic Airlines

 Air India
 GoAir Airlines
 IndiGo Airlines
 Jagson Airline
 Jet Airways
 Jet Airways Konnect
 Kingfisher Airline
 Paramount Airways
 SpiceJet Airlines
 JetLite (Air Sahara)
 Kingfisher Red (Air Deccan)
 MDLR Airlines
 Market Share
Jet Airways and Jet Lite (previously 27.7%
Air Sahara)
Kingfisher Airlines and Kingfisher
Red (previously Air Deccan) 20.7%
Air India (previously Indian
18.6%
Airlines)
IndiGo 13.6%
SpiceJet 12.4%
GoAir 5.4%
Paramount Airways 1.5%

Jet Airways Kingfisher Airlines Air India IndiGo Sp

GoAir Paramount Airways
How aviation industry is effecting india's economy?

10 years back there were just 2 airlines. Both state owned .

In the last 10years the economy has opened up. India has
experienced growth rate of 8% per year.
• The main factors which effect the Indian Economy are:-
1. Increased no. of domestic airlines
2. Low cost airlines
3. India's improving economy
• the other factors are:-
1. Increased in no. of business travellers to different
countries
2.Incresed no. of incoming tourist and business enterprises
 Known Factors Influencing
Growth Rate
• Increased Inward and outward tourism
• Increased competition has driven down prices
and margins
• Additional purchasing power due to rapidly
rising real incomes amongst the middle class
• Increased business trade due to the rapidly
growing economy and free trade agreements
with neighbouring countries
• Favourable Government policies and tax
reforms
 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
• Development for the growing Regional Airports
• Waving of Tax Exemption on leasing from
government
• Costs pressures (ATF Prices & Staff Cost)
 Upgrading Airport Infrastructure

By 2020, Indian airports are estimated to

handle:
• 100 million passengers
• Including 60 million domestic passengers
• Cargo in the range of 3.4 million tonnes per
annum
 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
– 100 per cent tax exemption for airport projects for a period of 10 years.

• 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
– 74 per cent FDI is permissible in cargo and non-scheduled airlines.
Foreign companies can explore various modes of entry into the Indian market
Background

 Indian airports were managed by Civil Aviation

Department, Government of India, till the creation of
International Airports Authority of India (IAAI) in 1972
and National Airports Authority (NAA) in 1986.

 In 1995 Airports Authority of India (AAI) was

established by merging both IAAI and NAA by an Act
of Parliament – The Airports Authority of India Act in
1994 – for better and efficient management of all
airports in India by a single Authority.
 At Present -

AAI manages 128 airports which includes:

- 15 International airports
- 8 Custom airports
- 25 Civil Enclaves
- 80 Domestic airports
 PPP IN INDIAN AIRPORTS
Need for Private Participation in Airport Infrastructure
To bridge the resource gap for achieving the
following objectives -

 To build world-class airports with modern technology and

efficient management practices.
 To make the airport user friendly and achieve higher level
of customer satisfaction.
 To lay special emphasis on the development of
infrastructure for remote and inaccessible areas.
 To provide airport capacity ahead of demand.
 To encourage greater efficiency in Airport Operations.
 First Indian Airport in Private Sector

• First Indian Airport in Private Sector was

constructed at Cochin. It has been constructed
by the company named “Cochin International
Airport Ltd.”

Proposed Private owned airports:

Gwalior (M.P.)
Durgapur (W.B.)
Jhajjar (Haryana)
Major Airports
Greenfield airports

Hyderabad Airport

Bangalore Airport
Development of Greenfield Airports –
Proposals received from state govts.

Goa
Gangtok – Sikkim
Navi Mumbai, Maharashtra
Chakan, Pune, Maharashtra
Kannur, Kerala
Kohima – Nagaland
Hassan & Gulbarga – Karnataka
Halwara – Punjab
Itanagar- Arunachal Pradesh
 Mumbai and Delhi Airports
• Salient Features of JVCs
 Objectives
 World Class Development and Expansion
 World Class Airport Management

•Equity participation
Delhi 74 % Pvt. Consortium (GMR Group, Fraport AG, MAPL, IDF)
26 % AAI
Mumbai 74% Pvt. Consortium ( GVK, ACSA,BSD)
26% AAI
•Initial Capital
Mumbai Rs. 200 crores Delhi Rs. 200 crores.

•Estimated Capital Investment for first 7 years

Delhi Rs. 3286 crs. (Funded as equity Rs. 551 crs, internal accrual
Rs. 70 crs. Debt Rs. 2665 crs.)
Mumbai Rs.5676 crs. (Funded as equity Rs. 626 crs. Internal
accural Rs. 804 crs. Debt Rs. 4246 crs.)
 Road Ahead

• The Indian aviation sector is likely to see clear skies ahead in the years to come.
• Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5
years.
• The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages
creating infrastructure to handle 280 million passengers by 2020.
• Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80
billion in new aircraft and US$ 30 billion in development of airport infrastructure.
• Associated areas such as maintenance, repair and overhaul (MRO) and training offer
high investment potential. A report by Ernst & Young says the MRO category in the
aviation sector can absorb up to US$ 120 billion worth of investments by 2020.
• Aerospace major Boeing forecasts that the Indian market will require 1,000
commercial jets in the next 20 years, which will represent over 3 per cent of Boeing
Commercial Airplanes’ forecasted market worldwide. This makes India a US$ 100
billion market in 20 years.
Thanks