Aviation in India

The Indian aviation industry is one of the world’s fastest growing aviation industries. With the liberalisation of the sector in the mid 1990s, the aviation industry witnessed many private players entering the market, which led to growth in the industry both in terms of players and number of aircrafts. The industry is witnessing continued growth on the back of strong demand from domestic passengers, growth in domestic tourism in the country, increasing number of low-fare airlines and rising outbound travel from India. Further, the Government’s initiatives such as opening new international routes, modernising non-metro airports, developing new airports as well as renovating the existing ones have also helped in the growth of the industry.

The Indian Aviation Industry is exploring opportunities to improve connectivity and is also looking at enhancing the number of Indian carriers to various countries."One of the key achievements of India in the last decade has been to set-up an independent regulator for economic regulation of airports," as per Ms Pratibha Patel, President of India.

Passengers carried by domestic airlines during January-August 2011 were 396.31 lakhs as against 334.06 lakhs during the corresponding period of previous year, registering a growth of 18.6 per cent, according to the latest data released by the Directorate General of Civil Aviation (DGCA).

Significantly, Delhi's IGI airport is the busiest airport in the country at present, handling an average of about 843 flights per day. It has been rated the 14th best airport in the world in the Airports Council International's airport service quality survey for 2010. In the category of 25-40 million passengers per annum, the airport has been rated fourth, behind only Seoul's Incheon, Singapore's Changi and Shanghai Pudong.

Investment opportunities of US$ 150 billion are being envisaged in India's aviation sector in the next few years.

In fact, the National Civil Aircraft Development Project which is set to be launched by January 2012 is expected to invest around US$ 1.84 billion. This project aims to focus on domestic air travel and build an aircraft which can land on a shorter runway and is better suited to Indian conditions.

Meanwhile, US-based aircraft manufacturer Boeing predicts that India will require 1,320 new aircraft valued at US$ 150 billion over the next 20 years.

“In the last one year, there has been an increase of $20 billion in the number of aircraft India will require over the next 20 years. This is primarily because of growth in GDP, development of infrastructure and increase in the number of people willing to fly - be it for vacation or rest and recreation,” according to Dr Dinesh Keskar, President, Boeing India.

Further, the Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020.

• To create world class airports, the government has recognised the need for the involvement of private players in the development of airport infrastructure. Development of airports at Delhi and Mumbai has been taken up under Public Private Partnership (PPP) mode.
• The capital expenditure is funded through private equity, borrowings, and internal resources of joint venture companies. The development work of Mumbai airport is likely to be completed by 2012 whereas the work of a new terminal (Terminal 3) at Indira Gandhi International Airport at Delhi got completed in July 2010. The development work of Kolkata and Chennai International airport has been taken up by Airport Authority of India whereas Bangaluru and Hydrabad international airports have been developed on PPP mode as greenfield airports. The AAI has taken up the development of 35 non metro airports at an estimated cost of US$ 777.80 million.
• The Government has also developed a model concession agreement to develop greenfield airports under the PPP mode. The government has also allowed 100 per cent FDI, under the automatic route, for greenfield airports. FDI up to 49 per cent is allowed in the domestic airlines sector under the automatic route, but not by of foreign airline companies.
• The adoption of Open Sky Policy has resulted in the entry of several new privately owned airlines and increased frequency / flights for international airlines.