An article on the growth of aviation in India

The civil aviation industry in India has become one of the fastest growing industries in the country over the past three years. India is currently considered the third largest domestic civil aviation market in the world. India is expected to become the world’s largest domestic civil aviation market in the next 10 to 15 years, according to Mr. Jayant Sinha, Union Minister of State for Civil Aviation, Government of India.

· According to the International Air Transport Association (IATA), India will displace the UK for third place by 2025.

The civil aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, foreign direct investment (FDI) in domestic airlines, advanced information technology (IT) interventions, and increasing emphasis on regional connectivity.

Market size

Domestic air traffic increased 17.69 percent year-on-year in December 2017, continuing its double-digit growth, according to civil aviation regulator Dirección General de Aeronáutica Civil (DGCA). About 11.24 million passengers flew in December 2017, up from 9.55 million the year before. Passengers transported by national airlines during 2017 were 117.1 million compared to 99.89 million in the same period of the previous year, thus registering a growth of 17.31 percent, according to the DGCA.

As of December 2017, the existing aircraft fleet numbers 548 aircraft in India, with another 920 aircraft expected to join the fleet by 2025.

investment

· According to data from the Department of Industrial Policy and Promotion (DIPP), FDI inflows into air transport (including air freight) between April 2000 and September 2017 amounted to US$1,590 million.

· India is estimated to see investment of US$25 billion over the next decade in the airport sector, and traffic growth of 13 percent, according to Morgan Stanley. According to them, the share of air travel in combined air and rail travel in India will grow to 15.2% by 2027 from the current 7.9%.

The Airports Authority of India has finalized investment plans worth Rs 65 billion (US$10.08 billion) with Rs17.5 billion (US$27.13 billion) for the next five years and around Rs 22 billion (US$3.41 billion) for brownfield expansion in Delhi, Mumbai, Hyderabad and Bengaluru by private operators and around Rs 21,000 crore (US$32.55 billion) for greenfield airports.

Key investments and developments in the Indian aviation industry include:

The Airports Authority of India (AAI) will undertake new development work at Lucknow, Deoghar, Rajkot and Allahabad airports.

· The objective is to improve and develop the airport infrastructure to meet the growing demand for traffic. AAI plans to construct a new integrated passenger terminal building at ChaudharyCharan Singh International Airport, Luck now at an estimated cost of Rs 1,230 crore (US$190.65 million). The new terminal will be able to handle 4,000 passengers during rush hour and 6.35 million passengers per year.

Government initiatives

Some important initiatives undertaken by the government are:

Under the second round of the Regional Connectivity Scheme (RCS 2), the government has awarded 325 routes to airlines and helicopter operators with the aim of improving flight services to mountainous and remote areas. Under the scheme, airline operators have to offer half their seats at reduced fares and helicopter operators can offer up to 13 seats at lower fares with the government providing Viability Gap Funding (VGF) or subsidy to airlines and helicopter operators.

The construction of 17 highways and airstrips are the government’s priorities and it will start work on them this year, Union Minister NitinGadkari said. The projects are designed in such a way that the roads will double as landing strips and traffic will stop when a plane lands or takes off. Road and air connectivity will also provide better access to remote areas.

Airport construction and modernization projects worth more than Rs 19.3 billion (US$2.99 ​​billion) have received recommended green approval, in line with the Government of India’s focus on improving regional air connectivity.

Conclusion

India’s aviation industry is largely untapped with huge growth opportunities, considering that air travel remains expensive for the majority of the country’s population, nearly 40 percent of whom are the upwardly mobile middle class.

Industry stakeholders need to engage and collaborate with policy makers to implement efficient and rational decisions that drive the Indian civil aviation industry forward. With the right policies and a relentless focus on quality, cost and passenger interest, India would be well positioned to achieve its vision of becoming the third largest aviation market by 2025.

· In the next 20 years, Indian companies will buy 2,100 new planes for a value of 290,000 million dollars. Furthermore, domestic air traffic in India is expected to exceed 150 million in fiscal year 2019, thanks to unprecedented capacity induction by airlines*.