Trade Analytics
Browse

This is the ARCHIVED section of the website. To visit the current content of the website please CLICK here

Aviation

Go Back

Aviation

April, 2010

The Indian aviation industry is one of the fastest-growing aviation industries in the world with private airlines accounting for more than 75 per cent of the sector of the domestic aviation market (as of 2006). With a compound annual growth rate (CAGR) of 18 per cent and 454 airports and airstrips in place in the country, of which 16 are designated as international airports, Union Civil Aviation Minister Mr Praful Patel has stated that the aviation sector will witness revival by 2011.

With an increase in traffic movement during December 2009 and increase in revenues by almost US$ 21.4 million, the Airports Authority of India seems set to accrue better margins in 2009-10, as per the latest estimates released by the Ministry of Civil Aviation. This is being primarily attributed to increase in the share of revenue from Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL).

Passengers carried by domestic airlines from January-February 2010 stood at 8,056,000 as against 6,761,000 in the corresponding period of 2009—a growth of 19.2 per cent, according to a report released by the Ministry of Civil Aviation.

The Hyderabad International Airport has been ranked amongst the world's top five in the annual Airport Service Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing. The Hyderabad International Airport is managed by a public-private joint venture consisting of the GMR Group, Malaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and the Airports Authority of India (AAI).

The US Ambassador to India Timothy J Roemer, has said that the US will work with the Indian government and the domestic private sector to make the country an aviation hub. Speaking at India Aviation 2010, Roemer said that the public-private initiative, US-India Aviation Programme, would work together with the Directorate General of Civil Aviation on helicopter aviation security.

The Airports Authority of India (AAI) is set to spend over US$ 1.02 billion in 2010, towards modernisation of non-metro airports. AAI is planning the city-side development of 24 airports, including those at Ahmedabad and Amritsar. Additionally, 11 new greenfield airports have been identified to reduce passenger load on existing airports, according to Praveen Seth, member-operations, AAI.

The government has also merged national carriers Air India and Indian Airlines into a single entity, the National Aviation Company Ltd (NACIL). The civil aviation ministry has prepared a blueprint to convert Delhi airport into an international hub for passenger airlines with effect from August 2010 to help the airport utilise large amounts of additional capacity that will be ready by July 2010. Under the plan, NACIL will set up its hub in Delhi.

Investment Policy

The consolidated document on FDI policy was released on March 31, 2010.

Currently, for the civil aviation sector:

  • FDI up to 100 per cent is allowed under the automatic route for greenfield projects.
  • For existing projects, FDI up to 100 per cent is allowed; while investment up to 74 per cent under the automatic route and beyond 74 per cent under the government route.

The Road Ahead

Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$ 80 billion towards new aircraft and US$ 30 billion towards development of airport infrastructure, according to the Investment Commission of India.

  • Indian aerospace companies are growing too. Hindustan Aeronautics Limited (HAL) was ranked 40th in Flight International's list of the top 100 aerospace companies last year.
  • Aircraft manufacturing major, Boeing, is in the process of setting up the US$ 100 million proposed Maintenance Repair Overhaul (MRO) facilities in Delhi. Air India is also in the process of launching a Cargo Hub in Nagpur while Deccan Aviation has already started one from the city.
  • GE Aviation and Air India will jointly invest US$ 90 million to set up a maintenance, repair and overhaul (MRO) facility in Mumbai.
  • Indocopters Private Ltd, distributor for Eurocopter helicopters in India, is planning to set up a helicopter maintenance, repair and overhaul (MRO) facility in Bhubaneswar, the company’s fourth service centre in the country.

Exchange rate used: 1 USD = 44.23 INR (as on April 2010)