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September, 2011

Market Size

India's domestic aviation market expansion has been the strongest in the world - tripling in the past five years, according to the International Air Transport Association’s (IATA) report.

India is currently the ninth largest aviation market in the world, according to a RNCOS report “Indian Aerospace Industry Analysis”. The Government's open sky policy has attracted many foreign players to enter the market and the industry is growing in terms of both players and the number of aircrafts. Given the strong market fundamentals, it is expected that the civil aviation market will register a compound annual growth rate (CAGR) of more than 16 per cent during 2010-2013.

India's domestic air traffic grew at a rate, which is the second highest after Brazil, according to global figures for June 2011, compiled by IATA. The country's domestic traffic grew by 14 per cent in the same period as against Brazil's 15.1 per cent.

Indian airlines reported a continuous growth trend and a strong domestic passenger growth rate of 22.3 per cent in July 2011. Passenger traffic has grown at 18 per cent year on year (y-o-y) basis and the year 2010 closed at 90 million passengers both domestic and international. India is the fastest growing aviation market and expected to be within 4-5 big aviation markets by 2020 and 3rd in terms of domestic market after US and China.

In July 2011, airlines in India handled 5 million domestic passengers, according to data released by the Directorate General Civil Aviation (DGCA) on September 12, 2011, marking the 11th consecutive month of double-digit growth. India’s domestic market has witnessed passenger growth for 26 consecutive months now. In July 2011, India’s airlines handled 1.3 million international passengers, an increase of 8.5 per cent y-o-y, according to DGCA.

Passengers carried by domestic airlines during Jan-Aug 2011 were 39.63 million as against 33.41 million during the corresponding period of previous year thereby registering a growth of 18.6 per cent, according to data released by DGCA.

India is expected to cross the 450 million mark of domestic passengers by 2020. During the last two decades from a fleet of only about 100, the scheduled operators now have reached 435 aircrafts connecting the nation and the world.

Private carriers are anticipated to post a combined profit of US$ 350–US$ 400 million for the fiscal years 2011-12, as reported by Centre for Asia Pacific Aviation (CAPA) India, in its 2011-12 - Aviation Industry outlook. Domestic capacity is also projected to grow by 12-14 per cent for the assessment period.

Aviation - Market Players

  • During July 2011, Vijay Mallya-promoted Kingfisher was the largest domestic standalone carrier with around 1.1 million passengers, based on CAPA calculations. Jet Airways/JetLite had a combined passenger level of 1.2 million passengers, or around 26 per cent of the market
  • IndiGo started its international air services from September 1, 2011 after completing the mandatory five years of wholly domestic operations. The low cost carrier (LCC), the largest in the domestic Indian market, marks the start of its foray into international markets with direct services to Dubai, followed by Singapore and Bangkok in the first phase – connecting all key global business hubs
  • Dubai's first low cost airline, flydubai, will start flights to the city of Ahmedabad in Gujarat from August 27, 2011. Ahmedabad is the world's third fastest growing city in the world and it will become the third Indian city on flydubai's rapidly expanding network. The airline will offer seats from Ahmedabad to Dubai beginning at Rs 7,500 (US$ 156.25) inclusive of taxes and seven kilograms of hand baggage. The flights will operate once in a week on Saturdays only
  • Hyderabad-based GVK Power & Infrastructure would be paying Rs 114 (US$ 2.37) for each equity share to Siemens Project Ventures to buy the latter's 14 per cent stake in Bengaluru International Airport Ltd (BIAL)

Aerospace on a High

  • The Indian commercial aerospace market is estimated to absorb about 1,100 commercial jets worth US$ 130 billion over the next 20 years, making it one of the most lucrative markets for the global aviation majors, according to a new Deloitte Touche Tohmatsu report. Mentioning the recent orders placed by IndiGo (180 Airbus A-320 aircrafts) and GoAir (72 A-320neo aircrafts), the report declared India as the fastest growing commercial aviation market in the world
  • An investment proposal worth Rs 11,700 crore (US$ 2.44 billion) from European Aerospace and Defence Systems (EADS) is among the many aerospace projects received and approved by the State Government for its aerospace special economic zone (SEZ) in Bengaluru. They plan to develop a 250 acre SEZ at Devanahalli, north of the city, at an investment of around Rs 14,500 crore (US$ 3.02 billion), according to Ms Manjula Geetha, Deputy Secretary, Infrastructure Development Department. “There is a huge growth in Karnataka, which is the preferred investment destination in this sector for components and MRO projects”, she added
  • Low-cost carrier, IndiGo, has signed a US$ 16 billion dollar deal with Airbus to acquire 180 single-aisle aircraft. The firming-up of the order for 150 A320neo and 30 A320 planes follows the memorandum of understanding (MoU) the carrier had signed with the European aircraft manufacturer in January 2011
  • SpiceJet has acquired a new fleet of Q400 aircraft from Bombardier and it will use these aircrafts in its new regional service, scheduled to start on September 21, 2011. Under the deal, SpiceJet also has the option of ordering 15 more Q400 NextGen aircraft