Last Updated: May 25, 2015
Q R Thomas
President, Boeing India
Updated: March, 2015
SECTORAL REPORT | March, 2015
The Indian civil aviation industry is on a high growth trajectory. India has a vision of becoming the third largest aviation market by 2020 and is expected to be the largest by 2030.
The civil aviation industry in India has ushered in a new era of expansion driven by factors such as low-cost carriers (LCC), modern airports, foreign direct investments (FDI) in domestic airlines, cutting edge information technology (IT) interventions and a growing emphasis on regional connectivity. In terms of market size, the Indian civil aviation industry is amongst the top 10 in the world with a size of around US$ 16 billion.
“The world is focused on Indian aviation – from manufacturers, tourism boards, airlines, global businesses to individual travelers, shippers and businessmen… If we can find common purpose among all stakeholders in Indian aviation, a bright future is at hand,” said Mr Tony Tyler, Director General and CEO, International Air Transport Association (IATA).
India’s scheduled airlines carried 67.73 million passengers in 2014 compared with 61.42 million passengers in 2013, and 58.81 million in 2012, according to the DGCA. Air traffic in India grew between 20 and 40 per cent for six years starting 2003, when low-fare airline Air Deccan was launched, making it possible for more people to travel by air. The domestic passengers carried by Air India were 12.42 million while the private carriers 54.95 million passengers. The market share of Air India remained at 18.4 per cent while for the private airlines it was 81.6 per cent.
The airlines are projected to record a collective operating profit of Rs 8,100 crore (US$ 1.29 billion) in fiscal year 2016, according to Crisil Ltd.
Aircraft movements, passengers and freight at all Indian airports are expected to grow at a rate of 4.2 per cent, 5.3 per cent and 5 per cent, respectively, for the next five years, according to estimates by Airports Authority of India (AAI).
FDI inflows in air transport (including air freight) during April 2000 to January 2015 stood at US$ 562.65 million, as per data released by Department of Industrial Policy and Promotion (DIPP).
Following are some of the major investments and developments in the Indian aviation sector:
Government agencies have projected that around 500 airports in all, both brownfield and greenfield, would be required by 2020. The private sector is sought to be involved in a big way through different PPP models, with substantial involvement of state support in terms of financing, concessional land allotment, tax holidays and other incentives.
Some of the major initiatives taken by the government are as follows:
There is large untapped potential for growth in the Indian aviation industry due to the fact that access to aviation is still a dream for nearly 99.5 per cent of its large population, nearly 40 per cent of which is the upwardly mobile middle class. It is critical for the industry stakeholders to engage and collaborate with the policy makers to come up with efficient and rational decisions that will shape the future of the Indian civil aviation industry. With the right policies and a relentless focus on quality, cost and passenger interest, India would be well placed to achieve its vision of becoming the third largest aviation market by 2020 and the largest by 2030.
Exchange Rate Used: INR 1 = US$ US$ 0.016 as on March 20, 2015
References: Media Reports, Press Releases, Press Information Bureau, Directorate General of Civil Aviation (DGCA)
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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