Last Updated: January 27, 2015
Q R Thomas
President, Boeing India
Updated: October, 2014
SECTORAL REPORT | October, 2014
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. Simply going by the 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," as per Mr Tony Tyler, Director General and CEO of International Air Transport Association (IATA).
In India, air traffic in terms of aircraft movement and passenger traffic has increased during the last three years. The total aircraft movements and passengers have registered a compound annual growth rate (CAGR) of 3.3 per cent and 5.6 per cent respectively during FY11 to FY14. In the April-May period of the current financial year, aircraft movements and passengers have increased by 5 per cent each over traffic handled during the corresponding period of FY14. The freight traffic during April-May, FY15, also grew by 9.9 per cent over traffic handled during the same period of the last fiscal.
Airports Authority of India (AAI) has estimated that aircraft movements, passengers and freight at all Indian airports are expected to grow at the rate of 4.2 per cent, 5.3 per cent and 5 per cent, respectively, for the next five years.
The aviation job market is expected to improve in FY15 with two new airlines entering the industry. One is AirAsia's joint venture with the Tatas, a low-cost carrier which began in June, 2014. The other, a full-service carrier to be formed separately by the Tatas and Singapore Airlines (SIA), is likely to begin in the fourth quarter of 2014.
The foreign direct investment (FDI) inflows in air transport (including air freight) during April 2000 to July 2014 stood at Rs 2,348.12 crore (US$ 383.63 million), as per data released by Department of Industrial Policy and Promotion (DIPP).
The following are some of the major investments and developments in the Indian aviation sector:
The Government of India has played a key role in promoting the Indian aviation sector. 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$ 0.0163 as on September 25, 2014
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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