Aviation
India is the world's ninth largest civil aviation market.

Indian Aviation Industry

Latest update: January, 2015

Aircraft movement in India

Total aircraft movement recorded a CAGR of 8.4 per cent over FY06-13.

Aircraft movement in India

Passenger traffic in India

Total passenger traffic stood at a 154.5 million in FY14.

Passenger traffic in India

Freight traffic in India

Freight traffic is expected to be 11.4 MT by 2032.

Freight traffic in India

International freight traffic

International freight traffic rose 6.2 per cent during FY06-13.

International freight traffic

Updated: January, 2015

SECTORAL REPORT | October, 2014

Introduction

By 2034, India is expected to be among the top five air domestic travel markets globally, in terms of additional passengers per year, according to the International Air Transport Association (IATA).

The civil aviation industry in India has witnessed 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).

Market Size

Domestic air passenger traffic in India has posted double-digit growth which is a growth of about 16.3 percent in October 2014, according to data released by International Air Transport Association (IATA).

Domestic airlines flew 5.92 million passengers in October 2014 as compared to 5.01million passengers during the same period in 2013. The number of passengers carried by domestic airlines during the January-October 2014 period was 55.06 million as against 50.7 million in the year-ago period, according to data released by Directorate General of Civil Aviation (DGCA).

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).

Investments

FDI inflows in air transport (including air freight) during April 2000 to November 2014 stood at US$ 542.55 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:

  • Air Works India Engineering has focused on growing international business and has formed a joint venture (JV) with Yaksa Investment to provide aviation maintenance services to international airlines and domestic operators.
  • Changi Airport India has picked up a 26 per cent stake in Bengal Aerotropolis Projects (BAPL), and will now run the airport for 15 years.
  • AirAsia has planned to add three aircrafts by the end of 2014 and 10 more by the end of 2015, which will take their total fleet to 15 aircrafts.
  • Star Alliance has planned to make New Delhi’s T3 and Mumbai’s T2 Terminals into hubs which will provide a smoother experience for flyers.
  • Vistara, the proposed airline by the Tata Group-Singapore Airlines (SIA) alliance, has signed an agreement for aircraft communications, airline operations and network connectivity with SITA.
  • IndiGo Airlines has ordered 250 A320 neo airplanes from Airbus for a record deal worth around US$ 25.5 billion.

Government Initiatives

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:

  • The Government of India plans to form a committee comprising bankers, aviation experts and technocrats to help turn around and look at privatizing national airline Air India.
  • The Government of India has launched tourist visa on arrival (TVoA) enabled by electronic travel authorisation (ETA) to 43 countries.
  • The Ministry of Civil Aviation plans to list Airports Authority of India and Pawan Hans Ltd on the stock exchanges.
  • The Government of India has approved the construction of five budget airports to improve regional connectivity and work on them will start from FY15.
  • Indian authorities plan to roll out a pilot of fingerprint scanners at airport entry points that will be linked to the country’s Aadhaar unique ID number project. From January 2015, passengers with an Aadhaar number can place his or her fingerprint on a biometric kiosk at airport entry gates in Bengaluru’s Kempegowda International Airport, with the details then checked against details held by the Central Industrial Security Force.
  • The Government of Odisha has signed a Memorandum of Understanding (MoU) with the Airports Authority of India (AAI) for developing an airport at Jharsuguda in western Odisha at a cost of Rs 210 crore (US$ 34.09 million).

Road Ahead

India’s domestic and international passengers, as well as its number of aircrafts, are expected to grow significantly in the coming years. This projected growth, combined with India’s low air traffic density—72 compared to 282 in China and 2,896 in the USA—indicates untapped potential given the projected burgeoning young population and rising disposable income levels.

It is of paramount importance 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 Indian civil aviation industry. With the right policies and focus on quality, cost and passenger interest, India would be well-placed to become one of the largest aviation markets by 2030.

Exchange Rate Used: INR 1 = US$ US$ 0.0162 as on January 21, 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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