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June, 2011

The aviation sector in India is amongst the most promising ones, driven by a massive boom in tourism and increasing levels of disposable incomes. The liberalisation of the sector in the mid-nineties has resulted in a remarkable growth as a large number of private service airlines entered the sector. Strong government support and private participation, coupled with the availability of skilled manpower, and favourable business environment have positioned India as an attractive investment destination on the world map.

Indian Aviation - Market Size

Recording the strongest growth in the world, India's domestic aviation market has tripled in the past five years, according to a latest report of the International Air Transport Association (IATA).

India is currently the ninth largest aviation market in the world, according to a report “Indian Aerospace Industry Analysis”, by research firm RNCOS. 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 more than 16 per cent CAGR during 2010-2013.

Passengers carried by domestic airlines during January - May 2011 were 24.5 million as against 21 million during the corresponding period of previous year thereby registering a growth of 17.6 per cent, according to the latest data released by the Directorate General of Civil Aviation (DGCA). For the first time, domestic traffic in a month has registered 5.5 million passengers carried with three airlines viz. Jet Airways, Kingfisher Airlines and IndiGo carrying more than 1 million passengers each in May 2011.

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

Indian Aviation - Market Players

Market share statistics for May 2011 indicates a neck-to-neck tiff between Kingfisher and IndiGo with 20 and 19.9 per cent of market share respectively. However, if the figures for Jet Airways (18.5 per cent) and JetLite (7.6 per cent) are combined, then the Jet Airways group of airlines leads with 26.1 per cent of the market. The remaining market shares belong to Air India (13.2 per cent), Spicejet (14.2 per cent) and GoAir (6.6 per cent).

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 embarked India as the fastest growing commercial aviation market in the world.

Indian Aviation - Recent Developments

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.