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June, 2012


The aviation sector is one of the major economic drivers for prosperity, development and employment in a country. The rapidly expanding aviation sector in India handles about 2.5 billion passengers across the world in a year; moves 45 million tonnes (MT) of cargo through 920 airlines, using 4,200 airports and deploys 27,000 aircraft. Today, 87 foreign airlines fly to and from India and five Indian carriers fly to and fro from 40 countries.

India is expected to be amongst the top five nations in the world in the next 10 years in the aviation sector. On the sidelines of the International Civil Aviation Negotiation (ICAN) Conference, Ms Pratibha Patel, President of India, highlighted that currently, India is the ninth largest civil aviation market in the world.

India is poised to emerge as the third largest aviation market in the world by the end of this decade, according to Dr Nasim Zaidi, Secretary, Ministry of Civil Aviation. The sector with a growth of 18 per cent in domestic market is expected to generate approximately 2.6 million jobs in the next one decade, added Dr Zaidi.

Market Size

Passengers carried by domestic airlines during January-May 2012 was recorded at 25.81 million as against 24.49 million during the corresponding period of previous year thereby, registering a growth of 5.34 per cent, according to latest data released by the Directorate General Civil Aviation (DGCA).

The passenger traffic has grown at the rate of 17 -18 per cent in the last few years. According to an assessment of the overall outlook of the sector, the fleet of the commercial airlines is expected to touch approximately 1,000 aircraft in 2020, as per Mr Ajit Singh, Minister of Civil Aviation.

The air transport (including air freight) in India has attracted foreign direct investment (FDI) worth US$ 433.42 million from April 2000 to March 2012, as per data released by Department of Industrial Policy and Promotion (DIPP).

In addition, the airport retail business in India has topped in revenue, registering US$ 1 billion during 2011, according to a boutique retail consultancy. The business is growing at 17-18 per cent annually, emerging as a viable platform for retailers and operators of the new airports, according to consulting firm Asipac Projects.

Market Players

  • SpiceJet Ltd plans to raise funds from private equity (PE) companies. "Various investors, including some PE funds, have approached SpiceJet, and we are in talks with them," as per a SpiceJet spokesperson. Currently, the firm has a fleet of 34 Boeing and seven Bombardier aircraft
  • As part of a strategic rebranding exercise, Jet Airways will consolidate its low-fare service products under the JetKonnect brand to make simpler the Group's service proposition and improve brand recall, according to the company. JetKonnect will be the dedicated low-fare service with a mixed fleet of Boeings and ATR aircraft to operate on metro, tier-II and tier-III city routes
  • Indian food catering firm Travel Food Services (TFS) has entered into a joint venture (JV) with Gate Gourmet, a subsidiary of Swiss giant Gate Group to provide in-flight on-board catering services. The JV has tied up with Jet Airways as a first move and will cater to 500 Jet flights a day

Aerospace on a High

  • In line with the international trend of transit hotels within airports, the UK-based Eaton Smart Hotel has started its operations at Terminal 3 (T3) of the Delhi International Airport, making it the first transit hotel in India. Eaton is being managed by the Langham Hospitality Group and has been developed by Wadhwa Developers. In addition, international hotel majors, including MGM, Marriott, Hyatt, Intercontinental and Conrad, are waiting to start operations in the Delhi International Airport Ltd hospitality district near the Delhi airport
  • Turkey is planning to double flights from India, besides opening four more connecting points in Hyderabad, Chennai, Kolkata and Bengaluru. "We have sought permissions from the Indian Government to double this number and expand to other destinations," as per Dr Burak Akcapar, Turkish Ambassador to India
  • Aircraft maker Gulfstream Aerospace Corp sees India as the next big opportunity for business jets. "We are optimistic as the Indian GDP is poised for growth so is the case with corporate entities. We see private jets driving economic growth," according to Roger Sperry, Regional Senior Vice-President, Gulfstream Aerospace
  • Richard Branson's Virgin Atlantic is all set to operate on the Mumbai-London route. The flights that are scheduled to operate from October 29, 2012, will be carried on the A330-300 with Upper Class Dreamsuite, a new product line offering, as per a statement by Virgin Atlantic. "India's phenomenal growth continues to drive travel to the UK and the USA and we know our passengers are going to love the connections the new flights offers," as per Sir Richard Branson, President, Virgin Atlantic Airways