The Indian aviation sector is growing steadily. Passenger output rose from 73 million in FY 2006 to 144 million in FY 2011, according to a study by FICCI–KPMG (2012). The high growth path can be credited to the 11th Five Year Plan (2007–2012). This period saw the completion of four international airport projects through the public–private partnership (PPP) mode, and also witnessed five Indian carriers functioning on international routes.
Air transport in India presently supports 56.6 million jobs and generates over US$ 2.2 trillion of the global gross domestic product (GDP). Air passenger traffic is also growing at a rapid pace, a development driven in no small part by modern infrastructure and facilities.
“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).
India is one the fastest growing aviation markets and currently the ninth largest civil aviation market in the world, according to Mr KN Shrivastava, India’s Civil Aviation Secretary. The sector is projected to be the third largest aviation market globally by 2020.
Currently, India’s aviation market caters to 117 million domestic and 43 million international passengers. Over the next decade that market could reach 337 million domestic and 84 million international passengers.
Air transport (including air freight) in the country attracted foreign direct investment (FDI) worth US$ 456.84 million in the period April 2000–July 2013, according to data released by Department of Industrial Policy and Promotion (DIPP).
Singapore-based Tigerair has entered into an interline agreement with Spicejet, India’s second largest low-cost carrier. Tigerair is a low-cost airline in which Singapore Airlines has a 33 per cent stake. Under this agreement, customers commuting on Spicejet’s domestic network from 14 Indian cities can connect to Tigerair’s Singapore-bound flights through the Hyderabad airport, from January 6, 2014.
InterGlobe Enterprises and CAE, a Canadian civil and military aviation simulation training firm, have jointly launched India’s largest pilot simulation training facility in Greater Noida, Uttar Pradesh. The move will cater to India’s demand for aviation training facilities. The 50–50 joint venture will set up the centre with an investment of US$ 25 million. “There is a growing need for trained pilots. This centre will help address the requirement,” said Mr Rahul Bhatia, Managing Director, InterGlobe Enterprises Group.
Mahindra Aerospace plans to make an 8-seater aircraft at its manufacturing base in Bangalore. The 8-seater GA8 aircraft will have a range of over 1,100 km and will facilitate connectivity between small towns and cities, and is particularly of help to domestic tourists. “Through our utility aircraft, we will get into areas where no one has reached yet,” said Mr Anand Mahindra, Chairman of Mahindra & Mahindra Ltd.
India’s aviation ministry is looking at small and medium airports to set up centres for maintenance, repair and overhaul (MRO) of aircrafts. Some officials see the airport at Surat as a viable option in this regard. The airport as of now has just three scheduled landing and take offs in a day, by Air India and SpiceJet. Various tests can be carried out in the day within a 1,000 feet and 5 nautical mile area. Currently, India’s MRO market is worth US$ 800 million with the likelihood of touching US$ 1.5 billion by 2020.
US companies, encouraged by the growth of the India aviation sector, are keen to invest in the various fields associated with the industry, such as building new airports or security, according to American officials. "Indian aviation is experiencing dramatic growth across the board, from the emergence of new carriers to a growing middle class ready to take travel by air," said US Transportation Secretary Mr Anthony Fox.
The Cabinet Committee on Economic Affairs (CCEA) has given the approval to Abu Dhabi-based Etihad Airways for buying a stake in Jet Airways. The Rs 2,058-crore (US$ 332.77 million) deal is the largest FDI in Indian aviation. Etihad will hold 24 per cent equity in Jet Airways, Jet Airways will own 51 per cent, and the rest will be floating shares.
Tata Group's proposal to set up a full service airline in collaboration with Singapore Airlines has been given the green signal by the Foreign Investment Promotion Board (FIPB). The US$ 100 million venture will see Tata Group hold a 51 per cent stake in the Tata SIA Airlines with an investment of US$ 51 million; Singapore Airlines will have a stake of 49 per cent with an initial investment of US$ 49 million.
The potential of the Indian aviation industry is enormous. The market already has about 150 million travelers passing through its airports, with the capacity to grow further. By 2020, traffic at Indian airports is projected to touch 450 million. Furthermore, India’s aviation industry supports about 0.5 per cent of the Indian GDP and close to 1.7 million high-productivity jobs. The annual value added by an employee in air transport services in the country is nearly 10 times greater than the Indian average.
Exchange Rate Used: INR 1 = US$ 0.01616 as on December 24, 2013
References: Media Reports, Press Releases, Press Information Bureau, Department of Industrial Policy and Promotion (DIPP), Directorate General of Civil Aviation (DGCA)