The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. India has become the third largest domestic aviation market in the world and is expected to overtake UK to become the third largest air passenger* market by 2024^.
India’s passenger* traffic stood at 341.05 million in FY20. It grew at a compound annual growth rate (CAGR) of 11.13% during FY16–FY20. Domestic passenger traffic stood at 274.50 million in FY20, growing at a CAGR of 12.91% over FY16. International passenger traffic stood at 66.54 million, growing at a CAGR of 5.01% during FY16-FY20.
Freight traffic grew at a CAGR of 5.32% during FY16–FY20 from 2.70 million tonnes (MT) to 3.33 MT. Freight Traffic is expected to grow at a CAGR of 7.27% to reach 4.14 MT in FY23.
Aircraft movement grew at a CAGR of 9.56% from 1.60 million in FY16 to 2.59 million in FY20. During FY16–FY20, domestic aircraft movement increased at a CAGR of 9.83% and international aircraft movement expanded at a CAGR of 3.57%. India’s domestic and international aircraft movements grew to reach 2,155 thousand and 433 thousand during FY20, respectively.
To cater to the rising air traffic, the Government of India has been working towards increasing the number of airports. As of March 2019, India had 103 operational airports. India has envisaged increasing the number of operational airports to 190–200 by FY40.
Further, the rising demand in the sector has pushed the number of airplanes operating in the sector. The number of airplanes is expected to reach 1,100 planes by 2027.
According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflow in India’s air transport sector (including air freight) reached US$ 2.75 billion between April 2000 and March 2020. The government has allowed 100% FDI under the automatic route in scheduled air transport service, regional air transport service and domestic scheduled passenger airline. However, FDI over 49% would require government approval.
India’s aviation industry is expected to witness Rs 35,000 crore (US$ 4.99 billion) investment in the next four years. The Indian Government is planning to invest US$ 1.83 billion for development of airport infrastructure along with aviation navigation services by 2026.
Key investments and developments in India’s aviation industry include:
Some major initiatives undertaken by the Government are:
Following are achievements of the Government:
India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for majority of the country’s population, of which nearly 40% is the upwardly mobile middle class.
The industry stakeholders should engage and collaborate with policy makers to implement efficient and rational decisions that would boost India’s civil aviation industry. With the right policies and 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. The expenditure of Indian travellers is expected to grow up to Rs 9.5 lakh crore (US$ 136 billion) by 2021. Due to rise in demand in air travel, India will need 2,380 new commercial airplanes by 2038.
Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123
Note: * - International and Domestic, ^ - As per International Air Transport Association (IATA) forecasts
References: Media Reports, Press Releases, Press Information Bureau, Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI), Union Budget 2020-21
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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