India presently is the ninth biggest aviation hub in the entire world and is set to become the third largest by the turn of 2020. A total of 85 international carriers and five national carriers have flown over 163 million passengers (comprising both domestic and international passengers) to different destinations in India and in 40 other countries. By 2020, this figure is expected to coast to 450 million.
The civil aviation industry in India has long been a strategic commercial sector contributing considerably to overall economic growth and development. The aviation infrastructure has been going through a massive restructuring and modernization drive with airports all over the country being installed with the state-of-the-art air traffic control, surveillance and security systems.
Both the public and private sector airlines have also inducted new fleets of planes. However, losses posted by almost all Indian carries in the 2012-13 fiscal belie the much touted growth potential of the aviation industry. The perpetually escalating cost of aviation fuel, rupee devaluation, economic downturn, soaring operational costs, and low ROI have coalesced in making the aviation companies in India bleed financially. Despite the grim scenario prevailing in the aviation sector, many reputed international carriers are queuing up to launch operations in the country by partnering with an Indian airlines company.
- According to data made public by DIPP (Department of Industrial Policy and Promotion), passenger transport and cargo transport in unison attracted a cumulative FDI amounting to nearly US$ 457 million between April 2000-July 2013
- IndiGo emerged as the top player in the domestic aviation segment with a market share of 29.7% closely followed by the combine of Jet Airways-Jet Lite. The other key players were Spice Jet, Go Air and Air Indi Domestic
- As per figures released by the DGCA (Directorate General of Civil Aviation) there was a 0.74% increase in the number of domestic passengers flown between January-May 2013 from the corresponding period in 2012
Major Developments in Indian Aviation Industry
The Indian aviation industry has charted an extraordinary growth in the last ten years. The domestic aviation market at present is the fourth largest in the world with a market capitalization tantamount to US$ 12 billion. The AAI emerged as the pivotal player as far as upgradations of Indian airports were concerned.
Nevertheless, some notable private players like L&T Ltd, GVK, Siemens, GMR Infrastructure and Maytas Infra Ltd also contributed hugely towards modernizing domestic and international airports. The government of India by following an ‘Open Sky Policy’ has accelerated private participation as international air carriers have made the most out of heightened traffic rights. Foreign airlines now can make FDI up to the tune of 49%.
- The Indian government will continue with its drive to upgrade and modernize airports and will make it an integral part of the 11th Five Year Plan
- FDI to be gradually increased to 100% on an integrated basis
- Tax holidays to companies involved in developing airports for at least ten years
Up-and-coming Trends and Patterns in Aviation Sector
- The growing middle class in India with considerable disposable incomes will stimulate domestic travel
- Eco-tourism and medical tourism are anticipated to further fuel the demand
- FDI investments will reach US$ 150
What Lies Ahead
The Indian aviation industry is likely to become the third biggest in the entire world by 2020. The sector will have to gear up adequately to deal with 85 million international passengers and 336 million domestic passengers.