Introduction
The Indian civil aviation industry is on a high growth trajectory. India has a vision of becoming the third largest aviation market by 2020 and is expected to be the largest by 2030.
The civil aviation industry in India has ushered in a new era of expansion driven by factors such as low-cost carriers (LCC), modern airports, foreign direct investments (FDI) in domestic airlines, cutting edge information technology (IT) interventions and a growing emphasis on regional connectivity. Simply going by the market size, the Indian civil aviation industry is amongst the top 10 in the world with a size of around US$ 16 billion.
Market size
In India, air traffic in terms of aircraft movement and passenger traffic has increased during the last three years. The total aircraft movements and passengers have registered a compound annual growth rate (CAGR) of 3.3 per cent and 5.6 per cent respectively during FY11 to FY14. Airports Authority of India (AAI) has estimated that aircraft movements, passengers and freight at all Indian airports are expected to grow at the rate of 4.2 per cent, 5.3 per cent and 5 per cent, respectively, for the next five years.
Investment
The foreign direct investment (FDI) inflows in air transport (including air freight) during April 2000 to July 2014 stood at Rs 2,348.12 crore (US$ 383.63 million), as per data released by Department of Industrial Policy and Promotion (DIPP).
IndiGo has signed a US$ 2.6 billion agreement with the Industrial and Commercial Bank of China (ICBC) under which the latter will finance the airline's plan to purchase 30 aircraft.
SpiceJet Airlines has signed a contract with GE aviation to use GE's Flight Efficiency Services (FES) to support its fleet of 52 Boeing 737 and Bombardier Q400 aircraft.
Air Costa has made capital expenditure plan for about Rs 600 crore (US$ 98.04 million) to acquire new aircraft to strengthen its fleet and expand its network.
L&T Technology Services has bought 74 per cent equity stake in Thales Software India Pvt Ltd, to strengthen its avionics business. This collaboration will enhance L&T's expertise in high-end avionics software.
The Tata Group and Swiss aerospace and defence firm Ruag Aviation plans to set up an aircraft manufacturing facility in Hyderabad, Telangana.
Tata-Singapore Airlines is ready to conduct a demonstration in September to prove that it can operate passenger flights, to the Director General of Civil Aviation (DGCA).
Hindustan Aeronautics Ltd (HAL) has entered into a collaboration with IIT Kharagpur to establish a Faculty Chair to give thrust on research and development (R&D) and academic work in new and emerging technologies in the aerospace industry. This initiative is to conduct applied research and tackle multi-disciplinary problems in the field of aerospace technology and its applications.
Road Ahead
There is large untapped potential for growth in the Indian aviation industry due to the fact that access to aviation is still a dream for nearly 99.5 per cent of its large population, nearly 40 per cent of which is the upwardly mobile middle class. It is critical for the industry stakeholders to engage and collaborate with the policy makers to come up with efficient and rational decisions that will shape the future of the Indian civil aviation industry. With the right policies and a 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 and the largest by 2030.
Road Ahead
There is large untapped potential for growth in the Indian aviation industry due to the fact that access to aviation is still a dream for nearly 99.5 per cent of its large population, nearly 40 per cent of which is the upwardly mobile middle class. It is critical for the industry stakeholders to engage and collaborate with the policy makers to come up with efficient and rational decisions that will shape the future of the Indian civil aviation industry. With the right policies and a 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 and the largest by 2030.