Executive Summary  

4
Introduction  4
Year 2005 in Review  5
Industry Analysis  6
Factors Affecting Demand for Air Travel  7
     Growing Purchasing Power of the Middle Class  7
     Lower Air Fares  8
     Tourism in India  8
     Growing Outbound Travel in India  9
     Growth Potential  9
Factors Affecting Aviation Services in India  10
     Liberalization of the Sector  10
     Modernization of Non-Metro Airports  11
     Rising Share of Low Cost Carriers  11
     Fleet Expansion by Airlines  13
     Service Expansions by State Owned Carriers  14
     Development of MRO Market in India  14
     The Indian Government Opens Up New International Routes  15
     Establishment of New Airports and Restructuring of Old Airports  15
     EU-India Civil Aviation Project  16
Challenges Facing the Indian Aviation Sector  17
Recent Developments in the Indian Aviation Sector  20
     Technological Upgradation  21
Leading Airlines in India  22
Regulatory Environment  28
     Federation of Indian Airlines  28
     The Directorate General of Civil Aviation  28
     Ministry of Civil Aviation  29
     Airport Authority of India  30
     The Airport Authority of India Act 1994  30
     Civil Aviation Policy  30
     Liberalization of Entitlements  31
     Open Skies Agreement between India and the US  31
Outlook  32
Aviation

Last Updated: August 2010 http://www.ibef.org/industry/aviation.aspx

The Indian aviation industry is one of the fastest growing aviation industries in the world with private airlines
accounting for more than 75 per cent of the sector of the domestic aviation market (as of 2006). The industry is
growing at a compound annual growth rate (CAGR) of 18 per cent. The country has 454 airports and airstrips,
of which 16 are designated as international airports.

Mr Praful Patel, Union Civil Aviation Minister has stated that the Indian aviation sector will become one of the
top five civil aviation markets in the world over the next five years. Currently, India ranks ninth in the global civil
aviation market.

Passengers carried by domestic airlines from January-June 2010 stood at 25.71 million as against 21.1 million
in the corresponding period of 2009—a growth of 22 per cent—according to data released by the Directorate
General of Civil Aviation (DGCA). In terms of market share, private carrier Jet Airways was the market leader
with 26.5 per cent share, followed by Kingfisher Airlines with 21 per cent, Air India with 16.9 per cent, Indigo
with 16.4 per cent, SpiceJet with 13.3 per cent and GoAir with 5.8 per cent during the month of June 2010.

Leading aircraft manufacturers Airbus and Boeing have expressed optimism over the growth of the civil aviation
industry in India. As per Airbus, the country would need 1,032 new aircrafts worth around US$ 138 billion by
2028. On a similar note, Boeing has also predicted that the sector would require 1,150 commercial jets worth
US$ 135 billion in the next 20 years.

The Hyderabad International Airport has been ranked amongst the world's top five in the annual Airport Service
Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing. The
Hyderabad International Airport is being managed by a public-private joint venture of the GMR Group, Malaysia
Airports Holdings Berhad and the State Government of Andhra Pradesh along with the Airports Authority of
India (AAI).

Timothy J Roemer, the US Ambassador to India has said that the US will work with the Indian government and
the domestic private sector to make the country an aviation hub. Speaking at India Aviation 2010, Roemer said
that the public-private initiative, US-India Aviation Programme, would work together with the DGCA on
helicopter aviation security.

The AAI is set to spend over US$ 1.02 billion in 2010, towards modernisation of non-metro airports. AAI is
planning the city-side development of 24 airports, including those at Ahmedabad and Amritsar. Additionally, 11
new greenfield airports have been identified to reduce passenger load on existing airports, according to
Praveen Seth, member-operations, AAI.

AAI also plans to spend around US$ 3.07 billion in the next five years for developing, upgrading and
modernising metro and non-metro airports.

With the growth in the industry, airport retailing has also gained pace in the recent times. Development of new
terminals and airports such as the recently inaugurated T3 in New Delhi has provided added impetus to this
segment. The highest margin earners in this segment are food and beverages, beauty product, electronic
items, apparel etc. It has been predicted that airports would provide around 300,000-400,000 square feet retail
space by 2015. Many companies are also planning to leverage on this growing segment by launching specific
products for air travellers. For instance, French premium skincare brand L'Occitane is planning to develop a
special range to cater to the airport retailing segment.

Investment Policy

The consolidated document on FDI policy was released on March 31, 2010.

Currently, for the civil aviation sector (Airports):

  FDI up to 100 per cent is allowed under the automatic route for greenfield projects.
 For existing projects, FDI up to 100 per cent is allowed; while investment up to 74 per cent under the
automatic route and beyond 74 per cent under the government route.

Government initiative

As per a new Civil Aviation Requirement (CAR) issued by the DGCA, airlines would have to mandatorily pay a
compensation for delay or cancellation of flights or in case the passengers are denied boarding although
possessing a confirmed ticket. The regulation would come into effect from August 15, 2010.

The Road Ahead

Investment opportunities of US$ 110 billion are being envisaged up to 2020 with US$ 80 billion towards new
aircraft and US$ 30 billion towards the development of airport infrastructure, according to the Investment
Commission of India.

GE Aviation and Air India will jointly invest US$ 90 million to set up a maintenance, repair and overhaul (MRO)
facility in Mumbai.

Indocopters Private Ltd, distributor for Eurocopter helicopters in India, is planning to set up a helicopter MRO
facility in Bhubaneswar, the company’s fourth service centre in the country.
Aviation Industry in India
http://business.mapsofindia.com/aviation/

Overview of Airlines industry in India

The aviation industry in India is one of those sectors that saw a
constant pace of growth among the other industries in the world
over the past many years. The open sky policy of the government
has helped a lot of overseas players entering the aviation market in
India. From then, it has only been growing in terms of players and
the number of aircrafts. At present, private airlines account for
around 75% portion of the domestic aviation market.

The 9th largest aviation market in the world is India. Taking the help of the statistics from the Ministry of Civil
Aviation, approximately 29.8 million passengers traveled to/from India in 2008, showing a surge of 30% from
2007. The prediction stated that international passengers will touch 50 million by 2015. More opportunities in
the aviation industry in India are likely to make way for about 69 foreign airlines from 49 countries.

Growth of Indian Aviation industry

The Indian Civil Aviation market grew at a CAGR of 18%, being valued round US$ 5.6 billion in 2008. Further
statistics revealed that the air traffic in August 2009 was a double digit figure. The domestic airliners flew 3.67
million passengers in August 2009, as against 2.92 million in the corresponding period of 2007, up by 26%. The
Centre for Asia Pacific Aviation (CAPA) has estimated that the domestic traffic will go up by 25% to 30% till
2010 along with a surge in the international traffic by 15%. There would be more than 100 million passengers
by 2010. Then again by 2020, Indian airports will in all probability handle over 100 million passengers every
year. The investment plans to the tune of US$ 9 billion has been made by the Aviation Ministry for modernizing
the existing airports by 2010.

In terms of domestic passengers' volume, US have always been the leader with followers in the league
like China, Japan and India. The number of domestic flights went up by 69% from 2005 to 2008, with the
domestic aviation sector growing at 9-10%.

Market share of key players in the Indian aviation sector

Name of the players Market Share

Kingfisher Airlines and Kingfisher Red (previously Air Deccan) 28%
Jet Airways and Jet Lite (previously Air Sahara) 25%
Air India and Indian (previously Indian Airlines) 16%
IndiGo 14%
SpiceJet 12%
GoAir 3%
Paramount Airways 2%
MDLR Airlines 0.004%

Future of Airlines industry in India

The challenges of the Indian aviation industry are cited below:

 Passenger traffic is estimated to grow at a CAGR of over 15% in the coming few years.
 The Ministry of Civil Aviation would handle around 280 million passengers by 2020.
  US$ 110 billion investment is envisaged till 2020 with US$ 80 billion solely for new aircraft and US$ 30
billion for developing the airport infrastructure.

Top aviation companies in India

India is one of the flourishing global aviation markets. As per Airport Authority of India (AAI) statistics, there are
127 airports in India which incorporates 13 international, 80 domestic, 28 civil and 7 custom airports. Moreover
India has around 1091 registered aircrafts.

Over the years there has been steady growth in the number of private players establishing their
business in India due to increasing liberalization and deregulation. Hence, at present aviation
industry consist of three types of players namely, Full cost carriers, Low cost carriers (LCC) and other start-up
airlines.

An overview of Aviation sector in India

The aviation sector in India has registered an estimated increase in domestic passenger sector by 50% per
annum in the recent years, while the growth in international passenger section is estimated as 25%. Experts
foresee future growth in international cargo by 12%.

As per the prediction of the Ministry of Civil Aviation, India in the coming decade will require 1,500 to 2,000
passenger aircrafts out of which 135 planes have already been added. It is also predicted that India's aircraft
capacity will stand at 500-550.

In the year 2010, as estimated by the ministry, the domestic market will exceed 60 million and the international
traffic will achieve 20 million. And in 2020, Indian airports will be effective enough to support 100 million
passengers, which would include 60 million domestic passengers. The quantity of cargo managed by the
airport is estimated to decline in the range of 3.4 million tonnes per year.

Top aviation companies in India

 Air Charter Services Pvt Ltd: Air Charter Services Pvt. Ltd. performs its business operations with
private business aircrafts, executive and corporate air charters, helicopter tours, VIP charter flights,
and photo and video flights. Its client list incorporates VIPs, corporate firms, tour co-ordinators, travel
agents and air medical evacuation professionals. It provides services such as relief, VIP, air
ambulance and privacy services.

 Air Charters India: Air Charter India is owned by the STIC Travel Group and has around 100
airplanes in India. It covers several international destinations with an unmatchable logistics support.
The aviation company has 40 offices with a highly skilled manpower of above 1000 people. It offers
services like heli-skiing, charter flights for pilgrimage in India, heli-sightseeing, corporate jets, executive
jets, etc. Air Charter India provides airplanes such as helicopters, business aircrafts, aircrafts for
corporates, individuals and group travelers.

 Air India: National Aviation Company of India Limited (NACIL) was the first Indian aviation company
which led the way for other companies in the aviation sector. It was initiated before the India gained its
independence. Later it collaborated with Indian Airlines and gained the reputation of being the largest
airline in South Asian airline. Air India Cargo, Air India Express and Air India Regional are its
subordinates in aviation market. It offers First class, Executive class and Economy class services and
has codesharing pacts with companies like Air France, Austrian Airlines, Aeroflot, Air Astana, Emirates
Airline, Air Mauritius, Kuwait Airways, etc.
 Aviation India: Aviation India provides services like cargo services, flight operation, air charter
services, passenger services, freight control, advisory and consultancy, aircraft preservation and
renovation, international flight operation, air supervision and helipad engineering, etc. The airlines has
skilled workforce and offers total control and functional back-up to several international schedule / non-
schedule operations.

 Indian Airlines: Indian Airlines was inaugurated on 1st August, 1953 and in collaboration with its fully
governed subordinate in aviation market Alliance Air, it takes pride in being recognized as one of the
biggest regional airline systems in Asia. It has a fleet of 70 airplanes and covers 76 destinations, 58
Indian destinations and 18 foreign destinations. Globally it covers Oman, UAE, Kuwait, Qatar,
Singapore, Yangon, Pakistan, Maldives, Bangladesh, Sri Lanka, etc.

 Deccan Aviation Ltd.: The aviation company has its presence in 8 places namely, Mumbai, Ranchi,
Surat, Hyderabad, Bangalore, Katra, Colombo (Sri Lanka) and Delhi. It has 350 daily departures and
covers 65 destinations in India. It offers the benefit of no-cost travel to infants, ticketing counters,
lavish aircraft interiors and ticketing flexibility.

 Indigo: Indigo is a utilitarian low-price domestic airline which offers feasible flying alternatives for
millions. The airline was facilitated by the Air Passengers Association of India (APAI) as the “Best Low-
Fare Carrier in India for the year 2007”. Indigo has 120 daily departures and a fleet of 19 Airbus A320.
The airline covers 17 destinations namely, Agartala, Bangalore, Bhubaneshwar, Ahmedabad, Delhi,
Chennai, Guwahati, Hyderabad, Goa, Imphal, Kolkata, Mumbai, Vadodara, etc.

 Paramount airways: Paramount Airways is a business class airline which has its base in India and
headquarters at Chennai. Endorsed by Madurai-based Paramount Group and Paramount Railways
was inaugurated in 19th October 2005. Its fleet comprises 5 aircrafts and it operates in 8 destinations.

 Go Air Airlines: Like SpiceJet, a Go Air airline is also a low price airline endorsed by the Wadia
group. It was inaugurated in Mumbai in June 2004. It operates in 11 cities with 61 daily departures. It
has started its functions in Ahmedabad, Chennai, Bangalore, Coimbatore, Goa, Cochin, Jaipur,
Mumbai, Pune, Delhi, Srinagar, etc.

 Kingfisher Airlines: It is the one and only 5-star airline in India which offers excellent first class
service on domestic itineraries also. A part of UB group, Kingfisher Airlines has received 30 awards for
its novelty and customer satisfaction. After its tie-up with Deccan, the airline covers 64 cities and has
484 daily departures.

 Spice Jet: Spice Jet is basically a low cost airline which incorporates many Boeing 737-800 airplanes
in its fleet. It covers 14 destinations in India.

 Air Sahara: Air Sahara was inaugurated on December 3, 1993 with a fleet of only two Boeing 737-
200s. Now it comprise of 27 aircrafts, 135 daily departures and availability of 16500 seats on regular
basis. It reaches various Indian destinations like Bangalore, Kolkata, Delhi, Lucknow, Mumbai,
Chennai, etc.

 Jet Airways: Jet Airways was established on May 5, 1993. It earns yearly revenue of Rs 2502.89 and
total income of approx Rs. 117868.8 Million. At present it id India's biggest private domestic airline with
62 aircrafts and a market share of 25%. It covers 50 destinations with 340 regular departures. Jet
Airways has pacts with foreign airlines, such as Lufthansa, Swiss, Gulf Air, Austrian Airlines, Qantas
and Thai.

 Role of Aviation Industry in India GDP

 The Role of Aviation Industry in India GDP in the past few years has been phenomenal in
all respects. The Aviation Industry in India is the most rapidly growing aviation sector of the
world. With the rise in the economy of the country and followed by the liberalization in the
aviation sector, the Aviation Industry in India went through a complete transformation in the
recent period.
  Role of Aviation Industry in India GDP-Facts

Role of Aviation Industry in India GDP-Growth Factors

 The growth in the Indian economy has increased the Gross Domestic Product above 8% and
this high growth rate will be sustained for a good number of years
 Air traffic has grown enormously and expected to have a growth which would be above 25% in
the travel segment
 In the present scenario around 12 domestic airlines and above 60 international airlines are
operating in India
 With the growth in the economy and stability of the country India has become one of the
preferred locations for the trade and commerce activities
 The growth of airlines traffic in Aviation Industry in India is almost four times above
international average
 Aviation Industry in India have placed the biggest order for aircrafts globally
 Aviation Industry in India holds around 69% of the total share of the airlines traffic in the
region of South Asia

Role of Aviation Industry in India GDP-Future Challenges

 Initializing privatization in the airport activities

 Modernization of the airlines fleet to handle the pressure of competition in the aviation
industry
 Rapid expansion plans for the major airports for the increased flow of air traffic
 Immense development for the growing Regional Airports

Role of Aviation Industry in India GDP-FDI Policy

The Reserve Bank of India (RBI) announced that foreign institutional investors might have
shareholdings more than the limited 49% in the domestic sector.

 Airports
 Foreign equity up to 100% is allowed by the means of automatic approvals pertaining
to establishment of Greenfield airports
 Foreign equity up to 74% is allowed by the means of automatic approvals pertaining
to the existing airports
 Foreign equity up to 100% is allowed by the means of special permission from Foreign
Investment Promotion Board, Ministry of Finance, pertaining to the existing airports

 Air Transport Services

 Up to 49% of foreign equity is allowed by the means of automatic approvals pertaining
to the domestic air transport services
 Up to 100% of NRI investment is allowed by the means of automatic approvals
pertaining to the domestic air transport services

Civil Aviation Policy

The Civil Aviation Ministry is evolving a draft Civil Aviation Policy that would increase foreign
direct investment ceiling, liberalize bilaterals and move towards an `Open Sky,' encourage the
promotion of Regional Airlines, lower fares to make aviation affordable and remove price monopolies
in respect of Aviation Turbine Fuel (ATF).

Mission Of Civil Aviation Policy

The main aim of the Civil Aviation Policy is to maintain a competitive Civil Aviation Environment
which ensures safety and security in accordance with international standards, promotes efficient, cost-
effective and orderly growth of air transport and contributes to social and economic development of
the country.

Strategic Objectives Of Civil Aviation Policy

The objectives of this Civil Aviation Policy are the creation and continued facilitation of a competitive
and service-oriented Civil Aviation Environment in which:

 the interests of the users of civil aviation are the guiding force behind all decisions, systems
and arrangements

 safe, efficient , reliable and widespread quality air transport services are provided at
reasonable prices

 there exists a well-defined regulatory framework catering to changing needs and

circumstances

 all players and stakeholders are assured of a level playing field

 private participation is encouraged and opportunities created for investors to realize adequate
returns on their investments

Regulatory Framework
In the context of a multiplicity of airlines, airport operators (including private sector), and the
possibility of oligopolistic practices, there is need for an autonomous regulatory authority which could
work as a watchdog, as well as a facilitator for the sector, prescribe and enforce minimum standards
for all agencies, settle disputes with regard to abuse of monopoly and ensure level playing field for all
agencies. Therefore, a statutory autonomous Civil Aviation Authority (CAA) will be constituted. The
basic objectives of setting up of the Authority will be to ensure aviation safety, security and effective
regulation of air transport in the country in the liberalized environment.

Airport Infrastructure

The Government will aim at ensuring adequate world class Airport Infrastructure capacity in
accordance with demand, ensuring maximum utilization of available capacities and efficiently
managing the Airport Infrastructure by increasing involvement of private sector.

Aviation Support Services

The role of Aviation Support Services like human resource development, maintenance facilities and
manufacture of aircraft is very important, as these are the backbone of Civil Aviation Services.
These services should be available in state-of-art condition in adequate supply in accordance with
demand. For this, the role of private sector needs to be emphasized.

Co-ordination

 A number of department/ agencies are involved in the development of Civil Aviation

Infrastructure and facilitating the convenience of the traveling public. Inter-linkages with
other modes of transport for travel and trade need to be emphasised.
 An Inter-Ministerial Standing Committee will be constituted for coordination with Ministries of
Commerce, Tourism, Industry, Railways, Surface Transport, Defence, Home Affairs
(Immigration and Security), Finance (Customs) and External Affairs.

Aviation Industry In India

 http://www.indiahousing.com/infrastructure-in-india/aviation-
industry-in-india.html

Aviation Industry in India traces back its History to 1912, with first flight from Karachi to Delhi
started by Indian State Air Services and Imperial Airways UK collaboration. Actually it was just an
extension of the London-Karachi flight by imperial airways.

However the actual instigation of India Aviation Industry was in the form of Tata Airline by JRD
Tata in 1932. He was also the first Indian to get an A-License. In 1946, Tata Airlines was transformed
into Air India. At the dawn of independence, India had nine air transport companies providing both
cargo and passenger services.

In 1953, the Government of India nationalized all existing airline assets and formed Indian Airline
Corporation for domestic air services along with Air India International for international air services.
Until, 1991, these two companies played monopoly in India. It was only in this year that private
airlines were allotted the 'air taxi scheme', under which they could operate chartered and non-
scheduled services for uplift of Indian tourism. In 1994, as a result of a repeal of the air corporation
act, private airline companies obtained permission to operate scheduled air services.

Indian Aviation Industry witnessed a major change in 2003, when Air Deccan introduced budget
flying by lowering down the fares to mere 17% of what the other airlines were charging. Now the list
includes Spice Jet, Go Airways and Kingfisher Air. 'All-business class airline' Paramount Airways also
belongs to this group. These budget airlines have taken up the major Indian Aviation Industry market
share. They have established newer trends in the aviation industry.

Indian Aviation Industry 2009

Indian Aviation Industry 2009 takes names of some of the leading airlines in the aviation industry
world over. Aviation industry statistics have shown a growth curve that establishes the emergence of
a new world leader. The latest Aviation Industry news shows airlines launching newer flights
everyday with very low fares to attract the maximum number of customers.

An Overview of the Aviation Industry of India gives us three main categories for the Aviation Industry
analysis. These include:

o Airlines in India

: Aviation Industry of India and airlines in India are managed by the Ministry of Civil Aviation,
Government of India. All domestic and international airlines are supposed to obtain license
from the ministry. Ten major domestic airlines came together to form FIA (Federation of
Indian Airlines) to deal with Indian Aviation Industry challenges in domestic segment and
establish newer trends in the aviation industry of India.

o Airports in India

: In order to establish international standards in operational, terminal and cargo services, the
 International Airports Authority of India was fused with National Airports Authority to ascertain
Airports Authority of India (AAI). The airports authority is responsible for all infrastructure
related and aviation industry market related tasks. All airports in India are managed by the
Airports Authority of India.

o Aviation Schools in India

: The aviation industry India provides highly lucrative careers and thus is a major attraction
amongst the youth of India. For professional training of these enthusiasts, various aviation
schools and aviation academy are present in different parts of the country. They provide
commercial pilot training. For this you need to obtain Student Pilot License (SPL) and after the
completion of your training, a Commercial Pilot License (CPL) is required.

For Aviation Industry Growth in the domestic airports infrastructure, Federation of Indian Airlines
(FIA) was formed. The federation has the main aim of establishing a forecast of all time highest
growth in the domestic Aviation Industry India. The future outlook of the Indian Aviation Industry
depends majorly on the various aviation schools operational in the country. The aviation industry
research undertaken by the Ministry of Civil Aviation can ensure technological advances.

Aviation industry conferences and expo are held regularly that give detailed reports of the various
events in the aviation industry in India, the advantages for the Indian aviation industry, the various
aviation industry jobs and employment opportunities available. Aviation industry report analysis helps
in solving the various aviation industry problems.