An Article on the Growth of Aviation in India
· The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. India is currently considered the third largest domestic civil aviation market in the world. India is expected to become the world’s largest domestic civil aviation market in the next 10 to 15 years, as per Mr Jayant Sinha, Union Minister of State for Civil Aviation, Government of India.
· According to International Air Transport Association (IATA), India will displace the UK for the third place in 2025.
· The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information technology (IT) interventions and growing emphasis on regional connectivity.
· Domestic air traffic rose to 17.69 per cent year-on-year in December 2017, continuing its double digit growth, according to the civil aviation regulator Directorate General of Civil Aviation (DGCA). About 11.24 million passengers flew in December 2017, up from 9.55 million a year earlier. Passengers carried by domestic airlines during 2017 were 117.1 million as against 99.89 million during the corresponding period of previous year, thereby registering a growth of 17.31 per cent, as per the DGCA.
· As of December 2017, the existing fleet of aircraft stands at 548 aircraft in India, and another 920 aircraft are expected to be inducted into the fleet by 2025.
· According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows in air transport (including air freight) between April 2000 and September 2017 stood at US$ 1.59 billion.
· India is estimated to see an investment of US $25 billion in the next decade in the airports sector, and traffic growth of 13 per cent, according to Morgan Stanley. According to them, the share of air travel in air and rail travel combined in India will grow to 15.2 per cent by 2027 from 7.9 per cent now.
· Capex plans to the tune of Rs 65,000 crore (US$ 10.08 billion) have been finalized by the Airports Authority of India with Rs 17,500 crore (US$ 27.13 billion) for the next five years and around Rs 22,000 crore (US$ 3.41 billion) for brownfield expansion in Delhi, Mumbai, Hyderabad and Bengaluru by private operators and around Rs 21,000 crore (US$ 32.55 billion) for greenfield airports.
Key investments and developments in India’s aviation industry include:
· The Airports Authority of India (AAI) will undertake new development works at Luck now, Deoghar, Rajkot and Allahabad airports.
· The objective is to improve and develop airport infrastructure to meet growing traffic demands. AAI plans to construct new integrated passenger terminal building at ChaudharyCharan Singh International Airport, Luck now at an estimated cost of Rs. 1,230 crore (US$ 190.65 million). The new terminal will be able to handle 4000 passengers during peak hour and 6.35 million passengers per annum.
Some major initiatives undertaken by the government are:
· Under the second round of Regional Connectivity Scheme (RCS 2) the government has awarded 325 routes to airlines as well as helicopter operators with the objective of enhancing flight services to hilly and remote areas. Under the scheme airline operators have to offer half of their seats at discounted rates and helicopter operators can offer up to 13 seats at lower fares with the government providing Viability Gap Funding (VGF) or subsidy to airlines and helicopter operators.
· Constructing 17 highways-cum-airstrips are the government’s priorities and it will start work on them this year, Union Minister NitinGadkari has said. The projects are designed in such a fashion that the roads will double up as airstrips and traffic will be stopped when an airplane lands or takes off. The road and air connectivity will also provide better access to remote areas.
· Airport building and modernization projects worth over Rs 19,300 crore (US$ 2.99 billion) have been recommended green clearance, in line with the Government of India’s focus on improvement in regional air connectivity.
· 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 per cent 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 2025.
· In the coming 20 years, Indian companies will buy 2,100 new planes worth US$ 290 billion. Also, domestic air traffic in India is expected to cross 150 million in FY19, on the back of unprecedented capacity induction by airlines*.