The Aviation Industry in India

India is the 9th largest aviation market in the world with an estimated size of US $16 billion and is poised to be the 3rd largest by the year 2020.This industry presently supports about 0.5 per cent of the India’s GDP. This sector caters to about 150 million passengers daily, with the potential to grow further. By 2020, traffic at airports in India is anticipated to reach 450 million. India aviation industry promises huge growth potential due to large and growing middle class population, rapid economic growth, higher disposable incomes, rising aspirations of the middle class and overall low penetration levels.

The Aviation industry in India is experiencing a new era of expansion driven by factors such as low cost carriers, modern airports, and foreign direct investments in domestic airlines, cutting edge information technology interventions and growing emphasis on regional connectivity. Civil aviation sector has been growing steadily registering a growth of 13.8% during the last 10 years. The air transport in India has attracted FDI of over US$ 569 million from April 2000 to February 2015. As per estimates, passenger traffic at Indian Airports is expected to increase to 450 million by 2020 from 159.3 million in 2012-2013. In the second quarter of 2015, domestic air passenger traffic surged 19.2 per cent to 20.3 million from 17 million in the corresponding period a year ago. Total passenger carried in June 2015 increased 13 per cent Y-o-Y to 8.8 million from 7.8 million in June 2014. International and domestic passenger traffic grew 5.3 per cent and 16 per cent, respectively, in June 2015. Over the next five years, domestic and international passenger traffic are expected to increase at an annual average rate of 12 per cent and 8 per cent, respectively, while domestic and international cargo are estimated to rise at an average annual rate of 12 per cent and 10 per cent, respectively.
Government agencies project that around 500 brownfield and Greenfield airports would be required by 2020. The private sector is being encouraged to become actively involved in the construction of airports through different Public Private Partnership models, with substantial state support in terms of financing, concessional land allotment, tax holidays and other incentives. The Government of India along with the Make in India campaign plans to form a committee comprising bankers, aviation experts and technocrats to help turn around and privatize the national airline, Air India. The Government of India approved a proposal to set up a second airport in the National Capital Region. The Government of India expects to finalize the new aviation policy and revised international flying norms for domestic carriers soon; the government may remove the ‘5/20’ norms for domestic airlines in this new policy. The Airports Authority of India is responsible for developing, financing, operating, and maintaining all public sector airports. New airports are permitted under the Greenfield Airport Policy 2008. Investment in airports is encouraged under the Public Private Partnership Policy of the Government of India.

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 2020 and the largest by 2030.