By 2034, India is expected to be among the top five airs domestic travel markets globally, in terms of additional passengers per year. The civil aviation industry in India has witnessed 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.
Aircraft movements, passengers and freight at all Indian airports are expected to grow at a rate of 4.2 per cent, 5.3 per cent and 5 per cent, respectively, for the next five years.
Current foreign Investments
Following are some of the major investments and developments in the Indian aviation sector:
- Air Works India Engineering has focused on growing international business and has formed a joint venture (JV) with Yaks Investment to provide aviation maintenance services to international airlines and domestic operators.
- Changi Airport India has picked up a 26 per cent stake in Bengal Aerotropolis Projects (BAPL), and will now run the airport for 15 years.
- Air Asia has planned to add three aircrafts by the end of 2014 and 10 more by the end of 2015, which will take their total fleet to 15 aircrafts.
- Star Alliance has planned to make New Delhi’s T3 and Mumbai’s T2 Terminals into hubs which will provide a smoother experience for flyers.
- Vistara, the proposed airline by the Tata Group-Singapore Airlines (SIA) alliance, has signed an agreement for aircraft communications, airline operations and network connectivity with SITA.
- Indigo Airlines has ordered 250 A320 neo airplanes from Airbus for a record deal worth around US$ 25.5 billion.
Government Initiatives and Future Plans
Government agencies have projected that around 500 airports in all, both brown field and Greenfield would be required by 2020.
The private sector is sought to be involved in a big way through different PPP models, with substantial involvement of state support in terms of financing, concessional land allotment, tax holidays and other incentives.
Some of the major initiatives taken by the government are as follows:
- The Government of India plans to form a committee comprising bankers, aviation experts and technocrats to help turn around and look at privatizing national airline Air India.
- The Ministry of Civil Aviation plans to list Airports Authority of India and Pawan Hans Ltd on the stock exchanges.
- The Government of India has approved the construction of five budget airports to improve regional connectivity and work on them will start from FY15.
- Indian authorities plan to roll out a pilot of fingerprint scanners at airport entry points that will be linked to the country’s Aadhaar unique ID number project. From January 2015, passengers with an Aadhaar number can place his or her fingerprint on a biometric kiosk at airport entry gates in Bengaluru’s Kempegowda International Airport, with the details then checked against details held by the Central Industrial Security Force.
- The Government of Odisha has signed a Memorandum of Understanding (MoU) with the Airports Authority of India (AAI) for developing an airport at Jharsuguda in western Odisha at a cost of Rs 210 crores (US$ 34.09 million).
This projected growth, combined with India’s low air traffic density—72 compared to 282 in China and 2,896 in the USA—indicates untapped potential given the projected burgeoning young population and rising disposable income levels. With the right policies and focus on quality, cost and passenger interest, India would be well-placed to become one of the largest aviation markets by 2030.