Sector Study

Aviation
 Indian Aviation Industry
India is the 3rd largest air India has 91 international
travel market in terms of carriers comprising of 5
domestic passenger traffic Indian carriers and
86 foreign carriers

Revenue passenger kilometer

(RPK) in domestic airline
India has connectivity
demand growth of 18.6% in
with 59 countries through
2018 was three times the
344 routes
global RPK growth of 6.5%
 Market Size
Text
Here !

India’s passenger Domestic passenger International In FY18, domestic

traffic grew at 16.52 traffic grew YoY by passenger grew YoY freight traffic stood at
per cent year on year 18.28 per cent to by 10.43 per cent to 1,213.06 million
to reach 308.75 reach 243 million in reach 65.48 million in tonnes, while
million in FY18. FY18 and is expected FY18 and traffic is international freight
to become 293.28 expected to become traffic was at 2,143.97
million in FY20E. 76 million in FY20E. million tonnes.
Ninth largest Civil
Aviation market in
the world

Fastest growing
domestic air
market in the
world

Aviation sector in
India currently
supports 8 million
jobs
 The Future
India aims to become the
third-largest aviation
market globally by 2024
Indian carriers plan to
increase their fleet size to
1,100 aircraft by 2027
Freight traffic on Indian
airports is expected to
cross 11.4 MT by 2032 Government agencies
projects requirement of
around 250 brownfield
and green-field airports
India has been projected to be the by 2020
second-fastest-growing country in
the world for passenger traffic by the
Airports Council International (ACI) in
its traffic forecasts between 2017-40.
 FDI Policies
Up to 100% FDI is Up to 100% FDI is
permitted in Non- permitted in
scheduled air transport helicopter services
services under the and seaplanes under
automatic route. the automatic route.

2019
Up to 100% FDI is Up to 100% FDI is
permitted in MRO for permitted in Ground
maintenance and repair Handling Services
organizations; flying subject to sectoral
training institutes; and regulations &
technical training security clearance
institutes under the under the automatic
automatic route. route.
Key Investments and Developments
AAI invested Rs 15,000
crore (US$ 2.32 billion) in
2018-19 for expanding
existing terminals and
constructing 15 new ones.
The AAI plans to develop
Guwahati as an inter-
regional hub and Agartala,
Imphal and Dibrugarh as
intra-regional hubs.
In June 2018, India has
signed an open sky
agreement with Australia
allowing airlines on either
side to offer unlimited seats
to six Indian metro cities and
various Australian cities.
Indian aircraft
Manufacture, Repair
and Overhaul (MRO)
service providers are
exempted completely
from customs and
countervailing duties

As of January 2019, the
Government of India is
working on a blueprint
to promote domestic
manufacturing of
aircrafts and aircraft
financing within the
country.
Government Initiatives
In January 2019, the
government organized
the Global Aviation
In November 2018, the Government of India approved
a proposal to manage six AAI airports under public
Summit in Mumbai
which witnessed private partnership (PPP). These airports are situated in
participation of over Ahmedabad, Jaipur, Lucknow, Guwahati,
1,200 delegates from Thiruvananthapuram and Mangalore. AAI received 32
83 countries. technical bids from ten companies.

In February 2019, the The Government of

In January 2019, the Government of India’s released Government of India
the National Air Cargo Policy Outline 2019 which sanctioned the
development of a new
envisages making Indian air cargo and logistics the most
greenfield airport in
efficient, seamless and cost and time effective globally
by the end of the next decade. Hirasar, Gujarat, with
an estimated
investment of Rs 1,405
crore (US$ 194.73
million).
Andhra Pradesh is to
develop Greenfield
airports in six cities-
Nizamabad, Nellore,
Kurnool,
Ramagundam,
Tadepalligudem and
Kothagudem under
the PPP model.
 Trends to look in 2019
• Driving the change are the revised regulatory framework
combined with cutting-edge tech initiatives

• However, the volatility in the airline market, driven by a

range of factors could prove to be detrimental, if not Regulatory changes
addressed in timely fashion through policy changes.

Emergence of Biometrics

Inflight connectivity

Volatility of fuel, yield economics

Greater passenger visibility of checked-baggage

 India's Grounded Aviation Sector

01 How has Economic Liberalization

Affected the Indian Aviation Industry?
02 What is the Major Challenge Currently
Faced by the Aviation Industry?

The civil aviation sector witnessed a boom
post liberalization, as domestic passenger
flights, cargo movement and international air
traffic saw exponential growth. This boom was
largely due to the government’s open sky
policy
In 2019, aviation turbine fuel (ATF) prices
increased by 8.15%, to Rs 62,795.12 per
kiloliter in India. Further, domestic airlines in
the country regularly pay 35% to 40% more for
fuel, as compared to foreign aircraft carriers.
 Defunct airlines and oppressive amounts of debt are only symptoms of an ailing aviation
industry.

03 How Has the Government Attempted to

Solve Problems in the Aviation Industry?
04 How Has Privatization Affected the
Aviation Industry?

The Indian government has, on different
occasions, accepted that only democratization
will help the aviation sector to become one of
the country’s main industries, which will thus
aid the promotion of business. Private sector
participation will give major thrust to the civil
aviation sector and hence the PPP model.
Post liberalization, the airline industry has
witnessed numerous scams. Private and public
sector banks who lent large amounts to various
airlines now face the problem of “bad loans,”
where lenders default in repaying banks..
Thank You