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.
