AVIATION SECTOR IN INDIA

Presented By-

Swapnilkumar Pawar (13253)1

HISTORY-BEFORE INDEPENDENCE

First commercial flight on February 18, 1911

Allahabad to Naini made by a French pilot

Monseigneur Piguet covering a distance of about 10 km

In 1915 Tata Sons Ltd. started regular air mail services

between Karachi and Madras and on January 24,

1920 Royal Airforce started regular airmail services

between Karachi and Bombay.

First air route between Karachi and Delhi-1912-by

Indian State Air Services and Imperial Airways-

extension to LONDON – KARACHI flight

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HISTORY-BEFORE INDEPENDENCE

In 1915 Tata Sons Ltd. started regular air mail services

between Karachi and Madras and on January 24, 1920

Royal Airforce started regular airmail services

between Karachi and Bombay

Construction of Civil Airports in India started in 1924.

Constructions began in Calcutta at

DumDum,.Allahabad at Bamrauli and in Bombay in

Gilbert Hill .

April 1927 saw the setting up of a separate Department

of Civil Aviation to look after all civil aviation

matters. That year also saw the establishment of Aero

club of India. 3

HISTORY-AFTER INDEPENDENCE

India had nine air transport companies transporting both

cargo and passenger traffic.

Indian Airline was set up to cater to the domestic

market, while Air India was set up to take care of the

International sector. Both Indian Airline and Air India

enjoyed monopoly over the Indian skies.

In March 1953 the Indian Parliament passed the Air

Corporations Act, and Indian Airlines and Air India

International were set up afternationalisation of the entire

airline industry. At this time eight formerly independent

domestic airlines: Deccan Airways, Airways

India,Bharat Airways, Himalyan Aviation, KalingaAir

Lines, Indian National Airways, Air India, Air Services

of India were merged.

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HISTORY-AFTER INDEPENDENCE

In 1953 the Indian government nationalized all theexisting airline assets.

In 1972 the International Airports Authority of India(IAAI) was constituted and Vayudoot airlines (agovernment owned airline company) started operation inthe year 1981.

1985 was also a very traumatic year for Indian aviationwhen Air India flight AI 182 betweenMontreal and Delhi was blown up by terrorists overthe Atlantic Ocean. Following this, the Bureau of CivilAviation Security was established in 1987.

The National Airports Authority was constituted in1986. 5

HISTORY-POST LIBERALIZATION

In 1995 Airport Authority of India (AAI) was constituted after the

merging of the International Airport Authority of India with National

Airports Authority.

1990-91 saw the entry of private airlines after the de-regulation of

the civil aviation sector. Private airlines were given permission to

operate charter and non-scheduled services under the ‘Air Taxi’

Scheme. The East West Airlines was the first national level private

airline to operate in the country after almost 37 years.

In 1994-95 the government gave permission to directly import

aviation turbine fuel (ATF).In 1997-98 to take the process of

liberalization one step further, foreign equity participation up to 40

per cent (100 per cent for NRI's) was allowed in the domestic airline

segment. But International service providers could not take stakes

either directly or indirectly without approval from DGCA. 6

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REGULATORY AUTHORITIES: STATE OF

REGULATION

Airport Authority of India (AAI):

The Airport Authority of India (AAI) is the operator in majority of airports.

- The relevant statutes are The Airports Authority of India Act, 1994 and The

Airports Authority of India (Amendment) Act, 2003.

- It is the de facto regulator for those airports.

The Directorate General of Civil Aviation (DGCA):

- The overall functions of DGCA include regulation of air transport services

to/from/within/over India by Indian and Foreign operators, registration of civil

aircraft, formulation of air safety and airworthiness standards for civil aircraft

registered in India and grant of certificates of airworthiness to such aircraft.

- It oversees the licensing of pilots, aircraft maintenance engineers, flight

engineers and air traffic controllers.

- It also coordinates all regulatory functions with International Civil Aviation

Organization (ICAO). 8

REGULATORY AUTHORITIES: STATE OF

REGULATION CONTD…

Airport Regulatory Authority of India (AERA):

- The relevant statute is the Airports Economic RegulatoryAuthority of India (AERA) Act, 2008.

- The function of the authority is to determine tariffs foraeronautical services, determine development andpassenger service fees in the major airports and tomonitor set performance standards relating to quality,continuity and reliability of service.

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DOMESTIC AIRLINES

Air India

GoAir Airlines

IndiGo Airlines

Jagson Airline

Jet Airways

Jet Airways Konnect

Paramount Airways

SpiceJet Airlines

JetLite (Air Sahara)

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MARKET SHARE

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HOW AVIATION INDUSTRY IS EFFECTING

INDIA'S ECONOMY?

Earlier there were just two airlines, both state owned. In lastfew years economy has opened up. India experiencedgrowth rate of 5-6% per year

The main factors which affect the Indian Economy are:-

1. Increased no. of domestic airlines

2. Low cost airlines

3. India's improving economy

the other factors are:-

1. Increased in no. of business travellers to differentcountries

2.Incresed no. of incoming tourist and businessenterprises 12

ROLE OF AVIATION INDUSTRY IN INDIA GDP-

GROWTH FACTORS

The growth in the Indian economy has increased the Gross Domestic Product above 5% and this high growth rate will be sustained for a good number of years

Air traffic has grown enormously and expected to have a growth which would be above 25% in the travel segment with the growth in the economy and stability of the country India has become one of the preferred locations for the trade and commerce activities

The growth of airlines traffic in Aviation Industry in India is almost four times above international average

Aviation Industry in India have placed the biggest order for aircrafts globally

Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia 13

ROAD AHEAD

The Indian aviation sector is likely to see clear skies ahead in the years to come.

Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next

5 years.

The Vision 2020 statement announced by the Ministry of Civil Aviation,

envisages creating infrastructure to handle 280 million passengers by 2020.

Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80

billion in new aircraft and US$ 30 billion in development of airport

infrastructure.

Associated areas such as maintenance, repair and overhaul (MRO) and

training offer high investment potential. A report by Ernst & Young says the

MRO category in the aviation sector can absorb up to US$ 120 billion worth of

investments by 2020.

Aerospace major Boeing forecasts that the Indian market will require 1,000

commercial jets in the next 20 years, which will represent over 3 per cent of

Boeing Commercial Airplanes’ forecasted market worldwide. This makes India a

US$ 100 billion market in 20 years. 14

AIRPORT INFRASTRUCTURE

Of the 464 airports and airstrips in India, 16 are

designated international airports

India’s Civil Aviation Ministry aims 500 operational

airports in next 12 years as per report by CAPA

Government aims to attract private investment in

Aviation Infrastructure

Mumbai and Delhi airports already privatized,

upgraded at an estimate investment of US$ 4 billion

over 2006-16

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AIRPORT INFRASTRUCTURE CONTD…

A Greenfield airport already operational at

Bangalore and Hyderabad, built by private consortia at

total investment of over US$ 800 million

A second Greenfield airport planned at Navi Mumbai,

developed using public-private partnership mode at an

estimated cost of US$ 2.5billion

35 other city airports proposed to be upgraded

Over next five years, AAI planned massive investment of

US$ 3.7 billion – 43% of which for Kolkata, Chennai

and Trivandrum and rest for other non metro airports

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AT PRESENT

AAI manages 125 airports which

includes:

18 International airports

07 Custom airports

26 Civil Enclaves

78 Domestic airports

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CIVIL AVIATION SECTOR IN INDIA – INVESTMENT

NEEDS

Projected Investment in Infrastructure—Twelfth

Plan( Rs Crore at Current Prices)

sectorTotal Eleventh

Plan

Twelfth Plan Projection

2012-13 2013-14 2014-15 2015-16 2016-17Total Twelfth

Plan

Centre 11873 2456 2710 2988 3282 3605 15041

State 1030 268 351 458 596 776 2449

Private 23408 4967 7655 11787 18081 27735 70224

Airports 36311 7691 10716 15233 21959 32116 8771419

BUDGET FOR AVIATION

Civil Aviation: Budgetary support of Rs.6500.00 crore has been earmarked for equity infusion in Air India Limited. Budgetary support of Rs.50.00 crore has been earmarked to meet expenditure towards the Plan schemes of Ministry

Airports Authority of India has been provided with budgetary support of Rs.79.70 crore, out of which Rs.22.00 crore has been earmarked for its project at Pakyong, Sikkim (North Eastern Region).

Budgetary support of Rs.50.00 crore has been provided to Directorate General of Civil Aviation to pursue their Plan schemes

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A provision of Rs.40.00 crore has been made for

Bureau of Civil Aviation Security for meeting

expenditure towards their Plan schemes

Budgetary support of Rs.0.10 crore has been

provided to Hotel Corporation of India for

renovation of its hotels/flight kitchen.

Aero Club of India has been provided grants-in-aid

of Rs.0.10 crore. The Indira Gandhi Rashtriya

Uran Akademi is being provided with grants of

Rs.0.10 crore.

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11TH FIVE YEAR PLAN

The investment requirement for airport development in

the country is projected at Rs. 30,968 crore for the

Eleventh Plan Period. It consists of investment in the

four Metro airports, 35 specific non-Metro airports,

Greenfield airports, North-East airports and upgradation

of CNS-ATM and other equipments. Out of the total

investment, the projected shares of public and private

sector investment are roughly 30% (Rs. 9,338 crore) and

70% (Rs. 21,630 crore) respectively.

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11TH PLAN PERFORMANCE OF CONSTITUENT

UNITS OF CIVIL AVIATION

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PASSENGER TRAFFIC FORECAST 12TH PLAN

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PASSENGER GROWTH

Passengers carried by domestic airlines during Jan-Oct 2014 were 550.68

lakhs as against 507.03 lakhs during the corresponding period of

previous year thereby registering a growth of 8.61%

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CARGO TRAFFIC FORECAST

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PASSENGER LOAD FACTOR

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AIRLINES CANCELLATION RATE( SEP.2014)

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AVIATION POLICIES

Many policies supporting the infrastructure are now in

place

For Greenfield airports, FDI up to 100% permitted

through automatic approvals

For existing airports, FDI up to 74% permitted through

special permission from Foreign Investment

Promotion Board (FIPB)

Private developers allowed to set up captive airstrips and

general airports 150 km away from existing airports

100% tax exemption for airport projects for a period

of 10 years29

AVIATION POLICIES CONTD…

49% FDI permissible under automatic route, but not by

foreign airline companies. 100% equity ownership by

non-resident Indians (NRI’s) is permitted

74% FDI permissible in cargo and non- scheduled

airlines

The “Open Sky” policy of the Government and rapid air

traffic growth, resulted in the entry of several new

privately owned airlines and increased frequency/flights

for international airlines

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FOREIGN COMPANIES CAN EXPLORE VARIOUS MODES

OF ENTRY INTO THE INDIAN MARKET

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AIRPORT INFRASTRUCTURE INVESTMENT 12TH

PLAN

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AIRLINES 12TH PLAN

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KEY OBJECTIVES UNDER THE TWELFTH PLAN

Develop greater design and manufacturing

capabilities in the defence space.

Become a global player in supplying advanced

technology in space sector at a fair price in the

global space market.

Drive dedicated technology development for civil

aviation, develop greater manufacturing

capabilities.

Become the international hub for maintenance,

repair and overhaul needs(MRO).

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REFERENCES

www.india-aviation.in

www.ibef.org/industry/indian-aviation.aspx

12thplan.gov.in

planningcommission.nic.in/plans/planrel/11thf.htm

articles.economictimes.indiatimes.com › Collections

› Market Share

en.wikipedia.org/wiki/List_of_airlines_of_India

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