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Ninth largest civil aviation market in the world

CIVIL AVIATION

The civil aviation industry in India is a fast growing one that has seen a significant rise in the number of flights over the years. The liberalized Foreign Direct Investment (FDI) norms can drastically change the face of the Indian aviation sector, pushing it towards enhancement.

A stable inflow of capital through FDI will boost the civil aviation sector, current domestic players can hugely benefit from this. Also, this will serve as an encouragement for new players to come onto the scene. FDI brings with it more employment.

Industry Scenario

  • India’s air transport sector currently contributes USD 72 bn to GDP. Passengers carried by domestic airlines during January-August 2017 were 75.4 mn as against 64.4 mn during the corresponding period of previous year, thereby registering a growth of 16.9%. Also for the corresponding period, IndiGo held a market share of 38%, followed by Jet Airways (18.3%), SpiceJet (14%), Air India (13.2%), GoAir (8%), AirAsia India (4.3%), Vistara (3.7%) and Trujet (0.5%). India has 464 airports and airstrips, of which 125 airports are owned by AAI. These 125 AAI airports manage close to 78% domestic passenger traffic and 22% of international passenger traffic. However, the share of international freight traffic is much higher (62%) in comparison with 38% of domestic freight traffic.
  • By 2020, Maintenance, Repair and Overhaul (MRO) industry is expected to grow to USD 2 bn from current USD 800 mn

Highlights

  • 1
    Ninth largest civil aviation market in the world
  • 2
    Fastest growing domestic air market in the world
  • 3
    India’s air transport sector currently supports 8 mn jobs

HIGHLIGHTS

RECENT INVESTMENTS

1. February 2018 - Mahindra Aerospace and Canada’s Viking Air have signed a memorandum of understanding to form a strategic alliance for making smaller aircraft to support regional air connectivity in India.

2. June 2017 - IndiGo, having 42% of the Indian aviation market has entered into a partnership with global distribution system services operator Travelport, to expand its global presence by distributing its ancillary products to the portal’s customers across 180 countries.

3. March 2017 - Airbus, leading European aircraft manufacturer, plans to invest USD 40 mn to set up a pilot and maintenance training center in New Delhi, which will be operational by the end of 2017. It will be setting up a greenfield training facility in Aerocity, close to Delhi's Indira Gandhi International Airport. This training facility is being set up to cater to the growing demand of skilled people in the domestic aviation space.

4. February 2017 - GVK Power & Infrastructure Ltd., which operates the existing airports in Mumbai and Bangalore, has won the right to build Mumbai’s second airport in Navi Mumbai, which will require an investment of USD 2.4 bn to build the airport with a capacity to handle 10 mn passengers annually in the first phase, expected to be operational by 2019 and 60 mn passengers a year by 2030.

FDI Facts

100 % FDI allowed in both greenfield and brownfield projects for Airports

100% FDI allowed in ground handling and maintenance and repair organizations.

<49% FDI in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and Regional Air Transport Service under the automatic route.

>49% FDI in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and Regional Air Transport Service under government route