Government Initiatives
Some major initiatives undertaken by the government are:
• Allocation to Civil Aviation Ministry has been tripled to Rs 6,602.86 crore (US$ 1,019.9 million) under Union Budget 2018-19.
• In February 2018, the Prime Minister of India launched the construction of Navi Mumbai airport which is expected to be built at a cost of US$ 2.58 billion. The first phase of the airport will be completed by end of 2019.• Under the second round of Regional Connectivity Scheme (RCS 2) the government has awarded 325 routes to airlines as well as helicopter operators with the objective of enhancing flight services to hilly and remote areas. Under the scheme airline operators have to offer half of their seats at discounted rates and helicopter operators can offer up to 13 seats at lower fares with the government providing Viability Gap Funding (VGF) or subsidy to airlines and helicopter operators.
• Constructing 17 highways-cum-airstrips are the government’s priorities and it will start work on them this year, Union Minister Nitin Gadkari has said. The projects are designed in such a fashion that the roads will double up as airstrips and traffic will be stopped when an airplane lands or takes off. The road and air connectivity will also provide better access to remote areas.
• Airport building and modernization projects worth over Rs 19,300 crore (US$ 2.99 billion) have been recommended green clearance, in line with the Government of India’s focus on improvement in regional air connectivity.
Introduction
The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. India is currently considered the third largest domestic civil aviation market in the world. India is expected to become the world’s largest domestic civil aviation market in the next 10 to 15 years, as per Mr Jayant Sinha, Union Minister of State for Civil Aviation, Government of India.
According to International Air Transport Association IATA, India will displace the UK for the third place in 2025.
The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information technology (IT) interventions and growing emphasis on regional connectivity.
Market Size
Air traffic in India rose 15.80 per cent year-on-year to 280.24 million during April-February 2017-18. Witnessing a growth of 18.50 per cent over the previous year, total passenger traffic stood at a 264.97 million in FY17. India’s passenger traffic grew 15.80 per cent y-o-y to 280.24 million during April-February 2017-18. As of March 2018, there are nearly 550 commercial aircraft in operation in India.
Investment
According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows in air transport (including air freight) between April 2000 and December 2017 stood at US$ 1,608.51 million.
India is estimated to see an investment of US $25 billion in the next decade in the airports sector, and traffic growth of 13 per cent, according to Morgan Stanley. According to them, the share of air travel in air and rail travel combined in India will grow to 15.2 per cent by 2027 from 7.9 per cent now.
Capex plans to the tune of Rs 65,000 crore (US$ 10.08 billion) have been finalised by the Airports Authority of India with Rs 17,500 crore (US$ 27.13 billion) for the next five years and around Rs 22,000 crore (US$ 3.41 billion) for brownfield expansion in Delhi, Mumbai, Hyderabad and Bengaluru by private operators and around Rs 21,000 crore (US$ 32.55 billion) for greenfield airports.Key investments and developments in India’s aviation industry include:
• AAI is going to invest Rs 15,000 crore (US$ 2.32 billion) in 2018-19 for expanding existing terminals and constructing 15 new ones.
• The Airports Authority of India (AAI) will undertake new development works at Lucknow, Deoghar, Rajkot and Allahabad airports. The objective is to improve and develop airport infrastructure to meet growing traffic demands. AAI plans to construct new integrated passenger terminal building at Chaudhary Charan Singh International Airport, Lucknow at an estimated cost of Rs. 1,230 crore (US$ 190.65 million). The new terminal will be able to handle 4000 passengers during peak hour and 6.35 million passengers per annum.