Thursday, 2 November 2017

Indian Aviation Industry

Latest update: October, 2017
  • Domestic passenger traffic expanded at a CAGR of 11.46 per cent over FY06–17
  • According to Directorate General of Civil Aviation, domestic passenger traffic witnessed growth at a rate of 22 per cent, in comparison 21.24 per cent in FY16.
  • International passenger traffic registered growth at a CAGR of 8.33 per cent over FY06-17.
  • During February 2017, domestic airlines carried over 8.23 million passengers, showing a growth of more than 23 per cent compared to the same period last year.
  • During FY17, domestic passenger traffic increased by 22 per cent in comparison with growth rate of 21.24 per cent in FY16.
  • During FY16, international passenger traffic increased by 7.72 per cent.
Notes: FY - Indian Financial Year (April - March), CAGR - Compound Annual Growth Rate
Source: Airports Authority of India, Ministry of Civil Aviation
Passenger Traffic in FY15

Last Updated: October, 2017
 SECTORAL REPORT AIRPORTS | OCTOBER, 2017

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.
According to International Air Transport Association  IATA, India will displace the UK for the third place in 2026.
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

Domestic air traffic rose nearly 16 per cent in August 2017, continuing its double digit growth, according to the civil aviation regulator Directorate General of Civil Aviation (DGCA). About 9.69 million passengers flew in August, up from 8.38 million a year earlier. Passengers carried by domestic airlines during January-August 2017 were 75.411 million as against 64.468 million during the corresponding period of previous year, thereby registering a growth of 16.97 per cent, as per the DGCA.
As against 395 aircrafts in the fleet of Indian carriers, there are 496 aircrafts in operation today, and another 654 are under purchase.

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 March 2017 stood at US$ 1.01 billion.
India is estimated to see an investment of US $25 billion in the next decade in the airports sector, a demand for 935 more planes and traffic growth of 13 per cent, according to Morgan Stanley. According to them, the share of air travel in air and rail travel combined in India will grow to 15.2 per cent by 2027 from 7.9 per cent now.
Capex plans to the tune of Rs 65,000 crore (US$ 10.08 billion) have been finalised by the Airports Authority of India (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:
  • 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. 1230 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.
  • State-owned AAI will construct a cargo terminal at Imphal airport at a cost of Rs 16.20 crore (US$ 2.5 million). The proposed terminal is expected to give a boost to the export of handicrafts items and perishable cargo. In addition to this, the EICT will help establish better connectivity with South & Southeast Asia and give a boost to trade between India and the ASEAN countries.
  • To meet the demand of increasing air travel in Allahabad, a new civil enclave at will be developed by AAI at an estimated cost of 125.76 crore (US$ 19.49 million). The new terminal is to be made operational before the ‘Ardh Kumbh Mela’ to be held in January 2019.
  • Rolls-Royce Holdings Plc, the UK-based aircraft engine manufacturer, has opened a new defence service delivery centre (SDC) in Bengaluru, which would deliver real-time solutions for improving capability and provide faster front-line support to over 750 aircraft engines used by the Indian Air Force, Indian Navy and State-owned Hindustan Aeronautics Ltd (HAL).
  • Qatar Airways is planning to start India’s first fully owned foreign airline in partnership with Qatar Government's investment arm, Qatar Investment Authority, as per Qatar Airways.
  • Indian budget airline carriers Indigo and GoAir, plan to expand their network to Gulf cities like Doha, Sharjah and Dammam in 2017, which would likely boost the growth of Indian aviation sector.
  • 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 Rs 16,000 crore (US$ 2.48 billion) to build the airport with a capacity to handle 10 million passengers annually in the first phase, expected to be operational by 2019 and 60 million passengers a year by 2030.

Government Initiatives

  • In the Union Budget 2017-18, the Civil Aviation Ministry received a substantial increase of over 22 per cent in budgetary allocation at Rs 5,167.60 crore (US$ 775.14 million) for the next financial year.
Some major initiatives undertaken by the government are:
  • 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.
  • Indian airline companies like Air India, Air Deccan, SpiceJet, Air Odisha and Turbo Megha, have been awarded with the right to fly to 128 routes across India, requiring them to cap half the seats at nearly 50 per cent of the fare, under the Government of India’s regional aviation scheme named UDAN.
  • The Government of India has approved the construction of 18 Greenfield airports in the country, which would be executed and financed by the respective airport promoters, and are estimated to require an investment of Rs 30,000 crore (US$ 4.66 billion).
  • The Cabinet Committee on Economic Affairs, Government of India, has approved the proposal to revive 50 un-served and under-served airstrips in three financial years starting from 2017-18 at an estimated cost of Rs 4500 crore (US$ 698.7 million).
  • The Government of India has started a new regional connectivity scheme (RCS) called Ude Desh ka Aam Nagrik (UDAN) under which fares will be capped at Rs 2,500 (US$ 37.5) for half the seats in an one-hour flight, as per Mr Jayant Sinha, Minister of State Civil Aviation. The Government of India has also received bids from 11 airlines for the same.
  • The Ministry of Civil Aviation along with Airports Authority of India (AAI) plans to develop small airports with frugal facilities, and encourage private airlines to bid for routes connecting these small airports with existing larger airports, thereby increasing regional air traffic.
  • AAI plans to increase its capital expenditure for 2017-18 by 25 per cent to Rs 2,500 crore (US$ 375 million), primarily to expand capacity at 12 airports to accommodate rising air traffic, as per Mr Guruprasad Mohapatra, Chairman, AAI.
  • The Ministry of Civil Aviation has revised its air services agreement with Netherlands, which would enable air carriers from both the countries to operate up to 28 flights each week, up from current weekly limit of 21 flights, which would benefit regional carriers as well as enhance connectivity between the countries.
  • The Executive Development Programme of Rajiv Gandhi National Aviation University in collaboration with Indo US – American Cooperation Program, inaugurated by Mr Ashok Gajapathi Raju, Minister for Civil Aviation, aims to promote skill development of senior leadership and close the gap of increasing demand for trained people in the aviation sector.
Road Ahead
India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for majority of the country’s population, of which nearly 40 per cent is the upwardly mobile middle class. 
The industry stakeholders should engage and collaborate with policy makers to implement efficient and rational decisions that would boost India’s civil aviation industry. With the right policies and relentless focus on quality, cost and passenger interest, India would be well placed to achieve its vision of becoming the third-largest aviation market by 2026.
In the coming 20 years, Indian companies will buy 2,100 new planes worth US$ 290 billion.
Exchange Rate Used: INR 1 = US$ 0.0155 as of October 31, 2017.
References: Media Reports, Press Releases, Press Information Bureau, Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI), Union Budget 2017-18, Boeing
at

1 comment:

Subscribe to: Post Comments (Atom)

resume format

क्या है डिजिटल अरेस्ट, साइबर फ्रॉड का नया तरीका, जानिए ये कैसा होता है

  क्या है डिजिटल अरेस्ट? डिजिटल अरेस्ट में किसी शख्स को ऑनलाइन माध्यम से डराया जाता है कि वह सरकारी एजेंसी के माध्यम से अरेस्ट हो गया है, उस...

  • FACTS ABOUT CLOUD COMPUTING
    CLOUD COMPUTING Cloud computing is the use of computing resources (hardware and software) that are delivered as a service over a network ...
  • Save a Workbook in another File Format
      Save a Workbook in another File Format When you save an Excel 2013 Workbook, by default it saves in the  .xlsx  format. Excel 2013 support...
  • Healthcare Industry in India
    Healthcare Industry in India Latest update: October, 2017 Healthcare has become one of India's largest sectors both in term...