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Aviation Sector

  • India is currently considered as ninth-largest civil aviation market in the world, with a market size of around USD 16 billion.
  • In the quarter of July-September of 2015, domestic air passenger traffic surged 21.5 per cent to 20.12 million from 16.57 million in the corresponding period a year ago. Total passengers carried in September 2015 increased by 13.24 per cent Y-o-Y to 8.73 million from 7.71 million in September 2014. International and domestic passenger traffic grew 6.6 per cent and 15.5 per cent, respectively, in September 2015.
  • In September 2015, total aircraft movements at all Indian airports stood at 145,628, which was 10.2 per cent higher than September 2014. International and domestic aircraft movements increased 7.5 per cent and 11 per cent, respectively, in September 2015.
  • Over the next five years, domestic and international passenger traffic is expected to increase at an annual average rate of 12 per cent and 8 per cent, respectively, while domestic and international cargo are estimated to rise at an average annual rate of 12 per cent and 10 per cent, respectively.
  • 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.
  • India's civil aviation industry is on a high-growth trajectory. India aims to become the third-largest aviation market by 2020 and the largest by 2030.
  • The airlines operating in India are projected to record a collective operating profit of Rs 8,100 crore (USD 1.29 billion) in fiscal year 2016, according to Crisil Limited.

List of opportunities in Indian Aviation industry:

  • Growth in aviation is accentuating demand for MRO facilities.
  • An investment of over USD 12 billion is required during the Twelfth Five Year Plan
  • Airlines are expected to operate about 1000 aircrafts by 2020, up from the present 450
  • Investment to the tune of USD 4 billion required for General Aviation aircrafts by 2017
  • Air Navigation Services entails investment worth USD 7 billion in Twelfth Five Year Plan
  • 300 business jets, 300 small aircraft and 250 helicopters are expected to be added to the current fleet in the next five years.
  • Greenfield airports under public private partnership (PPP) at Navi Mumbai and Mopa (Goa).
  • The development of the new airports - the AAI aims to bring around 250 airports under operation across the country by 2020.
  • The North-east region - the AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and Dibrugarh as intra-regional hubs.
  • The AAI plans to spend USD 1.3 Billion on non-metro projects between 2013 and 2017, focusing on the modernisation and up-gradation of airports.
  • Indian airports are emulating the SEZ Aerotropolis model to enhance revenues, focus on revenues from retail, advertising and vehicle parking, security equipment and services.
  • Greater focus on infrastructure development; increasing liberalisation - Open Sky Policy; AAI driving modernisation of airports, Air and Navigation Systems.
  • Industry is progressing with large scale collaborations and merger and acquisition deals.

Foreign Direct investment (FDI) Policy in Civil Aviation

Airport Projects

  • Upto 100% FDI is permitted for Greenfield airport projects under the automatic route.
  • Upto 74% FDI is permitted for existing airport projects under the automatic route, above 74% and up to 100% permitted under government approval route.

Air Transport Services

  • Upto 49% FDI is permitted in domestic scheduled passenger airlines under the automatic route. 100% permitted for NRIs. FDI above 49% and up to 74% is permitted under Government approval route.
  • FDI in Regional Air Transport Service- Foreign investments up to 49% is allowed under automatic route in Scheduled Air Transport Service / Domestic Scheduled Passenger Airline.
  • Upto 100% FDI under the automatic route is permitted in Non-Scheduled Air Transport Service.
  • Upto 100% FDI is permitted in helicopter services and seaplanes under the automatic route.

Other Services

  • Upto 100% FDI is permitted in ground handling services under the automatic route.
  • Upto 100% FDI is permitted in maintenance and repair organisations; flying training institutes; and technical training institutes under the automatic route.