Cover page □

Certificate □
Acknowledgement □
Index □
Objective of the study □
Introduction □
History (tb) □
Infrastructure □
Market size □
Investment □
Problems in aviation industry □
Operational strategies □
Future prospects □
Conclusion □
Bibliography □

Intro:
Aviation in India, broadly divided into military and civil aviation, is the fastest-growing aviation market
in the world (IATA data) and Bangalore with 65% national share is the largest aviation manufacturing
hub of India.
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 has become the third largest domestic aviation market in the world and is
expected to overtake UK to become the third largest air passenger* market by 2024.
As of March 2019, there are 103 operational airports in India. As of July 2018, 620 airplanes were in-
service in the fleet of scheduled Indian operators. It is further expected to grow to 1,100 planes by
2027.
The Government of India has launched regional connectivity scheme named UDAN (Ude Desh ka Aam
Nagrik) to make flying affordable for common man.

The civil aviation scenery in India has evolved in many ways. Whereas prior to 1992, when the two
public sector airlines, namely Air-India and Indian Airlines enjoyed a monopoly in the domestic sector,
today almost a dozen airlines are competing for a market share in the rapidly growing domestic
market.
IndiGo is India’s largest passenger airline with a market share of 43.4 per cent as of February 2019.
The company primarily operates in India’s domestic air travel market as a low-cost carrier
History:
On 18 February 1911, the first commercial civil aviation flight took off from Allahabad for Naini over a
distance of 6 miles (9.7 km) when Henri Pequet, a French aviator, carried 6,500 pieces of mail on
a Humber biplane from the exhibition to the receiving office at Allahabad which was the world's first
official airmail service. Rest is in the tb

Infrastructure:
India was targeting 486 existing airports as potential airport for UDAN-RCS, including 406 Unserved
airports, 18 Underserved RCS airports (mostly tier-2 regional cities), and 62 NON-RCS airports
participating in RCS, mostly tier-2 major city airports or customs airports in tier-2 cities (Dec 2017). In
addition, AAI granted in-principal approval to 19 new airports in December 2017.
Among the busiest airports in India, the Indira Gandhi International Airport which serves as the
primary civilian aviation hub for the National Capital Region of Delhi, is the busiest airport in the
country in terms of passenger traffic and international traffic busiest airport in Indiasince 2009 and
the second busiest airport in the country in terms of cargo traffic after Mumbai. With the
commencement of operations at Terminal 3 in 2010, it became India's and South Asia's largest
aviation hub, with a current capacity of handling more than 40 million passengers, which will go up to
100 million passengers by 2030 with the planned expansion.
There are a total of 22 airlines which are operational in India, including Air India and Pawan
Hans PSUs, listed companies (SpiceJet, IndiGo Airlines and Air India Express) and private airlines (such
as GoAir, Air Asia, Vistara and IndiGo) (c. 2015). Number of civil aviation aircraft in operation for the
scheduled commercial flights jumped 38% to 548 in December 2017 from 395 in 2014 and 50 aircraft
are being added every year.
In September 2018, Civil Aviation Minister said that as many as 100 new airports would be built in the
next 10 to 15 years for about $60 billion to meet the growing domestic air travel demand.

Market Size:
India’s passenger* traffic grew at 16.52 per cent year on year to reach 308.75 million in FY18. It grew
at a CAGR of 12.72 per cent during FY06-FY18.
Domestic passenger traffic grew YoY by 18.28 per cent to reach 243 million in FY18 and is expected to
become 293.28 million in FY20E. International passenger grew YoY by 10.43 per cent to reach 65.48
million in FY18 and traffic is expected to become 76 million in FY20E.
In FY18, domestic freight traffic stood at 1,213.06 million tonnes, while international freight traffic
was at 2,143.97 million tonnes.
India’s domestic and international aircraft movements grew 14.40 per cent YoY and 9.40 per cent YoY
to 1,886.63 thousand and 437.93 thousand during 2017-18, respectively.
During Apr 2018-Feb 2019, passenger* traffic in India stood at 316.51 million. Out of which domestic
passenger traffic stood at 252.92 million while international traffic stood at 63.59 million. Total
freight traffic handled in India stood at 3.25 million tonnes during the same time.
During Apr 2018-Feb 2019, domestic aircraft movement stood at 1.98 million while international
aircraft movement stood at 0.42 million.
To cater to the rising air traffic, the Government of India has been working towards increasing the
number of airports. As of March 2019, India has 103 operational airports. India has envisaged
increasing the number of operational airports to 190-200 by FY40.
Further, the rising demand in the sector has pushed the number of airplanes operating in the sector.
As of July 2018, there were nearly 620 aircraft being operated by scheduled airline operators in India.
The number of airplanes is expected to grow to 1,100 planes by 2027.

Investment:
According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows
in India’s air transport sector (including air freight) reached US$ 1,817.23 million between April 2000
and December 2018. The government has 100 per cent FDI under automatic route in scheduled air
transport service, regional air transport service and domestic scheduled passenger airline. However,
FDI over 49 per cent would require government approval.
India’s aviation industry is expected to witness Rs 35,000 crore (US$ 4.99 billion) investment in the
next four years. The Indian government is planning to invest US$ 1.83 billion for development of
airport infrastructure along with aviation navigation services by 2026.
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.
 In June 2018, India has signed an open sky agreement with Australia allowing airlines on either
side to offer unlimited seats to six Indian metro cities and various Australian cities.
 The AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and
Dibrugarh as intra-regional hubs.
 Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are exempted
completely from customs and countervailing duties

Problems:
High Costs, Low Yields
Jet fuel prices constitute about 40% of costs for an Indian carrier and are taxed higher here than anywhere
else in the world. A recent analysis by ET of the correlation between fuel prices and airline profitability in the
last 10 years showed at least three points — a rise in the December quarter of 2013 and significant dents in
April-March 2015 and January-March 2016 — that plunged airlines into deep losses or catapulted them to
significant profitability.

Aviation turbine fuel (ATF) prices have risen 9% between January and March-end, shows data from the fuel’s
biggest supplier, the state-run Indian Oil Corporation. That, combined with typical low-ticket pricing in India’s
price-sensitive market, will continue to hamper airline margins.
Government Apathy
Airlines in India have been appealing, in vain, to the government for a decade for a reduction in taxes on fuel. Jet fuel is 35-40% more
expensive in India than in the rest of the world, because of relatively high tax rates. The Civil Aviation Ministry and the
regulator have been allegedly slow in addressing issues. For example, India was one of the last nations to
ground the beleaguered 737 Max planes. Executives speak of archaic rules called the route dispersal
guidelines (RDG) that mandate airlines to fly a certain percentage of flights in smaller, unprofitable air routes.

Pilot Shortage
CAPA Centre for Aviation, a Sydney-based consultant, estimates the current number of pilots in India at 7,963.
In 10 years, airlines will have to hire 17,164 more. The projected growth in capacity, because of plane orders,
will lead to a 14% shortfall in commander pilots, a part of which will have to be fulfilled by more expensive
expatriates, leading to a rise in the wage bill, the second biggest cost chunk after fuel.

In a nutshell, the gap between crew and fleet will widen in the coming years, leading to higher dependence on
expats, which still may not be able to plug the gap entirely.