Market Size

Over the next five years, domestic and international passenger traffic are 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 airlines operating in India are projected to record a collective operating profit of
Rs 8,100 crore (US$ 1.29 billion) in fiscal year 2016, according to Crisil Ltd.
Government Initiatives
Government agencies project that around 500 brownfield and greenfield airports
would be required by 2020. The private sector is being encouraged to become
actively involved in the construction of airports through different Public Private
Partnership models, with substantial state support in terms of financing,
concessional land allotment, tax holidays and other incentives.
Some major initiatives undertaken by the government are:

The Airports Authority of India (AAI) plans to revive and operationalise around
50 airports in India over the next 10 years to improve regional and remote air
connectivity.
The Government of India, in its draft civil aviation policy released for inputs
from stakeholders, has proposed raising Foreign Direct Investment (FDI) limit
in domestic airlines from the current 49 per cent to over 50 per cent, along
with other reforms such as tax incentives for airlines, incentives for travellers
to fly to small towns at affordable rates, and easing the norms for domestic
carriers to operate abroad.
Gujarat is expected to get a second international airport at Dholera. The state
government has formed Dholera International Airport Co. Ltd. and is obtaining
approvals from the union government.
The Directorate General of Civil Aviation (DGCA) has given its approval to Air
Indias maintenance, repair and overhaul (MRO) unit.
The Government of India has decided to award airports in Kolkata, Chennai,
Jaipur and Ahmedabad on management contract. AAI has issued the
Request for Qualification document for these four airports.
The Government of India plans to form a committee comprising bankers,
aviation experts and technocrats to help turn around and privatise the national
airline, Air India.
The Government of India approved a proposal to set up a second airport in
the National Capital Region.
The Government of India expects to finalise the new aviation policy and
revised international flying norms for domestic carriers soon; the government
may remove the 5/20 norms for domestic airlines in this new policy.

AN OVERVIEW
India is the 9th largest aviation market in the world with a size of around US$ 16
billion and is poised to be the 3rd biggest by 2020. India aviation industry promises
huge growth potential due to large and growing middle class population, rapid
economic growth, higher disposable incomes, rising aspirations of the middle class
and overall low penetration levels.
Civil aviation industry in India is experiencing a new era of expansion driven by
factors such as low cost carriers, modern airports, foreign direct investments in
domestic airlines, cutting edge information technology interventions and growing
emphasis on regional connectivity. Civil aviation sector has been growing steadily
registering a growth of 13.8% during the last 10 years. The air transport in India has
attracted FDI of over US$ 569 million from April 2000 to February 2015.
The Indian airports have a combined capacity to cater to 220.04 million passengers
and 4.63 million tonnes cargo per annum and handled 168.92 million passengers and
2.28 million tonnes cargo in 2013-14. As per estimates, passenger traffic at Indian
Airports is expected to increase to 450 million by 2020 from 159.3 million in 20122013.
Looking at future air transportation requirements and desire to become a global
player in developing/commercializing aerospace technologies, India is rapidly
building capabilities to emerge as a preferred destination for manufacturing of
aerospace components.
Over the next decades, India undoubtedly has the potential to become a significant
part of the global aerospace supply chain as India offers cost advantages of between
15 to 25 per cent in manufacturing, together with its large procurement appetite.
Robust technical and engineering capabilities backed by top-notch scientific and
technical institutes are other positive offerings on the table.

MARKET OPPORTUNITIES
An investment of over US$ 12 billion required during the Twelfth Five Year Plan
Airlines are expected to operate about 1000 aircraft's by 2020, up from the
present 450
Investment to the tune of US $4 billion required for General Aviation aircrafts
by 2017

Air Navigation Services entails investment worth US$ 7 billion in Twelfth Five

Year Plan
FDI up to 49% allowed in domestic airlines by the foreign carriers

Foreign equity up to 100% allowed in airport development

Domestic and international passenger traffic expected to grow at annual

average rate of 12% and 8% in next five years

Annual average rate of growth of domestic and international cargo estimated

to be 12% and 10% during next five years

MRO industry to triple in size from INR 2250 crore in 2010 to INR 7000 crore

by 2020
Around 3,50,000 new employees are essential to facilitate growth in the next
decade

REASONS TO INVEST

India is one of the fastest growing aviation markets and currently the
ninth largest civil aviation market in the world.

India is projected to be the third largest aviation market by 2020.

Total passenger traffic stood at 163.06 Million during 2013. India is

one of the least penetrated air markets in the world with 0.04 trips per
capita per annum as compared to 0.3 in China and more than 2 in the USA.

Indian carriers plan to increase their fleet size to reach 800 aircraft by
2020.

The Indian aviation sector is likely to see investments totalling USD

12.1 Billion during 2012-17; USD 9.3 Billion is expected to come from the
private sector.