Aviation

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SUMMARY
  • The global revenue for commercial airlines in 2018 stood at $812 Bn and is forecasted reach $865 Bn in 2019.1
  • India is the world’s fastest growing domestic aviation market and has posted the fastest year on year growth for four years in a row in 2018.2
  • India’s domestic year-on-year Revenue Passenger Kilometre (RPK) growth of 18.6% in 2018 was almost thrice the global RPK growth of 6.5%.3
  • India has 91 international carriers out of which 5 are domestically owned. India has air connectivity with 59 countries through 344 routes.4
  • With the industry’s $30 bn contribution to India’s GDP5, the domestic aviation market is projected to rank 3rd globally by 2024.6
REASONS TO INVEST
  • India is projected to be the 3rd largest aviation market by 2024, as per IATA.7
  • The Indian aviation sector is likely to see investments around $15 Bn during 2016-20. Around one-third of this is expected to come from the private sector.8
  • Cabinet Committee on Economic Affairs has approved the extension of time and scope for revival and development of unserved and under-served airstrips with $643 Mn budgetary support.9
  • Ministry of Civil Aviation has received bids for 43 out of 50 airports in India, which were planned to be revived and operationalized to improve regional and remote air connectivity.10
  • Tremendous growth of aviation sector is also increasing the demand for MRO (Maintenance, Repair and Overhaul) facilities.
  • Greater focus on infrastructure development such as Open Sky Policy and Airports Authority of India’s (AAI) drive for modernization of airports and air navigation systems.
  • Six new airports in Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru have received approval for leasing out under the PPP mode.11
  • Skill India Mission has a clear focus to leverage India's human capital potential and create job opportunities.
  • Innovation and Technology –
    • GPS-Aided Geo Augmented Navigation (GAGAN) is India's first Satellite-based Augmentation System. It provides additional accuracy for safety in civil aviation and has expansion capability for seamless navigation services across geographies.
    • No Objection Certificate Application System (NOCAS) streamlines the online process of timely NOC for height clearances of buildings around airports.
    • e-Governance for Civil Aviation (eGCA) offers online delivery of 162 licensing and regulatory processes of Directorate General of Civil Aviation (DGCA).
STATISTICS
  • Domestic passenger traffic crossed the 100 mn mark in 2017, reaching 123.32 Mn during 2017-18.12
  • India is the fastest growing aviation market and as per IATA the Country is expected to cater to 520 mn passengers by 2037.13
  • India is one of the least penetrated air markets in the world with annual domestic seats per capita at around 0.08 in March 2018. This is significantly low compared to other developing markets such as Brazil (0.65) and China (0.35) or developed markets like the US (2.59) and Japan (1.12).14
FDI POLICY
  • Airports
    • 100% FDI allowed under Automatic route for both greenfield as well as brownfield projects.15
  • Air Transport Services
    • Scheduled air transport service/ domestic scheduled passenger airline/ regional air transport service: Up to 49% allowed under the Automatic route beyond which Government approval is required.16
    • Non-scheduled air transport services and helicopter services, seaplane services which require DGCA approval: 100% FDI allowed under the Automatic route.17
  • Other Services Under the Civil Aviation Sector
    • Ground handling services, maintenance, repair and overhaul services, flying institutes, technical training institutions: 100% FDI allowed under the Automatic route.18
SECTOR POLICY
  • Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) 1.0 and 2.0, launched by the Government aims to connect 66 airports and 31 heliports across the Country.
  • Under UDAN 3.0, proposals for 235 routes were awarded for 16 unserved airports, 17 under-served airports, 50 served airports, and 6 water aerodromes.19
  • NABH Nirman, announced in 2018-19 Union Budget, aims to expand airport capacity by more than five times to handle a billion trips in a year. The expansion is planned to be funded by leveraging the balance sheet of Airports Authority of India.20
  • Initiatives for Maintenance Repair and Overhaul (MRO) services:
    • The tools and tool-kits used by the MRO have been exempted from Customs duty. The exemption shall be based on the list of tools and tool kits certified by the Directorate General of Civil Aviation (DGCA) approved Quality Managers of aircraft maintenance organisations.21
    • MROs were required to provide proof of their requirements of parts or orders from their client airlines. The process for the clearance of the parts has been brought in line with that of the tool kits for one-time certification by DGCA approved Quality Managers in MROs.22
    • Restriction of one year for utilization of duty-free parts has been extended to three years to enable economies of scale.23
    • To allow the import of unserviceable parts by MROs for providing exchange/ advance exchange, the concerned notification has been revised to enable advance export of serviceable parts.24
    • Foreign aircraft brought to India for MRO work will be allowed to stay for the entire period of maintenance or up to 6 months. For stay beyond 6 months, DGCA's permission will be required.25
FINANCIAL SUPPORT

MRO, ground handling, cargo and Aviation Turbine Fuel (ATF) infrastructure facilities collocated at an airport, including heliport licensed by DGCA, are covered under the ‘harmonised list of infrastructure’ in the National Civil Aviation Policy 2016. This makes them eligible to get the benefits offered for infrastructure sector under the Policy.26 The Regional Connectivity Scheme under the Policy provides for following financial support:

  • Revival of airstrips/ airports as No-Frills Airports at an indicative cost of $7.1 Mn to $14.3 Mn.
  • Demand-driven selection of airports/ airstrips for revival in consultation with State Governments and airlines
  • Viability Gap Funding (VGF) to airline operators
  • Reduced Service Tax on tickets (on 10% of the taxable value) for 1 year initially
  • Reduced Excise Duty at 2% on ATF picked at RCS airports.27
INVESTMENT OPPORTUNITIES
  • 300 business jets, 300 small aircrafts and 250 helicopters are expected to be added to the current fleet of Indian carriers between 2017-22.28
  • As per Boeing, Indian Carriers plan to increase their fleet size by 2020 to around 1,200 aircraft.29
  • Demand for MRO facilities is increasing in India due to consistent double-digit growth in the aviation sector.
  • Investment opportunities worth $3 Bn in greenfield airports under PPP mode at Navi Mumbai (Maharashtra) and Mopa (Goa).
  • Development of greenfield airports – Government agencies project development of about 250 airports across the Country by 2020.30
  • For the development of the aviation industry in the North-East States, AAI plans to develop Guwahati as an inter-regional hub. It also plans to develop Agartala, Imphal and Dibrugarh as intra-regional hubs.
  • Indian airports are emulating the Special Economic Zone (SEZ) Aerotropolis model to enhance revenues. The model focuses on revenues from retail, advertising, vehicle parking, security equipment and services.
FOREIGN INVESTORS
  • Airbus (France)
  • Boeing International Corporation (US)
  • AirAsia (Malaysia)
  • Rolls Royce (UK)
  • Frankfurt Airport Services Worldwide (Germany)
  • Honeywell Aerospace (US)
  • Malaysia Airports Holdings Berhad (Malaysia)
  • GE Aviation (US)
  • Airports Company South Africa Global (South Africa)
  • Alcoa Fastening Systems Aerospace (US)
  • Singapore Airlines (Singapore)
  • Etihad Airways (UAE)
  • Fairfax (London)
KEY ACHIEVEMENTS
  • FDI grew 5 times - from $229 Mn (2010-14) to $1148 Mn (2014-18) in Air Transport sector.31
  • National Civil Aviation Policy (NCAP) boosted regional air connectivity. It provided an integrated ecosystem to promote tourism and generate employment.32
  • Revival and operationalisation of 160 airports.33
  • Approval provided for 18 greenfield airports.34
  • Operationalisation of 16 Common User Domestic Cargo Terminals (CUDCT). 35
  • The GPS-Aided Geo Augmented Navigation system (GAGAN) launched.36
  • A total of 75 airports were opened in 75 years of Independence while 33 new airports were started in just one year between 2016 and 2017.37
  • Domestic passenger traffic crossed the 100 mn mark in 2017, reaching 123.32 mn during 2017-18.38
SOURCES
  1. “Industry Statistics Fact Sheet- June 2019,” IATA website, https://www.iata.org/publications/economics/Reports/Industry-Econ-Performance/Airline-industry-economic-performance-Jun19-data-tables.pdf, accessed on 04 June 2019
  2. “Healthy Passenger Demand Continues in 2018 with Another Record Load Factor,” IATA website, https://www.iata.org/pressroom/pr/Pages/2019-02-07-01.aspx, accessed on 04 June 2019
  3. “Healthy Passenger Demand Continues in 2018 with Another Record Load Factor,” IATA website, https://www.iata.org/pressroom/pr/Pages/2019-02-07-01.aspx, accessed on 04 June 2019
  4. “International Air Traffic Statistics: January-March, 2018,” IATA website, http://dgca.nic.in/pub/international/QUARTERLY%20PUBLICATION%20Q1%202018/ANALYTICAL%20REPORT%20Q1%202018.pdf, accessed on 04 June 2019
  5. “INDIA’S AIR TRANSPORT SECTOR,” IATA website, https://www.iata.org/publications/economics/Reports/India-aviation-summit-Aug18.pdf, accessed on 04 June 2019
  6. “IATA Forecast Predicts 8.2 billion Air Travelers in 2037,” IATA website, https://www.iata.org/pressroom/pr/Pages/2018-10-24-02.aspx, accessed on 04 June 2019
  7. “IATA Forecast Predicts 8.2 billion Air Travelers in 2037,” IATA website, https://www.iata.org/pressroom/pr/Pages/2018-10-24-02.aspx, accessed on 04 June 2019
  8. “Indian Civil Aviation Market,” Ministry of Civil Aviation website, http://www.civilaviation.gov.in/sites/default/files/Final%20WINGS%202017%20flyer.pdf, accessed on 04 June 2019
  9. “Regional air connectivity infrastructure gets a boost,” PIB website: Cabinet Committee on Economic Affairs (CCEA), http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1567744, accessed on 04 June 2019
  10. “Regional air connectivity infrastructure gets a boost,” PIB website: Cabinet Committee on Economic Affairs (CCEA), http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1567744, accessed on 04 June 2019
  11. “Cabinet approves leasing out six airports,” PIB website: GoI Cabinet, http://www.pib.nic.in/Pressreleaseshare.aspx?PRID=1552165, accessed on 04 June 2019
  12. “Handbook On Civil Aviation Statistics, 2017-18,” DGCA website, http://www.dgca.nic.in/pub/HANDBOOK%202017-18/HANDBOOK%202017-18.pdf, accessed on 04 June 2019
  13. “Potential and Challenges of Indian Aviation,” IATA website, https://www.iata.org/pressroom/pr/Pages/2018-09-04-02.aspx, accessed on 04 June 2019
  14. “Opportunities and Financing Outlook for Aviation sector- March 2018,” FICCI website, http://ficci.in/spdocument/22958/aviation-report.pdf, accessed on 04 June 2019
  15. “SECTOR SPECIFIC CONDITION FOR FDI,” Invest India website, https://www.investindia.gov.in/foreign-direct-investment, accessed on 04 June 2019
  16. “SECTOR SPECIFIC CONDITION FOR FDI,” Invest India website, https://www.investindia.gov.in/foreign-direct-investment, accessed on 04 June 2019
  17. “SECTOR SPECIFIC CONDITION FOR FDI,” Invest India website, https://www.investindia.gov.in/foreign-direct-investment, accessed on 04 June 2019
  18. “SECTOR SPECIFIC CONDITION FOR FDI,” Invest India website, https://www.investindia.gov.in/foreign-direct-investment, accessed on 04 June 2019
  19. “Cabinet approves leasing out six airports,” PIB website: Ministry of Civil Aviation, http://pib.nic.in/PressReleseDetail.aspx?PRID=1561472, accessed on 04 June 2019
  20. “Cabinet approves leasing out six airports,” PIB website: Ministry of Civil Aviation, http://pib.nic.in/PressReleseDetail.aspx?PRID=1561472, accessed on 04 June 2019
  21. “Nabh Nirman initiative announced to expand Airport Capacity,” PIB website: Ministry of Finance, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1518555, accessed on 04 June 2019
  22. “MRO Facilities for Aviation Sector,” PIB website: Ministry of Civil Aviation, http://pib.nic.in/newsite/PrintRelease.aspx?relid=160226, accessed on 04 June 2019
  23. “MRO Facilities for Aviation Sector,” PIB website: Ministry of Civil Aviation, http://pib.nic.in/newsite/PrintRelease.aspx?relid=160226, accessed on 04 June 2019
  24. “MRO Facilities for Aviation Sector,” PIB website: Ministry of Civil Aviation, http://pib.nic.in/newsite/PrintRelease.aspx?relid=160226, accessed on 04 June 2019
  25. “MRO Facilities for Aviation Sector,” PIB website: Ministry of Civil Aviation, http://pib.nic.in/newsite/PrintRelease.aspx?relid=160226, accessed on 04 June 2019
  26. “National Civil Aviation Policy 2016,” Ministry of Civil Aviation website, http://www.civilaviation.gov.in/sites/default/files/Final_NCAP_2016_15-06-2016-2_1.pdf, accessed on 04 June 2019
  27. “National Civil Aviation Policy 2016,” Ministry of Civil Aviation website, http://www.civilaviation.gov.in/sites/default/files/Final_NCAP_2016_15-06-2016-2_1.pdf, accessed on 04 June 2019
  28. “India- Emerging MRO Destination,” India MRO 2016 website, http://www.indiamro.in/About-MRO-Sector.php, accessed on 04 June 2019
  29. “India- Emerging MRO Destination,” India MRO 2016 website, http://www.indiamro.in/About-MRO-Sector.php, accessed on 04 June 2019
  30. “Indian Civil Aviation Market,” Ministry of Civil Aviation website, http://www.civilaviation.gov.in/sites/default/files/Final%20WINGS%202017%20flyer.pdf, accessed on 04 June 2019
  31. “Progress Under 'Make In India' Programme,” DPIIT website, https://dipp.gov.in/sites/default/files/ru_1631.pdf, accessed on 04 June 2019
  32. “Progress Under 'Make In India' Programme,” DPIIT website, https://dipp.gov.in/sites/default/files/ru_1631.pdf, accessed on 04 June 2019
  33. “Progress Under 'Make In India' Programme,” DPIIT website, https://dipp.gov.in/sites/default/files/ru_1631.pdf, accessed on 04 June 2019
  34. “Progress Under 'Make In India' Programme,” DPIIT website, https://dipp.gov.in/sites/default/files/ru_1631.pdf, accessed on 04 June 2019
  35. “Progress Under 'Make In India' Programme,” DPIIT website, https://dipp.gov.in/sites/default/files/ru_1631.pdf, accessed on 04 June 2019
  36. “Progress Under 'Make In India' Programme,” DPIIT website, https://dipp.gov.in/sites/default/files/ru_1631.pdf, accessed on 04 June 2019
  37. “UDAN: 3 Years Of Path - Breaking And Inclusive Growth In Aviation May 2017,” PIB website, http://pib.nic.in/newsite/EBooks_image/civil.pdf, accessed on 04 June 2019
  38. “Handbook On Civil Aviation Statistics, 2017-18,” DGCA website, http://www.dgca.nic.in/pub/HANDBOOK%202017-18/HANDBOOK%202017-18.pdf, accessed on 04 June 2019
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