Aviation

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SUMMARY
  • Currently India is ninth largest civil aviation market.
  • Total passenger traffic stood at 224 million during 2016.
  • India is expected to have 60 million international passengers by 2017.
  • 81 international airlines connecting over 40 countries.
  • India is projected to be the third largest aviation market by 2020.
  • Indian carriers are expected to have possessions of 800 aircrafts by 2020.
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 224 million during 2016. 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 15 billion during 2016-2020 of which USD 10 billion is expected to come from the private sector.
STATISTICS
  • Domestic Passenger traffic Compound Annual Growth Rate (CAGR) – 10.1% (FY 2006-16).
  • International Passenger traffic CAGR – 8.8% (FY 2006-16).
  • Total freight compared to International air freight traffic CAGR in Domestic Sector – 7.6% (FY 2006-16) and in International Sector 4.8% (FY 2006-16)
  • India has more than 86 scheduled international airlines constituted of 5 Indian carriers and 81 Foreign carriers. Currently India has air connectivity with 55 countries through more than 300 routes.
  • Passenger traffic is growing at 20% per annum in the last 2 years.
GROWTH DRIVERS
  • Five international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) have been completed and are operational under Public Private Partnership (PPP) mode.
  • Greenfield airport at Navi Mumbai, Mopa (Goa) and some brownfield airports of Airports Authority of India (AAI) and 50 airports under the no-frills model would be developed all over the country of which same would be executed under the PPP model.
  • Indian aviation is experiencing dramatic growth which includes the emergence of Low Cost Carriers (LCC) / new carriers to a growing middle-class ready to travel by air as well as growth in business and leisure travel.
  • Greater focus on infrastructure development; increasing liberalisation – Open Sky Policy; AAI driving modernisation of airports, Air and Navigation Systems.
  • Growth in aviation is also increasing demand for MRO (maintenance, repair and overhaul) facilities.
  • India is home to large scale collaborations/ Merger & Acquisitions (M&A) deals – Etihad Airways & Jet Airways, Tata Group & Singapore Airlines, Tata Group & AirAsia.
  • India plans to increase the number of operational airports to 250 by the year 2020.
FDI POLICY
  • The extant FDI policy on Airports permits 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route.1
  • With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100% FDI under automatic route in Brownfield Airport projects.1
  • As per the present FDI policy, foreign investment up to 49% is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service. FDI beyond 49% is allowed through Government approval. For Non-Resident Indians (NRIs), 100% FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and  non-scheduled air-transport services up to the limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy.1
  • Up to 100% FDI is permitted in Non-scheduled air transport services under the automatic route.
  • Up to 100% FDI is permitted in helicopter services and seaplanes under the automatic route.
  • Up to 100% FDI is permitted in MRO for maintenance and repair organisations; flying training institutes; and technical training institutes under the automatic route.
  • Up to 100% FDI is permitted in Ground Handling Services subject to sectoral regulations & security clearance under automatic route.
1. - Investments are subject to relevant regulations, approvals from Directorate General of Civil Aviation (DGCA) and security and other conditions.
SECTOR POLICY
  • Airport Authority of India (AAI) is responsible for developing, financing, operating, and maintaining all public sector airports. New airports are permitted under the Greenfield Airport Policy 2008. Investment in airports is encouraged under the PPP Policy of the Government of India.
  • Regional Air Connectivity Policy offers attractive incentives in the form of exemption of landing, parking and navigation fees to airlines operating at designated airports in non-metro areas.
FINANCIAL SUPPORT
  • Aircraft engines and parts thereof are eligible for duty exemption when imported for servicing, repair or maintenance of aircraft used for scheduled operations.
  • The budget envisages the development of new airports in Tier II and Tier III cities.
  • The Income Tax Act provides presumptive taxation under Section 44AE in respect of assesses who are engaged in the business of plying, hiring or leasing goods carriages. The bill proposes to increase the amount of presumptive income to USD 112 per vehicle for all types of goods carriage vehicles.
  • Exemptions under the Income Tax Act for infrastructure development under section 80 IA.
  • Basic customs duty exemption is available for parts and testing equipment used for the maintenance, repair and overhaul of aircraft.
  • Budgetary support is provided to the Airport Authority of India (AAI) for the development of airport infrastructure in the North-eastern states of India.
INVESTMENT OPPORTUNITIES
  • 300 business jets, 300 small aircraft and 250 helicopters are expected to be added to the current fleet of Indian carriers in the next five years.
  • Demand for MRO facilities is increasing in India, due to growth in the aviation sector.
  • Investment opportunities worth USD 3 billion in greenfield airports under PPP at Navi Mumbai and Mopa (Goa).
  • The development of new airports – the Airport Authority of India (AAI) aims to bring around 250 airports under operation across the country by 2020.
  • For development of aviation in the North-east region – the AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and Dibrugarh as intra-regional hubs.
  • AAI has planned to spend USD 3 billion on non-metro projects between 2016 and 2020, focusing on the modernisation and up-gradation of airports.
  • Indian airports are emulating the Special Economic Zone (SEZ) Aerotropolis model to enhance revenues, focus on revenues from retail, advertising and vehicle parking, security equipment and services.
FOREIGN INVESTORS
  • Airbus (France)
  • Boeing International Corporation (USA)
  • AirAsia (Malaysia)
  • Rolls Royce (UK)
  • Frankfurt Airport Services Worldwide (Germany)
  • Honeywell Aerospace (USA)
  • Malaysia Airports Holdings Berhad (Malaysia)
  • GE Aviation (USA)
  • Airports Company South Africa Global (South Africa)
  • Alcoa Fastening Systems Aerospace (USA)
  • Singapore Airlines (Singapore)
  • Etihad Airways (UAE)
  • Fairfax (London)
AGENCIES
ACHIEVEMENT REPORT
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