In the FY18, around 309 Million passengers flew in India. Not more than95 years ago 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). 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. An official airlines came into existence when J.R.D. Tata on 15 October 1932, flew a consignment of mail from Karachi to Juhu Airport, an airline later became Air India.
Today, the country has the world's fastest growing domestic aviation market for the past three years, according to the industry body. It is forecasted that air passenger numbers to, from and within India will more than triple over the next 20 years to more than 500 million passenger journeys a year
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 (domestic and International passengers) market by 2024 (As per International Air Transport Association (IATA) forecasts)
It is true, air travel in India is booming. At the end of March 2009, all Indian airports put together had handled 68 million passengers. This year, to date, Delhi alone has handled that much traffic. And according to the latest report of the Directorate General of Civil Aviation — the regulatory body for civil aviation under the ministry of civil aviation — between January and September this year, domestic airlines flew 1 crore passengers as against 85 lakh in the corresponding period last year. Simply put, a growth of 20.94 per cent, the highest in the world!
India’s passenger traffic grew at 16.52 per cent year on year to reach 308.75 million in FY18. Domestic passenger traffic grew YoY by 18.28% to reach 243 million in FY18 and is expected to become 293.28 million in FY20E. International passenger grew YoY by 10.43% to reach 65.48 million in FY18 and traffic is expected to become 76 million in FY20E. India’s domestic and international aircraft movements grew 14.40% YoY and 9.40% YoY to 1,886.63 thousand and 437.93 thousand during 2017-18, respectively. As of December 2018, India has 102 operational airports. As of May 2018, there were nearly 588 commercial aircraft in operation in India.
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$ 1,658.23 million between April 2000 and June 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.
- 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
- In February 2018, the Prime Minister of India launched the construction of Navi Mumbai airport which is expected to be built at a cost of US$ 2.58 billion. The first phase of the airport will be completed by end of 2019.
- The Government of Andhra Pradesh is to develop Greenfield airports in six cities-Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem and Kothagudem under the PPP model.
- In September 2018, Jharsuguda Airport in Odisha and Pakyong Airport in Sikkim were inaugurated. Pakyong airport is Sikkim’s first ever airport and AAI’s first Greenfield airport construction.
- In December 2018, Kannur International Airport was inaugurated making Kerala the only state in India to have four international airports.
Few of the noticeable achievements in the recent years are:
“Typically, in the airline industry, you would expect to see higher fares to cover the increased costs, however that has not happened here,” IndiGo's co-founder and interim chief executive Rahul Bhatia told investors when its earnings figures were released in October.
IndiGo is India’s largest airline by market share, at more than 40 per cent, and is considered the country's strongest financially. But it reported its first quarterly loss since going public in November 2015 for the July to September quarter. IndiGo swung to loss of 6.5bn rupees during this period compared to a profit of 5.5bn rupees a year earlier, blaming fuel prices, rupee depreciation and the competitive fare environment. But the airline said it was taking steps to try to manage the challenges.
“For example, we have adopted various initiatives to reduce the fuel burn on our planes by reducing weight and improving navigation and landing procedures,” said Rohit Philip, the chief financial officer at IndiGo.
IndiGo raised eyebrows aplenty when it ordered 250 Airbus A320 Neos at a cost of $26.5 billion in 2015. When it came to ordering planes, it had broken all records in 2005 and then again in 2012. But it had also shown strategic planning in its choice of aircraft (those with a slim fuel diet), accessories, as well as in-flight crew hires. For instance, instead of stewards, it hired air hostesses, who on average weigh 15-20 kilos less than their male colleagues. As opposed to the bulky seats of other airlines, it got lightweight ones. According to industry experts, these measures saved hundreds of kilos per flight, which were then utilised to carry more freight. IndiGo seems unlikely to let up its expansion spree even now. In the first six months of this financial year, it added 30 aircraft to its fleet, and plans to add another 50 before March next year.
“While it is easy to find Indian passengers who want to fly, it’s very difficult for airlines to make money in this market,” says Alexandre de Juniac, the director general and chief executive at Iata. “India’s social and economic development needs airlines to be able to profitably accommodate growing demand. We must address infrastructure constraints that limit growth and government policies that deviate from global standards and drive up the cost of connectivity.”
Jet reportedly cannot pay its employees on time, pilots are threatening to stop flying if dues are not cleared and there are reports that Vistara Airways is in talks to acquire it It is not just Jet, Air India’s losses are mounting, market leader IndiGo has announced a loss for the first time since it took off in August 2006, SpiceJet is said to be looking for fresh investments to stay airborne. Some new airlines like Air Odisha (of Jharsuguda fame), Air Deccan and TruJet are not flying aircraft on several shorter routes as not operating is a more viable option than flying. In fact, had it not been for the recent fall in fuel prices and the rupee’s recovery, at least two airlines would have come to a grinding halt. They did not have enough cash to sustain themselves beyond a month.
Last year, the central government’s UDAN scheme to promote regional connectivity — under which the airport at Jharsuguda was imagined — did attract a few new airlines. But there was turbulence even before takeoff. According to the latest Capa study, the Indian aviation industry is expected to lose $1.65-1.90 billion this financial year. “And this is only a conservative estimate,” warns Kapil Kaul of the Centre for Aviation (Capa).
One indicator of how a sector is doing is to look at the share prices of the companies listed on stock markets and almost all the major fliers except for Air India are listed in India. The numbers paint a sorry picture. “They have been wealth eroding stocks for many years now. Shareholders have only lost money. It is a win-win for the passengers and lose-lose for the airlines,” says Sanjiv Bhasin, executive vice-president, markets and corporate affairs, IIFL Securities, a financial services company.
But only the current financial status cannot be considered as the signal for the future of the airlines. Though aviation is a heavy investment and low margin industry, if companies are able to tap into greater market share or increase the number of passenger flows to them, they can have a considerable profit. The entire world is having an eye on India and several of its industries. With the growth in the industry and the promising achievements, the future will be able to show how the industry performs.
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In the FY18, around 309 Million passengers flew in India. Not more than95 years ago 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). 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. An official airlines came into existence when J.R.D. Tata on 15 October 1932, flew a consignment of mail from Karachi to Juhu Airport, an airline later became Air India.
Today, the country has the world's fastest growing domestic aviation market for the past three years, according to the industry body. It is forecasted that air passenger numbers to, from and within India will more than triple over the next 20 years to more than 500 million passenger journeys a year
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 (domestic and International passengers) market by 2024 (As per International Air Transport Association (IATA) forecasts)
It is true, air travel in India is booming. At the end of March 2009, all Indian airports put together had handled 68 million passengers. This year, to date, Delhi alone has handled that much traffic. And according to the latest report of the Directorate General of Civil Aviation — the regulatory body for civil aviation under the ministry of civil aviation — between January and September this year, domestic airlines flew 1 crore passengers as against 85 lakh in the corresponding period last year. Simply put, a growth of 20.94 per cent, the highest in the world!
India’s passenger traffic grew at 16.52 per cent year on year to reach 308.75 million in FY18. Domestic passenger traffic grew YoY by 18.28% to reach 243 million in FY18 and is expected to become 293.28 million in FY20E. International passenger grew YoY by 10.43% to reach 65.48 million in FY18 and traffic is expected to become 76 million in FY20E. India’s domestic and international aircraft movements grew 14.40% YoY and 9.40% YoY to 1,886.63 thousand and 437.93 thousand during 2017-18, respectively. As of December 2018, India has 102 operational airports. As of May 2018, there were nearly 588 commercial aircraft in operation in India.
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$ 1,658.23 million between April 2000 and June 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.
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