Civil Aviation in India
Cygnus Research, June 2008, Pages: 183
The report provides an in-depth analysis of the Indian aviation industry, growth and trends, aviation infrastructure, future outlook, etc. It sheds light on various regulatory bodies that regulate the industry, various regulations and Government policy.
According to International Air Transport Association (IATA), the total number of airline passengers in the year 2007 was 2,079.68 million, including 1,249.14 million domestic passengers and 830.54 million international passengers. The total number of air passengers in India during the year 2007-08 was 116.87 million
Key Findings & Highlights:
- The air traffic in terms of passenger and cargo movement have increased by an impressive CAGR of 19.14% and 9.91% during the period from 2003-04 to 2007-08
- The fleet size of Indian aviation industry has also grown by 23.77% during the period from May 2005 to April 2008.
- Factors that hamper the growth of the aviation industry are capacity and infrastructure related constraints, rising fuel cost, taxing the industry, unfair price war between carriers, etc.
- The maximum growth in international passenger demand is likely to come from the Middle East
Reasons to Buy:
- Spot Business Opportunities
- Reveals the factors that hamper growth of aviation industry
- Analyses the various measures taken related to aviation infrastructure
- Get a thorough understanding about the industry and prevent further losses
- Know the corrective measures for sustainable growth
The report will be useful for the industry professionals, researchers and consultants. It will also be useful for students who pursue education in aviation ancillary services like stewardships, etc.
1. Global Aviation Industry – Industry Overview
1.1. Introduction
1.2. Global Air Passenger Growth Trends
1.3. Global Air Cargo & Its Movement
1.4. Overview of Regulation of Civil Aviation – global perspectives
1.5. Major players in the Global Civil Aviation
1.6. Growth Drivers
1.7. Issues & Challenges
1.8. Future Outlook
2. Aviation Industry in India - An Overview
2.1. Introduction
2.2. Growth of Air passenger traffic
2.2.1. Passenger category-wise air traffic (FY03-FY08)
2.3. Future projection of air passenger traffic
2.3.1. passenger category-wise air traffic projection (FY09-FY13)
2.4. Air Cargo Market – Opportunities & Performance
2.5. Trends in air craft movements
2.6. Airport Infrastructure Status
2.7. Recent Industry Trends
2.7.1. Mergers and Acquisitions
2.7.2. Heralding of era of e-ticketing
2.7.3. Emergence of regional air carriers
2.8. Aviation Services
2.9. Employment Opportunities
2.10. Institutions/ Vocational Training Institutes in Industry
2.11. Marketing Strategies Adopted by Airlines
3. Policy Framework
3.1. Airport Infrastructure Policy
3.1.1. Categories of Airports
3.1.2. Procedure Guidelines for setting up of Greenfield Airports
3.2. Domestic Air Transport Policy
3.2.1. Categories of Air Transport Services
3.2.2. PPP in Airport Infrastructure
3.2.3. Foreign Equity Participation in Air Transport Services
3.2.4. Requirements for Becoming Air Cargo Operator
3.2.5. Procedure for starting Scheduled/Non Scheduled Air Transport Services
3.2.6. Route Dispersal Guidelines
3.3. International Conventions
3.4. Bilateral Agreements
3.5. Aviation Security (AVSEC) Law & Policy
3.5.1. Air Craft Act – 1934
3.5.2. Air Craft Rules – 1937 Industry Insight – Civil Aviation
3.5.3. Anti-Hijacking Regulation
3.5.4. Aircraft Safety Regulation
3.6. Operation of Charter Flights under Inclusive Tour Packages (ITPs)
3.7. Contract for Carriage of Goods by Air Act
4. Role of Regulatory Agencies in Civil Aviation
4.1. Role of State & Central Governments
4.2. Ministry of Civil Aviation
4.3. Director General of Civil Aviation
4.4. Bureau of Civil Aviation Security
4.5. Airports Authority of India
4.6. International Air Transport Association (IATA)
4.7. International Civil Aviation Organization
5. Major Players
5.1. Public Carriers
5.1.1. National Aviation Company of India Limited (merged company between Air India and Indian Airlines)
5.2. Private Carriers – Full service Airlines & Low Cost Airlines
5.2.1. IndiGo
5.2.2. Go Air
5.2.3. Kingfisher Airlines
5.2.4. SpiceJet Airlines
5.2.5. Jet Airways
5.2.6. Paramount
5.2.7. Charter Airlines
5.2.8. Full Cargo Airlines
5.3. Major Foreign Airlines Operating in India
6. Growth Drivers
6.1. Economic Growth
6.2. Global Trade
6.3. Corporate Trend
6.4. Liberalisation & Deregulation
6.5. Foreign Direct Investment
6.6. Information Technology & E-Commerce
7. Issues & Challenges
7.1. Capacity constraints
7.2. Passenger & Traffic Congestion
7.3. Fuel costs
7.4. Taxation
7.5. Aviation Security
7.6. Skill Availability
7.7. Specific Issues & Challenges for Low Cost Airlines
8. Outlook
9. Annexure
9.1. Annexure on regulations
9.2. List of Abbreviations
9.3. Bibliography
LIST OF FIGURES
Figure 1.1: Global air passengers traffic in 2007
Figure 1.2: Region-wise air traffic trends in 2007
Figure 1.3: Trends in Air cargo movements in 2007
Figure 1.4: Region-wise air traffic growth demand during 2006-2011
Figure 2.1: Category-wise air passenger traffic in India during FY03-FY08
Figure 2.2: Passenger category-wise air traffic projection (FY09-FY13)
Figure 2.3: Aircrafts movement in India during FY03-FY08
Figure 2.4: Projection of aircrafts movement in India (FY09-FY13)
Figure 2.5: Air cargo traffic in India during FY03-FY08
Figure 2.6: Projection of Air cargo traffic in India (FY09-FY13)
Figure 2.7: Industry value chain
Figure 3.1: Sequence of signing agreements for setting up of Greenfield airports
Figure 5.1: Market share of airlines in India (as of June, 2007)
Figure 6.1: Growth trends in GDP in India during FY03-FY08
LIST OF TABLES
Table 1.1: Major players in Global Civil Aviation in terms of revenue in 2007 (US$ bn)
Table 3.1: Routes under category-I (routes connecting directly)
Table 5.1: National Aviation Company of India Limited
Table 5.2: Jet Airways (Including the subsidiary JetLite)
Table 5.3: Kingfisher Airlines (Merged entity of Kingfisher airlines and Deccan Airlines)
Table 5.4: GoAir Airlines
Table 5.5: Indigo Airlines
Table 5.6: Paramount Airlines
Table 5.7: SpiceJet Airways
Table 5.8: Taj Air
Table 5.9: Deccan Aviation
Table 5.10: Air Charters India
Table 5.11: Blue Dart Aviation
Indian aviation industry has become the world’s ninth largest industry, after crossing the mark of 100 million passenger traffic in 2007-08. India will be a major driving force of the global civil aviation business that is expected to grow from US$5.1 billion in 2007 to US$5.6 billion in 2008, according to International Air Transport Association.
The global aviation industry comprises 3,256 airlines, running 23,913 aircraft. The industry has flown 2.08 billion passengers in 2007, a growth of 9.18% over the previous year. The Revenue Passenger Kilometre (RPK), which measures the actual passenger traffic, has increased by an average annual growth rate of 9.05% from 2003 to 2007. The Available Seat Kilometre (ASK), which measures the available passenger capacity, has increased by 7.30%. The passenger traffic, in terms of RPK, showed recovery symptoms from the SARS threat in 2004, and grew by 15.35% in 2004 compared with 2003. However, there was a lull in demand in 2006 due to high fuel prices and competition from other mode of transportation like rail and road. In 2007, the air passenger traffic increased due to strong passenger demand. As far as the air cargo demand is concerned, there was a sharp decline in the air cargo traffic in 2005 compared with 2004 on the back of weaker demand from IT and semi-conductors, which later started recovering in 2006 and 2007. Middle East region experienced highest growth in air passenger traffic among all regions. It has grown by a CAGR of 15.35% during 2004 to 2007 which can be attributed to strong regional economies, impact of oil wealth, expanded capacity and new routes. The effects of restructuring in the Latin American region led to the growth in cargo traffic by 10.55% during the same period. Africa region was able to achieve CAGR of 9.20% during the same period, due to the effects of strong economic growth and successful market liberalisation in different parts of the continent. Asia Pacific carriers registered growth of 9.85%, mainly due to continuous expansion of the economies of China and India, making air travel accessible to new markets. In Europe, traffic grew by a CAGR of 6.95%, due to steady economic growth and expansion on long-haul routes to Asia and the Middle East. North America grew by 8.20% in 2007, and the carriers of North American region were able to sustain the level of growth because they diverted their capacity to more attractive international markets.
The Freight Tonne Kilometre (FTK), which measures the actual freight traffic and Available Tonne Kilometre (ATK), which measures the available capacity, showed an average growth of 13.15% and 12.85% respectively in the Middle Eastern region from 2004 to 2007, highest among all regions. The growth can be attributed to strong regional economies, impact of oil wealth, expanded capacity and new routes.
Indian aviation industry has been consistently growing over the last five years, recording a CAGR of 19.12% from 2003-04 to 2007-08. The growth of the domestic passenger traffic growth has been higher at 22.09% compared with international passenger traffic growth at 12.38%. In 2007-08, Indian aviation industry flew 116.87 million passengers, which comprises 25.5% international passenger traffic and 74.5% domestic passenger traffic. Some of the Indian airports have experienced significant growth in 2007-08 over 2006-07. These are Mangalore (381.4%), Coimbatore (255.0%), Tiruchirappalli (89.3%), Ahmedabad (64.6%) and Lucknow (32.0%).
The total aircraft movement in India has grown consistently at a CAGR of 15.47% from 2003-04 to 2007-08. The movement of the international aircrafts have increased at CAGR of 13.37% and that of domestic aircrafts have increased at a CAGR of 16% during the same period.
India is ranked among the top 30 global freight markets in terms of total as well as international operations, after a strong growth since 2003. Indian air cargo business has grown at a CAGR of 9.91% from 2003-04 to 1.71 million tonnes in 2007-08. The international air cargo traffic in India has increased by 10.58% and that of the domestic air cargo has gone up by 8.63% in the period. The airports experiencing major growth in international air cargo were Ahmedabad (58.2%), Tiruchirappalli (32.8%), Cochin (22.0%), Chennai (16.7%) and Mumbai (13.9%). Similarly, Imphal (71.9%), Raipur (50.9%), Mangalore (37.5%), Indore (34.1%) and Agartala (32.7%) witnessed significant growth in domestic freight traffic during the period. The growth in air cargo traffic can be attributed to the economic activity in the country, rise in trade and commerce between nations, flourishing food processing sector and entry of new players in the sector.
Aviation industry is capital intensive and hence investment is necessary in areas like airport services, related infrastructure and fleet capacity expansion. Investment norms are being relaxed to attract more investments. Indian government is roping in private parties into the development of the infrastructure in the industry through PPP mode. The two Greenfield airports—Rs. 24.78 billion Bangalore International airport and the Rs. 24.70 billion Rajiv Gandhi International airport in Hyderabad—stands for the growing momentum of PPP in India. Modernisation of Mumbai and Delhi airports and 37 non-metro airports under PPP mode is also underway. These developments are expected to improve the aviation infrastructure in India.
India has become the fastest consolidating market in the world. There has been a spurt in mergers and acquisitions (M&A) in the industry. The reasons that led to a surge in the M&A activity are as follows: growing competition among airlines, especially between Low-cost Carriers (LCCs) and Full Service Carriers (FSCs), increasing pressure on the revenue per seat, losses incurred by airlines, unorganised fleet management and need to achieve economies of scale. Acquisition of Air Sahara by Jet Airways; Deccan by Kingfisher; and Air India-Indian merger were completed in 2007. Some of benefits expected from these M&As include attaining economies of scale in areas such as maintenance, ground operations, use of landing slots and parking rights; resource rationalisation; route optimisation; fare rationalisation; leveraging assets and capital better; and building a stronger and sustainable business.
India has open sky agreement with SAARC countries and has bilateral agreements with other countries in air transport. The bilateral agreements specify frequency of flights, number of seats/ passengers allowed per weak, and designated carriers of parties to the agreement.
Ministry of Civil Aviation is the apex body regulating the aviation industry in India. The other regulatory bodies that come under its purview are Directorate General of Civil Aviation, Airports Authority of India and Bureau of Civil Aviation Security.
The growth of Indian civil aviation industry is driven by the following factors: burgeoning economy, rising personal income, increasing global trade, increasing incidence of corporate travels, India’s emergence as an affordable yet quality medical tourism centre, aggressive marketing strategies by tour operators, liberalisation and deregulation of aviation industry, increasing FDI investments following the norms relaxations and improving IT and E-commerce. However, factors such as capacity constraints, passenger and traffic congestion, heavy taxation and the rising fuel prices, fuel wastages, aviation security, lack of availability of skills, low marketing penetration, and threatened sustainability of LCCs due to various reasons are some of challenges facing the industry. Measures like capacity augmentation, infrastructure improvement, rationalisation of ticket pricing and reduction of tax on ATF are suggested to sustain the growth of the industry in future. Factors such as the strong demand for low air fares, willingness of the middle-income group to spend on leisure travels, corporates focusing on cutting down the employee’s travel expenditures, providing enhanced connectivity to places which are poorly connected, are expected to help the LCCs to survive despite disadvantages of soaring fuel cost, unfair and unsustainable fare wars.
Aviation sector has the potential to create 3 million jobs by 2017 in the field of flight dispatchers, cabin crew, airline managers, airport managers and ground-handling personnel. The industry requires around 6,000 certified captains in the next five years to cover the gap arising out of shortage of pilots. It also requires 5,000 additional pilots for scheduled operations and 1,000 pilots for non-scheduled and private operations. The airline industry of India is currently facing shortage of around 1,000 qualified pilots, particularly for wide-bodied passenger jetliners.
Based on the growth trends of air traffic from 2003-04 to 2007-08, the air passenger traffic is projected to reach 289.92 million in 2012-13 of which 236.55 million would be domestic passengers and remaining would be international air passengers. The air cargo traffic is likely to be 2.77 million tonnes, comprising 0.86 million tonnes of domestics cargo and remaining international cargo. The aircraft movement is expected to reach 2.73 million owing to increased air passenger and air cargo traffic. Of the total aircraft movement, 1.43 would be domestic aircrafts, while remaining would be international aircrafts.
- National Aviation Company of India Limited (merged company between Air India and Indian Airlines)
- IndiGo
- Go Air
- Kingfisher Airlines
- SpiceJet Airlines
- Jet Airways
- Paramount
- Charter Airlines
- Full Cargo Airlines
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