Civil Aviation - a Booming Sector

Labels: airport, cityside, development, Mumbai, upgradation

Civil Aviation - A booming sector : An estimated investment of US $9 billion to be pumped in by the year 2012. The following are the facts and figures related to the Indian Aviation Industry.

SIZE

India has 454 airports and airstrips; of these, 16 are designated international airports.

In 2006-07, Indian airports handled an estimated 95 million passengers and 1.5 million tonnes of cargo.

Passenger traffic grew in excess of 30% in 2006-07 over 2005-06; Cargo grew at 11% over the previous year.

STRUCTURE

Currently 97 airports are owned and operated by the Airports Authority of India(AAI).

The Government aims to attract private investment in aviation infrastructure.

Mumbai and Delhi airports have been privatized and are being upgraded at an estimated investment of US$4 billion over 2006-16.

Greenfield airports at Bangalore and Hyderabad are being built by private consortia at a total investment of over US$800 million.

Second Greenfield airport being planned at Navi Mumbai to be developed using PPP mode at an estimated cost of US$2.5 billion.

35 other city airports proposed to be upgraded - city side development to be undertaken through PPP mode where an investment of US$357 million is being considered over the next 3 years.

India now has 12 airlines including the national carriers Air India and Indian

Indian private airlines - Jet, Kingfisher, Spicejet, Go - accounted for around 70% of the domestic passenger traffic in 2006. Some have started international flights.

POLICY

100% FDI is permissible for airports; FIPB approval required for FDI beyond 74%.

100% FDI under automatic route is permissible for greenfield airports.

49% FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies.

100% equity ownership by Non-Resident Indians (NRIs) is permitted.

AAI Act amended to provide legal framework for airport privatisation.

100% tax exemption for airport projects for a period of 10 years.

Indian Govt. plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players.

'Open Sky' Policy of the Government and rapid air traffic growth have resulted in the entry of several new privately owned airlines and increased frequency/flights for international airlines.

74% FDI permissible in cargo and non scheduled airlines.

OUTLOOK

Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years.

Expected to cross 145 million passengers p.a. by 2010.

Vision 2020 envisages creating infrastructure to handle 280 million passengers by 2020.

Investment opportunities of US$110 billion envisaged upto 2020 with US$80 billion in new aircraft and US$30 billion in development of airport infrastructure.

Associated areas like MRO and training offer high investment potential.

Cargo traffic to grow at over 20% p.a. over the next five years and is expected to cross 3.3 million tonnes by 2010.

Major investments planned in new airports and upgradation of existing airports.

POTENTIAL

Favourable demographics and rapid economic growth point to a continued boom in domestic passenger traffic and international outbound traffic.

International inbound traffic will also grow rapidly with increasing investment and trade activity and as India's rich heritage and natural beauty are marketed to international leisure travellers.