Indian Aviation Industry

Indian Aviation Industry

Posted on Posted in Articles, Economy

Indian aviation industry is on a high-growth trajectory with a growth rate of 12.47%  in passenger traffic  in Fiscal Year 2015. India is expected to become the third largest aviation market by 2020 and is expected to be the largest by 2030. Total passenger traffic stands at a 106.45 million in FY 2016.  

India’s aviation sector is now attracting some of the country’s wealthiest investors, driven by the market debut of a consistently profitable airline, a fall in fuel prices and steady rise in air travel demand. Earlier, Government of India announced its draft National Civil Aviation Policy on 30 October 2015, seeking suggestions for the same. This policy inter alia focuses on expanding the open sky agreements and create a Regional Connectivity Fund.

Indian Aviation Industry and GDP

With the introduction of the private operators in the civil aviation sector and the huge cut in air prices, air travel in India became popularized and cheaper. The growth of airlines traffic in Aviation Industry in India is almost four times above international average. Central Government takes rapid expansion plans for the major airports for the increased flow of air traffic. Many domestic and international airports are being constructed at different parts of the country. The Reserve Bank of India (RBI) announced that foreign institutional investors might have shareholdings more than the limited 49% in the domestic aviation sector.

Over the next five years, domestic and international passenger traffic are expected to increase at an annual average rate of 12 per cent and 8 per cent, respectively, while domestic and international cargo are estimated to rise at an average annual rate of 12 per cent and 10 per cent, respectively. Growth in import and export in India will be the key driver for growth in freight traffic as 30 per cent of total trade is undertaken via airways.

In order to tap the potential of the aviation sector, the government has now made an effort to eliminate some of the impediments obstructing the growth of this sector.   One such step is the draft National Civil Aviation Policy 2015. Placed perfectly between the western and the eastern hemisphere, India has the opportunity to take advantage of its geographical location to become the hub of the global aviation industry.

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