Civil Aviation

Civil Aviation

Over the last three years, India’s civil aviation sector has grown at one of the fastest rates in the nation. It can be broadly divided into three categories: scheduled air transport, which includes both domestic and international airlines; non-scheduled air transport, which includes air taxi and charter operators; and air cargo, which includes cargo and mail transportation by air.

Approximately 69% of all airline traffic in South Asia is domestic, and by 2023, it is anticipated that India’s airports will handle 1 billion trips annually.

Indigo is the largest airline company in India with the highest market share. India has become the third-largest domestic aviation market in the world and is expected to overtake the UK to become the third-largest air passenger market by 2024.

India is expected to overtake China and the United States as the world’s third-largest air passenger market in the next ten years, by 2030, according to the International Air Transport Association (IATA).

The government has allowed 100% FDI under the automatic route in scheduled air transport service, regional air transport service, and domestic scheduled passenger airlines. However, FDI over 49% would require government approval.

The following list includes some of the major elements that will propel the aviation industry’s expansion

Higher Household Income- As the GDP of India grew after a contraction during the COVID period, there has been more business travel by professionals and greater leisure travel by individuals due to increasing income groups which drive the consumption pattern in India and primarily based out of urban areas, contributing more to the aviation industry.

Entry of Low-cost Carriers (LCC)- This model, which has been in the domestic market since 2004, is what has allowed the average person to afford air travel. The market suggests that this model is driving domestic traffic and thus, has shown strong operational performance over the years.

Increased FDI Inflows- The inflow of FDI contributes to the better development of the infrastructure of the aviation industry.

Under the automatic route, up to 100% FDI in civil aviation is allowed for non-scheduled air transport services in India.

Under the automatic route, up to 100% FDI is allowed in seaplanes and helicopter services.

Under the automatic route, up to 100% FDI is allowed in maintenance and repair organisations (MRO); flying training institutes; and technical training institutes.

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Ground Handling Services may accept up to 100% Foreign Direct Investment (FDI) in the aviation industry, subject to sector-specific laws and automatic security clearance procedures.

Increased Tourist Inflows- Over time, air travel has grown in tandem with the expansion of the tourism sector. For Foreign Tourist Arrivals (FTA), air travel is the most chosen mode of transportation. In 2023, out of 1.52 million FTAs in India, 87.5% of individuals entered via air routes, 11.8% via land routes, and 0.7% via sea routes.

Development of Modern Airports with New Technologies- Modern airports contribute more to the aviation industry because they have developed infrastructure with regard to speed, capacity, sustainability goals, etc. The recently constructed greenfield international airport in Mopa, Goa, is one instance.

Supporting Government Policies-Government interventions play a major role in the development of the aviation industry in India. One of the schemes launched by the government in support of the growth of aviation was the UDAN (Ude Desh Ka Aam Nagrik) scheme which was released in June 2016 with the motive of offering half of the flights at subsidized fares and is expected to be in process for a period of 10 years (till 2026).

Government Initiatives

Some major initiatives undertaken by the Government are

NABH (NextGen Airports for Bharat): Nirman is a government initiative to expand airport capacity more than five times to handle billions of trips a year, in the next 10-15 years.

AAI Startup Policy: Delivering a framework & mechanism for the interaction of AAI with internal and external stakeholders that catalyze innovation at airports and leveraging technology for addressing challenges and enhancing the delivery of services to passengers.

The Ministry of Civil Aviation (MoCA): announced that airlines can operate domestic flights without any capacity restriction, effective from October 18, 2021.

October 2021 saw the introduction of the Krishi UDAN

2.0 programme by the Ministry of Civil Aviation. The plan suggests providing support and incentives to facilitate the air transportation of agricultural products.

Digi Yatra initiative was launched by the Ministry of Civil Aviation for providing passengers seamless and hassle-free experience at airports without the need for verification of ticket and ID at multiple touch points.