2. Aviation Industry
• The Aviation sector in India currently contributes $72 bn to GDP.
• India has 464 airports and airstrips, of which 125 airports are owned by Airport
Authority of India (AAI). These 125 AAI airports manage close to 78% of domestic
passenger traffic and 22% of international passenger traffic.
• Aviation in India, broadly divided into military and civil aviation, is the fastest-
growing aviation market in the world according to the International Air Transport
Association (IATA).
• The hub of the nation's aviation manufacturing industry is at Bangalore which has
a 65% share of this economic sector.
• The government's UDAN (regional connectivity scheme) is driving the growth of
civil aviation and aviation infrastructure in India.
• Air transport represents a small share of GDP but is closely linked to the activities
of other sectors, especially airports and aircraft manufacturing – collectively
considered here as the “aviation industry”. The aviation industry is a key enabler of
many other economic activities.
7. GDP
• The growth in the Indian economy has increased the Gross Domestic Product
above 8% and this high growth rate will be sustained for a good number of years
• Air traffic has grown enormously and expected to have a growth which would be
above 25% in the travel segment
• In the present scenario around 12 domestic airlines and above 60 international
airlines are operating in India
• With the growth in the economy and stability of the country India has become one
of the preferred locations for the trade and commerce activities
• The growth of airlines traffic in Aviation Industry in India is almost four times
above international average
• Aviation Industry in India have placed the biggest order for aircrafts globally
• Aviation Industry in India holds around 69% of the total share of the airlines traffic
in the region of South Asia.
8. Factors affecting Aviation Industry
• Competitors
• Fuel price
• Interest rate
• Exchange rate
• Global events
• Government policies
9. Influence of FDI on Aviation sector in India
• FDI inflows in India’s air transport sector reached US $1904.37
million between April 2000 and June 2019.
• FDI policy of India has liberalized the foreign investment through
foreign investment promotional board.
• FDI up to 100% by NRIs in Air India.
• FDI in Air India Ltd including that of foreign airlines shall not exceed
49%.
• 100% FDI is permitted in scheduled Air Transport service/Domestic
scheduled passenger airlines.
• 100% FDI under automatic route in helicopter/seaplane services
requiring Directorate General of Civil Aviation(DGCA) approval.
10. FDI initiatives
• The investment is divided in three category-Airport, air transport
services and other services(MRO).
• 300 business jets, 300 small aircraft and 250 helicopters are
expected to be added in Indian fleet.
• Demand of MRO facilities is increasing in India.
• USD 3 billion investment opportunity in greenfield under PPP at
Navi Mumbai and mopa(goa)
• Airport authority of India aims to bring around 250 airports under
operation by 2020.
11. SWOT analysis of FDI on aviation
Strengths- • 60 million International Passengers.
• Largest Peninsula.
• Abundance of natural resources.
• Abundant supply of labour forces
Weakness- • Income inequality.
• Political instability.
• Insufficient infrastructure
Opportunities- • National civil aviation policy-2016.
• UDAN- regional connectivity scheme.
• Affordable flying charges.
• Enhanced skill development schemes.
Threats • Problems in open sky policy.
• Lack of latest technology.
13. Suggestions
To promote a sustainable trajectory for the aviation industry, government
policies should prioritize sector-wide measures and competition. In particular
they need to:
• Strike the balance between the need for support and the risk of distorting
competition
• Preserve business dynamics and allow exit.
• Encourage investments in the green transition
• Address sustainability along the whole aviation value chain.