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Indian aviation industry is ranked the ninth largest aviation market in the world. It is estimated to
clock a Growth Rate of 400% between 2010 to 2020, making it one of the fastest growing aviation
industries.[1] At current rates, it will be a $16 Billion industry by 2020, making it the third largest
in the world. While the growth in civil aviation can be attributed to an increase in number of
business travellers as well as tourists, freight aviation has contributed to the growth in a major way
as well.[2] From the policy perspectives, factors like opening up of economy, increased FDI in
airline sector, increase in middle class’ incomes, low-cost carriers, regional connectivity,
privatization of airports, etc have been some of the major contributors in the aviation sector
growth story of India.
However this sudden burst in the number of fliers has caused multiple capacity related challenges
for the aviation sector in terms of airplanes availability, airport infrastructure and air-traffic
handling capacity. The number of fliers, which stood at 468.09 lacks in 2010 is estimated to grow
by three-folds till 2020 to more than 100 Million. Forecasts show that at this rate, there is going to
be huge demand supply gap in aviation sector in the upcoming future.[3]
Some of the major bottlenecks that the sector is going to face are:i.

Lack of aircrafts
"Indian air-carriers' total fleet-size currently stands at 335 and at a passenger growth rate of 1215 percent annually, they will need 35-40 planes per year to meet this demand", says Dinesh
Keskar, Boeing India president. He estimates this to be a major bottleneck if not resolved at the
Government provisions:- The Aircraft Acquisition Committee has been abolished
to liberalize the acquisition of aircraft by airlines, flying institutes and for private use. Hence,
airlines are free to acquire aircrafts as per their business plan and requirements, without
undergoing the cumbersome and time-taking processes of permission seeking from Ministry of
Civil Aviation. The decision will help airlines to plan better for future induction of aircraft and
also maintain timeliness of acquisition.
Moreover, by allowing up to 100 percent FDI in the aviation sector (49% for foreign airlines),
the government has given Indian airlines a chance to improve their balance sheets, and
facilitated higher investments.


Lack of skilled manpower
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2 is-likely- to-emerge- one-of- the-largest-aviationmarkets/articleshow/46595770.cms
3 Corporate News, India Infoline, 2010

and called for bids for developing the city-side of these airports. Moreover. Government provisions:. like restaurants. which would empower the regulatory body to license air traffic controllers. conservation of fuel. Majority of these tier-II cities are only connected to metros like Delhi and Mumbai. allowing expatriate pilots to operate in India. the unskilled or semi-skilled employees are not capable of handling demand efficiently. Government will also set up an Airport Economic Regulatory Authority to deal with the emerging scenario of private airport operators. on sharing basis.Acute shortage of skilled manpower and Air Traffic Controllers (ATC) in aviation industry. This hampers the growth of the industry by increasing overall costs of the airlines and thus reducing demand.The Government is in the process of formulation of a policy for the promotion of regional connectivity. Regional connectivity Regional connectivity is a big issue in hampering growth of the industry as more and more cities are developing in terms of business and investments. Other facilities at airports. by code-sharing and seat-credit mechanism.[6] For increasing airport capacities.butinfrastructure. also have limited capacities as compared to demand. which results in unnecessary stopovers for fliers from these cities. Government has fast-tracked airport modernisation works in Delhi.nic. It would result in optimum usage of airspace. reduction in emissions and ultimate benefits to travelling public.hurdles-remain. lounges etc.html 6 pib. This increases the overall operating costs of airlines resulting in fewer profits especially for low cost carriers (LCC) airlines. Many flights get delayed due to inadequate infrastructure facilities. congestion costs are increasing.Government has raised the retirement age of Air India pilots to 65 years and furthermore.[4] Government provisions:. wages rises to an unsustainable level. leads to a cut-throat competition for employees as a consequence of which.The Government has also allowed for flexible utilization of Airspace by civil and military users. 4 Indian Aviation Industry: Issues & Challenges 5 livemint. incentivizing Indian airlines to operate on these routes.aspx?relid=95531 . Government has also enhanced DGCA’s powers after amending the Aircraft Act. enhancement of airspace capacity. with a world-class flying school being set up by the AAI at Gondia in Maharashtra. iv. Mumbai and other major cities. minimizing Lack of Airports and other related facilities Due to less number of airports and their individual capacities. This is expected to generate greater financial viability for regional The bigger airlines will be able to use such credits to meet their requirement of having to connect such remote areas without having to lose money on such operations.[5] iii. the Airports Authority of India started work on 35 non-metro airports. Government provisions:. Expansion in terms of flying schools is also on the cards. Additionally.

overtaxation in terms of central and state taxes on fuel and maintenance as well as service taxes on air tickets are likely to hamper growth. Furthermore. and still take the less profitable route of fuel procurement. due to lack of infrastructure. an Essential Air-Services Fund is also being proposed by the Government for providing subsidy for development of low-cost airports throughout the country.Government has allowed airlines to import jet fuel (ATF) directly from foreign oil firms in order to help the airlines cut fuel costs by up to 20%.[5] v. Fuel import duties and other taxations Domestic carriers are required to pay heavy federal and state taxes for buying fuel from domestic oil firms.Additionally. Government provisions:. However. . significantly adding to the debt pile-up of airlines. local airlines face issues in direct import of fuel.