AVIATION INDUSTRY IN INDIA

State of Indian Economy

SUBMITTED TO:
DR. JAGDISH SHETTIGAR
DR. POOJA MISHRA

SUBMITTED BY:
ANKITA SHUKLA (18DM029)
SNEHA YADUVANSHI (18DM220)
 1. Introduction

The economic and social viability of aviation industry makes it one of the most important
industries in a country. It not only contributes to the GDP of the nation but also enhances
domestic and international trade and aids to employment opportunities.

1.1. Indian Aviation Industry and its evolution.

Indian civil aviation industry came into existence in 1912. The first domestic air route was
between Karachi and Delhi. It was started by the Indian Airlines in collaboration with the UK
base Imperial Airways. The first Indian airlines service was an airmail service started by Tata
Sons Ltd. During the independence there were 9 airlines operating in India. In 1953 as a result
of nationalization the domestic civil aviation was brought under the government. The open
sky policy and other liberalization policies transformed the Indian Aviation Industry.

Several private airline industries entered the aviation business by 2000. Indian aviation
industry today is dominated by private airlines and low cost carriers like Indigo, Go air,
Spicejet etc.

Some of the trends related to Aviation are discussed below.

Passenger Traffic (1995-2019)

400
350
300
No. of Passengers

250
200
150
100
50
0
1996
1997
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2003
2004
2005
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2017
2018
2019

Year
 Passenger Traffic(1995-2019)

Aircraft Movement (FY 2003-2019)

' 3

2.5

1.5
vv'
'ff

0.5

0
'vf

2006

2013
2003
2004
2005

2007
2008
2009
2010
2011
2012

2014
2015
2016
2017
2018
2019
Year

Aircraft Movement ( FY2003-19).

Freight Movement(2004-05 to 2018-19)

4000000
Freight Movement(in Tonnes)

3500000
3000000
2500000
2000000
1500000
1000000
500000
0
200520062007200820092010201120122013201420152016201720182019
Year

Freight Movement (2004-04 to 2018-19)

In the year 2008-09 the effect of the global recession can be seen in the number of passenger
movement. The number has reduced during this period. As a result of increasing oil prices
during this period losses of around $2.5 billion was sustained. Further in Dec 2011 there was
slow down of 8% in the passenger which showed the effect of slowing economic growth. This
similar pattern of reduction in aircraft movement and freight movement can be seen during
2009 and 2011.

Indian Aviation is categorised into 3 categories: Scheduled, Non-scheduled and Air Caro
Service.

Scheduled consists of domestic and international, non-scheduled consists of charter

operations and air Taxi operators and Air cargo consists of air transportation of cargo and
mail.

Scheduled air transport is between two places and operates according to a fixed time
schedule. The domestic scheduled flights run between places within the country and a few
international destinations. While International flights fly between scheduled international air
services to and from India.

Non Scheduled flights do not fly according to published time schedule and do not issue the
passenger ticket.

Air Cargo services can be scheduled or non-scheduled but has to be within India. For places
outside the India it needs to take permission from DGCA.

India is set to become 3rd largest aviation industry in terms of market by 2024. In terms of
domestic civil aviation markets, India is behind USA and China. The total passenger traffic in
India for the year 2018 was 344.70 million which was higher by 11.64 percent from the
previous year. There are 449 airports and airstrips throughout India. 125 airports out of these
449 airports are owned by Airport Authority of India.

In India, the air transport sector employs more than 3,90,000 people and another 5,70,000
are supported in the supply chain

1.2. Aviation Market

The passenger traffic growth in India has been 16.52% year on year to reach 308.75 million in
FY18 and 344.70 million in FY19.The CAGR from 2006-18 has been 12.72 percent. The
domestic passenger traffic grew by 18.28 percent to 243 million in FY18. International
passenger grew by 10.43 percent and reached to 65.48 million in FY18 which is estimated to
reach 76 million in FY20.

The air craft movement for FY19 has been 2.15 million for domestic and .45 million for
international which was 2153 thousand and 453.61 thousand respectively for FY18.

As of march 2019 the operational airports were 103 which will be increased to 190-200 by
FY40.In July 2018, there were 620 aircrafts operated by scheduled airlines and are expected
to grow to 1100 planes by 2027.
 2. Airports
There are total 464 airports and airstrips in India. The Airport Authority of India manages 125
airports out of these and rest 339 are managed by other bodies. Out of these 125 airports, 9
are non-operational 90 operational and 26 are civil enclave. The operational airports are
further categorised as 66 Domestic, 7 Custom and 17 international airports.

The AAI looks after development, financing, operations and maintenance of all the
government airports while the other airports are managed under the Aircraft Act (1934)

Activity in AAi airports-shares(%)(source IBEF)

 Traffic at International Airports

Percentage growth in International Traffic

The growth in International traffic was highest in Varanasi. But as the base of Bengaluru and
Ahmedabad is huge, the growth percentage of 17.5% and 15.9 shows a significant growth.
 Air Traffic In Domestic Airports

In the category of domestic airports Indore and Patna have shown huge growth over 30%
while Mumbai shows a decline.

The lower growth in Delhi’s passenger traffic and decline in the passenger traffic have been a
result of various factors. Airport Officials said that due to the shutdown of Jet Airways and
terrorist attack in Sri Lanka this slower growth in the passenger traffic was recorded. The
other factors included cancellation of Indigo flights due to the shortage of pilots, escalation
in India Pakistan tensions, grounding of two dozens of aircrafts of Air India and grounding of
Boeng Max 737s of Spicejet.

The growth in the passenger traffic at Bangalore airport was mainly because of addition of
new airlines to familiar destinations. The Facilities at the Bangalore Airport makes it one of
the best airports. Careful hourly capacity and investment in new technology has made this
possible. Fully automated self-bag-drop machines has made it possible for customers to
collect the baggage within 45 seconds. Further Smart Security Travel with automated tray
retrieval has eased the process.

Brownfield Airports

Building a new airport after demolishing or remodelling an old airport is called brownfield
airport.

Greenfield Airports

Greenfield airports are the airports that reflect environmental qualities such as utilising
undeveloped or empty land for the airport purpose. India’s Greenfield airport project are
among the robust models. In India the number of airports are expected to increase to 500
out of which 367 will be Greenfield projects. Some of the Greenfield projects include Rajiv
Gandhi International Airport, Kempegowda International Airport, Cochin International
Airport etc.
 3. Airlines

The deregulation in the aviation sector and the aim of the government to enhance the
connectivity between various regions has led to the increase in the number of airlines in India.
Now the passengers have the option of selecting from four low cost-carrier, various regional
airlines and three full service airlines.

The major airlines operating in India includes Indigo, Air India, Spicejet, Go Air, Vistara, Air
Asia etc.

Based on the report shared by IBEF the market share of Indigo by July 2019 stood at 49.9%,
Air India at 13.9%, Spice Jet at 13.1%, Go Air at 10.8%.
 3.1. Major Airlines Operating in India
3.1.1. Indigo
Indigo fleet 217 aircraft, consisting of 130 A320ceos, 71 A320neos, 1 A321neo and 15 ATRs.
It covers 70 destinations which include 17 international destinations. In the year 2018-19 it
has carried 64.7 million passengers. On a daily basis airline operates 1400 daily flights.

3.1.2. Go Air
Go Air operates 270 daily flight to over 27 destinations. The fleet consists of 50 Airbus A320-
200/neo aircraft. Over 10.8 million passengers have been carried for the year 2017-18.

3.1.3. Air India

Air India's fleet includes 27 Boeing 787-8 Dreamliner, 2 Boeing 747-400, 16 Boeing 777-200
and77 300 series, Airbus A319/A320/A321 and ATR-42 aircraft flying to destinations across
four continents.

3.1.4. Air India (Regional)

Airline Allied Services Ltd. was formed in 1983 as an Indian Airlines subsidiary. Alliance Air
(brand name) flight operations began in 1996 and its current fleet includes ATR-42 / ATR-72
turboprop aircraft. Alliance Air (rebranded as Air India Regional) carried 400 000 passengers
in 2015-16.

3.1.5. AirAsia India

AirAsia India operates flights to 21 destinations in India incl. Amritsar, Bagdogra, Bengaluru
(hub), Bhubaneswar, Chandigarh, Chennai, Delhi, Goa, Guwahati, Hyderabad, Imphal, Indore,
Jaipur, Kochi, Kolkata, Mumbai, Nagpur,Pune, Ranchi, Srinagar, Surat and Vizag carrying 6.82
million passengers in 2018.

3.1.6. Air India Express

Air India's low cost airline subsidiary, Air India Express, flies to 18 Indian cities and 13
international destinations with a fleet of 25 Boeing 737-800 aircraft. The airline carried 4.36
million passengers in 2018-19 and reported a total revenue of Rs42 billion and a net profit of
Rs 1.7 billion for the same year.
 3.1.7. Spicejet
Spicejet flies to 53 Indian and nine international destinations. The airline carried 14.2 million
passengers in 2016 and currently operates approx. 600 flights daily. Spicejet operates a fleet
of 76 Boeing 737-700/800/900ER/MAX 10 and 32 Bombardier Q400 NextGen turboprop
aircraft. The airline posted revenues totalling ₹ 78 billion in 2017-18.

3.1.8. TruJet
Hyderabad based TruJet operates flights to the following destinations: Hyderabad, Chennai,
Aurangabad, Cuddapah, Bengaluru, Goa, Kochi, Rajahmundry, Tirupati and Vijayawada. The
airline carried 586 000 passengers in 2018.

3.1.9. Vistara
Vistara flies to 22 destinations within India and operates over 170 flights a day with a fleet of
23 Airbus A320 and 7 Boeing 737 aircraft. The airline commenced international services in
Aug '19. Its main hub is at Delhi IGIA. Vistara carried 5.62 million passengers in 2018. The
airline recorded a total revenue of over Rs 21 billion during fiscal '18 and a net loss of Rs 4.3
bn.

3.1.10. Star Air

Star Air, a new start up air carrier, flies to Ahmedabad, Bengaluru, Tirupati, Hubballi and
Belagavi. Mumbai will be served from Sep 6 onwards.
 3.2. Performances of various airlines
3.2.1. Passenger Load Factor

The above graph shows the passenger load factor for Dec 2018 and Jan 2019. The data in May
2019 was Spice Jet at 93.9%, Go Air 93.3%, Indigo 90.9%, Air Asia 87.8%, Vistara 85.6%, Air
India 85.0%, Trujet 75.9%, Star Air 61.0%, Pawan Hans 21.9% and Air Deccan 18.7% in May
2019

From the Passenger Load point of view we can see that Spicejet has been giving a better
performance.
 3.2.2. Cancellations

The cancellation rate has been quite high for Air Heritage while that of Air Asia has been
low.

3.2.3. Passenger Complaints

The ratio of no of complaints is higher compared to other airlines. In private sector the
complaint ratio has been lower for Spicejet compared to Indigo.
 3.2.4. Punctuality

The punctuality status of various flights recorded as in March are represented in the above
chart where the highest punctuality was recorded by Go Air while Air India is the least
punctual Airline.
 4. Growth Drivers
4.1. Growing Demand
 Expanding middle income group and working population
The growth in air travel is increasing with the increase in working class and middle
class population. According to IATA, a growth of additional 359 million passenger by
2037 has been estimated which will largely be contributed by middle class population
 With the growth in GDP and per capita income improvements in living standard comes
into picture. This further increases the leisure travel thus giving boost to air travel.
.

4.2. Policy Support

4.2.1. Greater Focus on Infrastructure
The Government focus on the infrastructure has increased. The government is
working on several new projects. In the last 5 years 23 metro stations have been
developed and upgraded. AAI has been planning to increase the number of
operational airports to 200 by FY40.AAI is focussing on upgrading and modernising
non-metro airports. Airports at Itanagar,Kohima and Gangtok have been planned. The
government of Andhra Pradesh is planning for greenfield airport in six cities. Upfront
subsidy by 2 percent levy on domestic as well as international airfares to fund non-
metro airports has been proposed.
Around 15000 crores have been invested in 2018-19 for the expansion of existing
terminals and for building 15 new terminals. Additional US $1.83 billion will be
invested for the airport infrastructure development and aviation navigation services
by 2026.
Across various regions in North East India, around 30 projects are under progress.
Guwahati will be developed as inter regional hub while Agartala, Dibrugarh and Imphal
as intra-regional hubs.
AAI has planned to develop around 20 new airports in tier II and tier III cities in next 5
years.

4.2.2. Liberalisation and open sky policy

The private participation has given way to several new opportunities and is also
helping in better management of the aviation sector. Under the PPP model, 6 airports
 across major cities will be developed. The handling of air traffic is being shared
between AAI (40%) and PPP model (60%). The traffic rights have increased under the
bilateral agreements with foreign countries.
In 2017, India signed MoU with Spain for cooperation in civil aviation which will
support greater investment, trade, tourism and cultural exchange between the two
countries. Besides this Brussels Airlines started service from Brussels to Mumbai which
is their first flight to Asia.
Under the Open Sky Policy, India has signed its first agreement with Greece. In 2018 it
has also signed open sky agreement with Australia with which Australia allows airlines
on either sides to offer unlimited seats to six Indian metro cities and several Australian
cities.
There are provisions in the tax policy as well for the aviation. There is 100 per cent
exemption for airport projects for 10 years. Indian aircraft manufacture, Repair and
Overhaul service providers are exempted completely from customs and countervailing
duties.

4.2.3. Budgetary Support

In the current budget US$60.15 million has been allocated for Air India Limited,
US$11.32 million for AAI, US$710.38 million for DGCA to implement different
schemes, and US$ 7.62 million to Bureau of Civil Aviation Security to meet their
expenditure and US$ 6,237.01 million to Civil Aviation Ministry .

4.2.4. National Civil Aviation Policy, 2016

Under this scheme Regional Connectivity Scheme has been launched. It covers 22
areas of civil aviation sector. Airlines have to deploy 20 aircrafts or 20 of total capacity for
domestic operations.

4.2.5. FDI encouragement

100 percent FDI for Greenfield projects and 74 percent FDI for brownfield projects
under automatic route has been allotted by GOI .In scheduled air transport, regional air
transport and domestic scheduled passenger airline, 100 percent FDI has been allotted under
automatic route. FDI over 49 percent would require government approval. For foreign carriers
49 percent FDI has been approved. Between 2000-2019, FDI inflows in air transport sector
has reached US$ 1833.61million.
 4.2.6. Increasing Investment
The Public Private Partnership has boosted investment from private sector in airports. It has
increased share of private sector in equity component of major airports. E.g. 74 percent
private shareholding each in IGI Airport (Delhi), CSI Airport (Mumbai), RGI Airport
(Hyderabad), KIA (Bangalore).

4.3. Technology
Several new technology use will ease the check in process for customers. This is another
growth driver for air travel in India.

 Emergence of Biometrics-:The use of biometrics such as face recognition at various

process points will ease the process and save the time.
 Passenger visibility of checked baggage: Newer baggage protocol will help the
passengers to keep track of their luggage. Use of RFId and other NFTs instead of paper
tags will improve security and lesser stress for the passengers.
 Usage of Drones: There are plans for greater use of commercial drones for cargo
delivery with tighter regulations from safety and noise perspective.
 Digital transformation: With increasing use of artificial intelligence, machine learning,
robotics, data analytics coupled with biometrics, facial recognition, NFT etc. the
customisation level will increase for the customers. Thus, pushing the growth of air
travel in India.
 Inflight Connectivity: The Telecom Commission has approved the proposal by the
Department of Telecommunications to allow calls and internet services on aircraft
above Indian airspace.
This will allow the customers to make phone calls and use internet services.

4.4. Travel and Tourism

The increase in travel and tourism directly increases the air traffic. In the current scenario the
emergence of business hubs like Mumbai, Delhi, Bangalore, Pune will boost the business
travels. In 2018 94.8 percent was directly contributed by leisure purpose while 5.2 percent
was contributed by business travel. Leisure travel is further expected to grow by 7.1 % per
annum during 2018-2028 and business travel is expected to grow by 7.00 percent.
 4.5. Exports and Imports
Air transport handles 30p percent of India’s total trade by value. Thus growth in trade
contributes towards growth of aviation market. During 2018-2019, merchandise exports and
imports stood at US $ 331.02 billion and US$ 507.44 billion, respectively. Over FY 09-18, the
exports expanded at CAGR of 5.61 % to US$ 302.84billion in FY18 while imports expanded at
CAGR of 4.71 per cent to US$ 459.87billion in FY18.
 5. Challenges

The various challenges for the aviation industry in India are discussed below.

1. Safety
In the past few years there have been many fatal accidents. These accidents could
have prevented if the various officials involved had a better understanding of the
dynamics of man-machine interface. With the increase aircraft movement it has
become even more important to make the flying operations, air space management,
arrivals, departures more efficient and safer.
Also, to prevent from the terror activities like bomb blasts or hijacking surveillance,
safety oversight audits, surprise checks etc. are important

2. Passenger Experience
The passenger experience is one of the factors that helps in the growth of any airline
service. The ease in booking, cancelling or postponing the flight. The inner
environment in the flight, the food served, the facilities availed are various aspects
which help the customers to decide which flight to choose for their next travel. Hence
airlines need to take care of these services.
3. Sustainability
Environmental sustainability is a shared responsibility of aircraft manufacturers,
airlines, suppliers, airports, regulators, employees, passengers etc. The key issues
related to sustainability in aviation are:
 Sustainability of fuel sources and use of biofuels with the view towards electric
aircrafts.
 To control the emissions from the fuel and thus preventing harm to the
environment.
 The immediate impacts in the form of noise , pollution and traffic
 Enhancing inflight recycling to reduce inflight wastage.
 Enhancing the recycling of aircraft components.
4. Fuel Cost
 The rise of fuel cost is impacting the Indian airlines more than foreign Airlines. The fuel
cost accounts for 34% of an Indian carrier’s cost while it is just 24.4% globally. There
is no fuel competition at the airports and thus, the prices are not competitive. Besides
weaker rupee and intense competition restricts the airlines to increase the fares which
could help them in covering the high cost.
5. Congestion
Congestion leads to a lot of fuel wastage. Half an hour of hovering leads to 25-30
percent of extra fuel consumption which can cost around Rs 50,000. The congestion
also impacts the turnaround time of the aircrafts reducing the average utilisation of
the aircrafts.
 6. Committee Reports
Report of the Committee Constituted for examination of the recommendations made in the Study
Report on Competitive Framework of Civil Aviation Sector in India

Various initiatives had been taken up by the government to promote competition in

the economic sectors. As a part of this initiative, The Indian Institute of Corporate
Affairs (IICA) which is an autonomous body working under the Ministry of Corporate
Affairs (MIC) has appointed the Nathan Economic Consulting India Pvt. Ltd. (Nathan
India) as consultants to carry a detailed competition analysis for the Civil Aviation
Sector. The purpose of the study is to identify and analyze the major competition
inhibiting provisions of statues, rules, policies and practices present within the
regulatory framework of India’s civil aviation sector.

The study carried out had evaluated the rules and regulations which had that puts a
limit on the number and range of suppliers, limit the suppliers ability to compete,
minimize the incentive of suppliers to compete and affect the investment in the
sector. The report also offered policy recommendations that would minimize and also
in some cases eliminate certain barriers to competition.

6.1. Critical Findings of the Research Report:

 There should be a competitive neutrality between the private carriers and the
National carriers.
 To remove the regulations in order to ensure a preferential treatment to Air India
as a part of recapitalization.
 To remove regulations also to ensure preferential treatment of Air India with
reference to flying rights.
 To consider reducing the fleet and equity requirements for passenger air carriers
by looking at how the regulators in India have reduced the same requirement in
cargo carriers.
  To consider introducing an incentive based route program for servicing all the
airports in India
 To consider introducing market based tools in distribution of the various slots.

6.2. Recommendations in the report:

 Creation of a single civil aviation policy.
 The civil aviation policy should aim at reducing artificial barriers to entry for
example fleet and equity requirements.
 There should be a proper framework to put a check on the anticompetitive pricing
behavior in this sector.
 The policy formed should ensure to attract greater private investment in India’s
airport and improve the level of competition in the government procurement
process.

6.3. Report of Working Group on Civil Aviation for Twelfth Five Year Plan
1. Essential Air Services Provision to Remote Regions: The current arrangement for

proper air connectivity in the remote regions of India. As per the feedback received
from the many states, the connectivity in the remote areas is either unserved or
underserved. The possible solution suggested to this is the route dispersal
guidelines. A closer analysis of the route dispersal guidelines reveals that this
offers a partial solution to the problem of connectivity. The RDG is a matter of
internal cross-subsidization between the financially stable and economically
unviable routes of the airline and providing that is a challenge in the times when
the aviation sector is facing a financial crisis. The proposal has been to establish a
2. National Aviation University: The Indian aviation sector has a lot of potential in
terms of growth. The trend observed in the recent estimates suggest that the
domestic air traffic will reach around 160-180 million passengers per annum while
the international traffic will reach around 80 million passengers per annum from
the current levels. With the continuous rise in the traffic, safety in carrying out the
entire process becomes important. The infrastructure also requires renovation.
The government has setup various training institutes for the civil aviation sector
like the IGRUA, NIAMAR, Civil Aviation Training College, Allahabad and Hyderabad
airport. A number of private institutes are also there which provide training in the
 civil aviation sector. Around 42 functional pilot training institutes (of which only 17
are operational) and 77 AME training institutes along with a number of other air
hostess training institutes.
3. Development of Aerospace Industry: Keeping the growth prospects of the air traffic
in the country into consideration, the scope for the acquisition of carrier aircrafts
and the advantages arising as a result of the growth in the scientific and technical
manpower in the country, a need for the development of aerospace industry for
civil aircrafts. Foreign aircraft manufacturers view the demand potential of India
as an opportunity to derive benefit in terms of cost and cheap labor. China will also
come out with a commercial civilian aircraft in the next 3-4 years. Therefore it is
high time now and proper initiatives should be taken up to develop the aerospace
industry in India.
4. Innovations in Governance: With innovation holding a high significance in the
‘Decade for innovation’, in order to enhance growth and competitiveness in the
economy, it is important to promote innovation in all the sectors of civil aviation.
For the implementation of the policies and programs in the civil aviation sector, a
need for the involvement of non-governmental not for profit organizations to
achieve better results. This type of approach has been followed worldwide. In
India also the involvement of voluntary organizations in other sectors (except civil
aviation) has proved to be success. Safety, security and environment are some of
the areas where the voluntary organizations could perform for the aviation sector.
These areas in the past have posed greater challenge in terms of the trajectory of
growth in air traffic service in the next two decades in India.
5. Establishment of Civil Aviation Museum: The aim behind bringing up a civil aviation
museum is to archive the development of civil aviation in India and also to collect,
preserve and display aeronautical equipment, provide material for education of
the civil aviation and spaceflight sectors. The civil aviation museum shall preserve
the evolution and development of civil aviation and spaceflight sector in India and
shall also educate and inspire the nation by: 1) Preserving and putting to display
the material used in the aeronautical and spaceflight and data of historical and
technical interest with the National Programs. 2) Develop educational material
and conduct programs in order to improve the participation of the public and also
their involvement so as to develop an understanding of the civil aviation sector. 3)
Conducting and spreading new knowledge on aviation and spaceflight and their
related technologies.
 7. Scams in the Aviation Sector:
Praful Patel, former civil aviation minister and senior NCP leader had to appear before
the Enforcement Directorate (ED) for his involvement in the Deepak Talwar case. This
has been the first time when the minister had to appear before the Financial Probe
Agency in connection with the case under the Prevention of Money Laundering Act
(PMLA). ED had summoned him for his alleged involvement in the providing favorable
air traffic rights to foreign airlines causing losses to Air India. The ED has alleged that
Praful Patel was constantly involved with Deepak Talwar in the negotiation with the
foreign private airlines. Praful Patel who was the minister when the merger between
the Air India and Indian Airlines has taken place has denied any such charges of wrong
doing. ED is also investigating how the money from Deepak Talwar’s account has been
transferred to the bank accounts of government employees including those of the civil
aviation ministry.

7.1. National Civil Aviation Policy

“With recent release of the civil aviation policy, the aim has been to take flying to the
masses by making it affordable and convenient, establish an integrated eco-system
which will lead to significant growth of the civil aviation sector to promote tourism,
employment and balanced regional growth, enhance regional connectivity through
fiscal support and infrastructure development and enhance ease of doing business
through deregulation, simplified procedures and e-governance.”
“Vision: To create an eco-system to make flying affordable for the masses and to
enable 30 crore domestic ticketing by 2022 and 50 crore by 2027, and international
ticketing to increase to 20 crore by 2027. Similarly, cargo volumes should increase
to 10 million tonnes by 2027.”

7.2. Key Features of the Policy are:

• Scrapping of the decade-old 5/20 rule and replacing it with 0/20 norm: Earlier, a
domestic airline could start international operations only after five years of domestic
operations and having a fleet of at least 20 aircraft. As per new rules, they will be
required to deploy 20 aircraft or 20% of the total fleet size, whichever is higher on
domestic routes to get international flying rights.
• Regional Connectivity Scheme: Airlines will no longer be able to charge more than
Rs. 2500 for a 1-hour flight connecting two small cities. The government will provide
financial support to fund airlines’ losses on such un-served routes. A 2% levy has been
proposed on all domestic and international flights on metro routes to boost regional
connectivity. 50 No frills Airports, also called low cost airports, will be revived in the
next three years. Airlines operating from these airports will get concessions on
landing, parking charges and other expenses.
• Private Security Agencies: Private security agencies comprising of retired personnel
from military and para-military forces will be encouraged for non-core security
functions at the airports.
• Code sharing agreements: Indian carriers will now be able to enter into such
agreements with foreign carriers for any destination within India on a reciprocal basis.
• Open Sky Policy: India will have this policy for countries beyond the 5000 km radius
from Delhi on a reciprocal basis. This means that airlines from European or SAARC
countries, will have unlimited access, in terms of number of flights and seats, to Indian
airports, leading to increased flight frequencies with these countries.
• Growth of helicopters: This will be supported to provide connectivity to remote and
inaccessible areas. Separate regulations for helicopters will be notified by DGCA.
• DGCA: Necessary administrative and financial flexibility will be provided to
Directorate General of Civil Aviation (DGCA) for an effective aviation safety oversight
system and for creating a transparent single-window system for all aviation safety
related issues.”
 8. Conclusion

When considering the Indian aviation industry it is showing considerable growth

compared to other aviation industries of the world. It is set to become third largest
aviation industry in terms of market size by 2024. A lot of growth drivers are
contributing towards this, such as the growth in the working middle class sector,
growing per capita income, improving living standard, policies and initiatives of the
government such as UDAN Scheme, digi yatra and others, technological
advancements, improving infrastructure, growing tourism and ravel etc.

But when we look at the various airlines operating in the country, the situation
explains that most of them are in losses. There are several reasons behind these.
In 2018 out of 7200 complaints, 2300 complaints were related to delays which were
because of congestions. This extra hovering in the sky leads to a lot fuel wastage and
thus money. Further the unsold seats are sold at very low prices which are leading to
increase in the traffic. This increase in the traffic is profitless growth. Another issue is
rise in the fuel costs every now and then. Airlines are adding new aircrafts in their fleet
and to sell the seats the prices are being reduced. This leads to loss of the fares that
earlier airlines used to recover during the booking dates closer to the travel dates. If
the airlines do not add new aircrafts to their fleet, they will not be able to increase the
capacity and hence will not get slots. The government intervention is another factor.
E.g. Price cap of $35 on flights connecting smaller towns for short duration. Further
the slowdown of economy, depreciation of rupees, rising fuel costs etc. affect the
aviation industry.
So, the government needs to take proper action which not only help in improving the
state of Indian aviation but also the state of the airlines operating in India. Also, the
private sector needs to come up with proper strategy to recover their losses and
increase the profit without affecting the consumer base.
The various committee reports and the suggestions offered by them should be
implemented as these reports have been prepared after a thorough analysis of the
aviation sector by other agencies. The rising cost of the aviation turbine fuel has
remained a pain in the neck of the Indian Aviation Industry. The industry has been
through financial losses and increased fuel prices has made the structure
unsustainable. Hence the government should ease the survival of Indian carriers who
continue to live on the edge.
 9. Recommendations

Therefore for a healthy and long running growth of the aviation sector there is a need of
better planning not only from the aviation market perspective but also from the airlines
perspective.
1. The short haul flight prices need to be reasonable but not very cheap. Or even if the air
tickets are cheaper, the additional service prices need not be very cheap.
2. The increase in the number of aircrafts leads to larger capacity. But this also leads to
reduction in prices because of which the airlines are unable to recover the costs and so,
addition of aircrafts should be done only after proper analysis.
3. The newer aircrafts such as B737Max and Bombardier Q400with better fuel efficiency
should be added in the fleet.
4. There is a need to take proper actions to reduce congestion in the air traffic to reduce
the hovering time and thus preventing wastage of fuel. For this number of runways can
be increased on the airports which are busy. The other way is reducing the number of
aircrafts which cannot be done on a large extent.
 10. Reference
https://qrius.com/vision-2035-the-indian-aviation-sector-is-ready-for-a-takeoff/

https://www.ibef.org/industry/indian-airports-analysis-presentation

www.civilaviation.gov.in

https://www.ukessays.com/essays/tourism/introduction-to-indian-aviation-industry-tourism-
essay.php

http://www.sps-aviation.com/story/?id=2195&h=Challenges-for-Indian-Civil-Aviation

https://business.mapsofindia.com/india-gdp/industries/aviation.html

https://data.gov.in/resources/yearly-domestic-traffic-air

Total Traffic (Freight Movements) at Airports in India (2009-2010 to 2014-2015)