Aviation Industry in India: History, Growth, Challenges, FDI and Future
Aviation Industry in India
Introduction: Aviation is one of the greatest wonders of modern science. There has been tremendous growth in the field of both civil aviation and military aviation sector.
India is presently among the top 10 civil aviation markets in the world. The airlines industry of India served over 16 million customers in 2013. According to reports, India is poised to become one of the top 5 civil aviation markets by 2020.
What is Aviation Industry? Aviation industry (also aviation sector) refers to the industries and organizations, engaged in the various aspects of aviation, such as airlines manufacturing, airlines flying, operating, maintenance, ground-handling, training centers, airports and regulatory bodies.
The possibilities of the development of air traffic during peace-time and the effective use of aircraft for military purposes became quite clear in the past few years. There are extensive experiments in India.
India has a long history in the field of aviation. The operation of air transport was entrusted to three Public Undertakings, namely
- Air India for international services,
- Indian Airlines for domestic services and services to neighboring countries, and
Hindustan Aeronautics Limited: The Hindustan Aircraft (now Hindustan Aeronautics Limited), was founded in 1940. It was started at Bangalore (now Bengaluru) as a repair, overhauling and assemblage depot, has now grown into an important manufacturing plant. It has designed and manufactured trainer air-crafts. It belongs to the aerospace and defence industry. It is managed by Ministry of Defence.
- 1932: Tata Airlines (first commercial airlines of India) was founded by J.R.D. Tata.
- 1946: Tata Airlines became Air India.
- 1953: Indian Airlines Corporation was established and to begin its operation.
- 1981: Vayudoot was founded as a joint venture between Air India and Indian Airlines.
- 1993: Vayudoot was merged into Indian Airlines in 1993.
- 1996: Alliance Air (now Air India regional) was formed as a subsidiary of Indian Airlines.
- 2005: Indian Airlines was re-branded as ‘Indian”.
- 2011: Indian (formerly Indian Airlines) merged with Air India. Post merger, Alliance Air was renamed as ‘Air India Regional.”
List of Major Airlines in India
- Air India
- Sahara Airlines (now Jetkonnect) became operational in 1993. It was founded in 1991.
- Jet Airways began its operation in 1993.
- GoAir started its operation in 2005.
- SpiceJet became operational in 2005.
- Indigo became operational in 2006.
- Air Costa commenced scheduled operation in 2013.
- Air Asia India commenced its operation in 2014.
- Vistara (joint venture between Tata Sons and Singapore Airlines), Fly Easy, TruJet, and Air Pegasus became operational in 2015.
Growth and progress of the Aviation sector
In the sphere of civil aviation, there has been remarkable progress in India. Both in respect of speed and carrying capacity modern aircraft are far superior to those in use even a decade ago. As already mentioned earlier, India is already among the top 10 aviation markets serving over 16 million passengers annually.
The volume of air traffic, both in terms of passenger and goods, is also daily increasing. Now-a-days very few among those who can afford the cost of air travel use any other form of conveyance, especially in long-distance journeys.
These improvements that are being daily made may very well further reduce the time of travel and correspondingly improve the safety and comfort of journeys.
Benefits of Aviation
Civil Aviation in India has shown signs of quick development and is expected to be more and more popular as its advantages come to be realized.
The benefits and advantages of Aviation has been discussed below:
- The expansion of air traffic has made the world look very small, indeed. It is possible to make a round-the-world trip in a modern aircraft in the course of less than two days.
- One of the obvious results of the progress in aviation has been wider and more intimate international intercourse.
- It is now possible for different peoples of the world to exchange their thought and ideas in diverse spheres more frequently because of the vastly increased facilities for contact provided by air communication.
- And the greater such facilities are, the closer will be the cultural and intellectual understanding among the different nations of the world.
Problems/Challenges faced by Aviation Industry
- There is dearth of properly trained pilots and technicians necessary for quick expansion of aviation services.
- Though several centers for the training of pilots and technicians have already been opened they are patently inadequate to meet the requirements of even the existing volume of air traffic.
- Another difficulty is with regard to aviation petrol. India, having very small supply of indigenous petroleum, has to depend on foreign sources for fuel, especially for aviation purposes. Whenever there is any bottleneck in the regular supply of aviation spirit, even the regular scheduled services, have to be cut off temporarily.
- Besides these hurdles, the general poverty of the masses is a factor to be taken into account in estimating the possibilities of the expansion of aviation in India.
- In India, however, the number of people who can afford air travel is very small, and they cannot by themselves keep the air-line companies going.
Foreign Direct Investment (FDI) in the Aviation Sector in India
The Government of India has allowed up-to 100% FDI under automatic route in Green Field Airport projects. There is provision for 74% FDI under automatic route for invest in existing airport projects. FDI’s beyond 75% in existing projects is possible after Government approval (FIPB and Ministry of Aviation).
For FDI in scheduled domestic airlines, up-to 49% FDI is allowed. Non Residential Indians (NRI) can invest up-to 100% in scheduled domestic airlines.
FDI is also allowed in helicopters and seaplanes services, ground handling services, maintenance and repairs services, and flying training services.
Note: All investments are subject to relevant regulations and other conditions. You are advised to seek expert advise.
Future of Aviation Industry in India
The Future of Indian Aviation Industry is bright. As already mentioned above, India is set to become one of the top five aviation markets by 2020. The latest report on civil aviation, reveals an all-round improvement in air traffic. The number of passengers as also the volume of goods and mails carried by airplanes during the period shows an appreciable improvement over those of the last decade.
The Aviation sector is expected to witness huge surge in investments from private sector players. The number of aircraft is expected to touch 800 by 2020. The low penetration ratio (0.04 per capita/p.a) provides immense opportunity for investment in aviation sector.
Aviation being not only a very important form of peacetime communication but also a vital part of the defense organization, the State cannot remain indifferent to its development along proper lines.
This progressive expansion may be expected to continue, and a time may come, not at a very distant future, when aeroplanes will be ever more popular, and become, the normal means of communication. The idea of one world, therefore, may not long remain an empty slogan but will be a concrete reality in the foreseeable future.
India has to rely on foreign sources for the supply of crude petroleum. If India is to develop aviation services as also other major industries, she must be self-sufficient in fuel supply.
In a vast country like India, with very suitable weather conditions all the year round, the possibilities of aviation are immense and the Government may be expected to take suitable measures for helping the growth of this important industry, so that it may play its part in the all-round development which India is planning for her people.