India continues to emerge as aviation’s next major player

Huge aircraft orders, the removal of dated regulations and a growing middle class who are eager to travel are all helping to bring India to the forefront of the aviation market. Passenger numbers are growing at a faster rate than the rest of the world, as India is on course to become the largest market by 2030.

It has been predicted that India will need over 1,600 new passenger and freighter aircraft between 2015 and 2034 to help meet growing demand. The first steps have been taken to cope with increasing passenger numbers and demand, as 250 firm orders were placed with Airbus for A320neo in 2015. Traffic serving the Indian market is set to grow by 8.4 percent per year over the next 20 years: significantly higher than the world average of 4.6 percent.

India is the ninth largest civil aviation market in the world, with a market size of around $16 billion. It is expected to become the third largest market in the world by 2020, and the largest by the following decade. The rapid growth of the Indian civil aviation market can be attributed to factors such as low-cost carriers (LCCs), modern airports and growing emphasis on regional connectivity.

January 2016 has seen travel numbers increase significantly. Domestic air travel was up by 23 percent compared to the year before to 7.66 million passengers. Total aircraft movements at all Indian airports was up by 15.9 percent – international movements increased by 10.6 percent, whereas domestic expanded by 17.5 percent. In the 2016 fiscal year, airlines operating in India are projected to record a collective operating profit of $1.29 billion.

This decade has seen continued growth in the Indian domestic market; available seats are up by more than 40 percent and average annual growth sits at 8.3 percent. Over 100 million scheduled seats were on offer within the country in 2015, a nine percent increase on the previous year. This growth is down to new entrants Air Pegasus, Vistara and TruJet; AirAsia India and Air Costa entering their first year of operations and IndiGo – the market leader – continued to rise. IndiGo has taken delivery of their first Airbus A320neo and has more than tripled its domestic offering since 2010. The LCC has boosted scheduled seats by an average rate of 54.3 percent between 2010 and 2015.

India had the strongest global air travel growth in August 2015 with an 18.3 percent year-on-year growth. This surpassed China by 4.7 percent to top a list consisting of India, China, Russia, US, Australia, Brazil and Japan. This staggering growth was fuelled by airlines offering cheaper tickets as oil prices dropped significantly – as prices in Delhi decreased by 36 percent, fares were between 15 and 20 percent lower.

Key developments and investments have been made in order to grow India’s aviation industry. This includes Airbus committing to source products worth $2 billion cumulatively over the next five years from the south Asian country.

The aircraft manufacturer also plans to provide customised maintenance and other sources closer to the base for all its airline customers in India. Aside from the Airbus contribution, The Ministry of Civil Aviation has signed a memorandum of understanding (MoU) with Finland, Kazakhstan, Kenya, Sweden, Norway, Denmark, Oman and Ethiopia in order to increase cooperation between the countries. This is in terms of additional seats, sharing of codes, increased frequencies and additional routes.

Government agencies have projected that around 500 brownfield and greenfield airports would be required by 2020. Initiatives have been undertaken such as the Airports Authority of India (AAI) plans to revive and operationalise around 50 airports in India over the course of the next decade to improve regional and remote air connectivity. The Government of India has also given site clearance to Delhi Mumbai Industrial Corridor and Development Corporation (DMICDC) for setting up of a Greenfield Airport. This would be for public use near Bhiwadi, Alwar district of Rajasthan. The government has also granted ‘in-principle’ approval to 13 other greenfield airport projects.

India is the first country in the Asia region to operate the Airbus A320neo. IndiGo are only the second operator of this aircraft in the world, after Lufthansa acquired the first production airliners. The A320neo made its air show debut at India Aviation 2016 in Hyderabad earlier in March.

Major announcements were made during India Aviation 2016, including Airbus’s plan to establish a pilot and maintenance training centre near Delhi, and the Telangana government’s pact with Aero Campus Acquitane of Bordeaux Metropole of France to set up the first training centre for skill development in India.

The Indian international market has grown at an average annual rate of 5.7 percent this decade with departure capacity up 28.3 percent between 2010 and 2015. The country’s primary international carriers have helped drive this growth alongside an increasing presence from foreign air carriers, particularly low-cost operators like Air Arabia and AirAsia, the Gulf hub carriers and the rise of SriLankan Airlines in the sub-continent following its entry into the oneworld alliance.

Jet Airways remains the largest international carrier in the Indian market with over 4.5 million departure seats last year and a 14.3 percent share of capacity.  It is followed by Air India with 3.8 million seats and a 12.0 percent share. The Indian market has been a key factor in the success of the Gulf hub carriers and Emirates Airline, Etihad Airways and Qatar Airways are among the six largest operators in the country by international capacity.  Together they offered almost 5.8 million one-way seats in 2015, accounting for an 18.2 percent share of available capacity and up 63.3 percent since 2010.

Changes could be made to the controversial 5/20 rule that currently exists in India. This means an Indian airline must be five years old and have 20 planes in its fleet if it plans to fly abroad. The rule was implemented in December 2004, but now the government is considering doing away with the age cause completely. This would still leave a minimum requirement of 10 or 20 planes in an aircraft’s fleet for it to fly international services along with conditions that a certain percentage of the flights are to be domestic.

Former Minister of Civil Aviation, Praful Patel said: “We introduced 5/20 in 2004 when private carriers were being allowed to fly abroad. At that time, only Indian Airlines and Air India used to go abroad. Among big private carriers, only Jet Airways and Air Sahara existed and Air Deccan was a very small airline. The idea was to protect Indian carriers’ interests by ensuring new players don’t just spring up just to fly overseas and overlook the needs of connecting a country as big as India.”

The Indian aviation industry is largely untapped with huge opportunities for growth. For much of the population, air travel is still expensive – although the middle classes are growing. It is believed the middle classes will top 600 million people, more than double that of the US. By 2034, Indian passengers will on average each make four times as many flights as they do today. India already boasts the fastest growing economy, and Oxford Economics forecasts that by 2025 India’s population is set to surpass China’s.


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