Aviation Industry

SUMMARY

• India is the world’s fastest growing domestic aviation market, and has posted the fastest full year growth rate for three years in a row now.
• India’s Revenue Passenger Kilometre (RPK) growth of 17.5% was higher than the global average growth of 7% in 2017.
• At USD 16 billion, India’s aviation market is currently the 9th largest in the world and is projected to be the 3rd largest by 2020, and largest by 2030.
• More than 80 international airlines connecting to over 40 countries. Domestic passenger traffic crossed the 100 million mark in 2017, reaching 106 million in the January to November period.
• India is the fastest growing aviation market and is expected to cater to 478 million passengers by 2036.
• India is one of the least penetrated air markets in the world with 0.04 trips per capita per annum as

REASONS TO INVEST

• India is projected to be the third largest aviation market by 2020, and the largest by 2030.
• The Indian aviation sector is likely to see investments totalling USD 15 billion during 2016-2020 of which USD 10 billion is expected to come from the private sector.
• Airport Authority of India (AAI) plans to revive and operationalize around 50 airports in India over the next 2 years to improve regional and remote air connectivity.
• Growth in aviation is also increasing demand for MRO (maintenance, repair and overhaul) facilities.
• Greater focus on infrastructure development – increasing liberalization - Open Sky Policy; AAI driving modernization of airports and Air & Navigation Systems. Five international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) are operational under Public Private Partnership (PPP) mode.
• Enhanced Skill Development – Clear focus to leverage India's human capital potential and create job opportunities.
• Innovation and Technology – Launched GPS Aided Geo Augmented Navigation (GAGAN): India's first satellite based navigation system; NO Objection Certificate Application System (NOCAS): streamlines online process of timely NOC for height clearances of buildings around airports; E-Governance for Civil Aviation (eGCA): online delivery of 162 licensing and regulatory processes of DGCA.

FDI POLICY

• Airports 100% allowed under Automatic route for both greenfield as well as brownfield projects
• Air transport services
• Scheduled Air Transport Service/Domestic Scheduled Passenger Airline/Regional Air Transport Service
  • Up to 49% allowed under Automatic route. Government approval required beyond 49%
• Non-Scheduled Air Transport Services and Helicopter services/seaplane services requiring DGCA approval
  • 100% allowed under Automatic route
• Other services under the Civil Aviation sector
  • Ground Handling Services and Maintenance Repair and Overhaul Services
    • 100% allowed under Automatic route

SECTOR POLICY

• Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) initiated by the government last year shall connect 56 unserved airports and 31 unserved helipads across the country. Operations have already started at 16 such airports.
• NABH Nirman, announced this year, aims to expand airport capacity by more than five times to handle a billion trips in a year. The expansion will be funded by leveraging the balance sheet of Airports Authority of India.
• Maintenance Repair and Overhaul services
  • Foreign aircraft brought to India for MRO work will be allowed to stay for the entire period of maintenance or up to 6 months, whichever is lesser, provided it undertakes no commercial flights during the stay period. The aircraft may, however, carry passengers in the flights at the beginning and end of the stay period in India. For stay beyond 6 months, DGCA's permission will be required. However, with regard to spending by various airlines on MRO of aircraft in the country and percentage of expenses on MRO from abroad, no such record is maintained by this Ministry, as it is a financial matter of an airline, in which this Ministry does not interfere.
  • To allow import of unserviceable parts including aircraft components like engines and landing gears by MROs for providing exchange / advance exchange, the concerned notification has been revised to enable advance export of serviceable parts.
  • To enable economies of scale, the restriction of one year for utilization of duty free parts has been extended to three years.
  • MROs were required to provide proof of their requirements of parts, or orders from their client airlines. The process for the clearance of the parts has been brought in line with that of the tool kits for a one time certification by DGCA approved Quality Managers in MRO's.
  • The tools and tool-kits used by the MRO have been exempted from Customs duty. The exemption shall be given on the basis of list the tools and tool kits certified by the Directorate General of Civil Aviation (DGCA) approved Quality Managers of aircraft maintenance organisations.

FINANCIAL SUPPORT

• MRO, ground handling, cargo and ATF infrastructure facilities collocated at an airport, (including heliport licensed by DGCA) are covered under the ‘Harmonised List of Infrastructure and will get the benefit of ‘infrastructure’ sector.

INVESTMENT OPPORTUNITIES

• 300 business jets, 300 small aircraft and 250 helicopters are expected to be added to the current fleet of Indian carriers in the next five years.
• Demand for MRO facilities is increasing in India, due to growth in the aviation sector.
• Investment opportunities worth USD 3 billion in greenfield airports under PPP at Navi Mumbai and Mopa (Goa).
• The development of new airports – the Airport Authority of India (AAI) aims to bring around 250 airports under operation across the country by 2020.
• For development of aviation in the North-east region – the AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and Dibrugarh as intra-regional hubs.
• AAI has planned to spend USD 3 billion on non-metro projects between 2016 and 2020, focusing on the modernisation and up-gradation of airports.
• Indian airports are emulating the Special Economic Zone (SEZ) Aerotropolis model to enhance revenues, focus on revenues from retail, advertising and vehicle parking, security equipment and services.

KEY ACHIEVEMENTS

• FDI grew five times - from USD 229 million (2010-14) to USD 1148 million (2014-18) in Air Transport sector.
• National Civil Aviation Policy (NCAP) to boost regional air connectivity, establish an integrated ecosystem to promote tourism and generate employment.
• 160 airports being revived & operationalized.
• 18 Greenfield airports approved.
• 16 Common User Domestic Cargo Terminals (CUDCT) operationalized.
• The GPS-Aided Geo Augmented Navigation system (GAGAN) launched.
• 75 airports opened in 75 years of Independence while 33 new airports have been started in just 1 year.