Tuesday, June 30, 2009

Mid Year assessment of Aviation Industry...

Its exactly half of 2009, lets have a assessment of Aviation industry in India. This report has been take from IBEF : -

*Sector structure/Market size : With a growth rate of 18 per cent per annum, the Indian aviation industry is one of the fastest growing aviation industries in the world. The government's open sky policy has led to many overseas players entering the market and the industry has been growing both in terms of players and number of aircrafts. Today, private airlines account for around 75 per cent share of the domestic aviation market. India has jumped to 9th position in world's aviation market from 12th in 2006. The scheduled domestic air services are now available from 82 airports as against 75 in 2006. *Potential for Growth : The Indian Civil Aviation market grew at a compound annual growth rate (CAGR) of 18 per cent, and was worth US$ 5.6 billion in 2008. The Centre for Asia Pacific Aviation (CAPA) has forecast that domestic traffic will increase by 25 per cent to 30 per cent till 2010 and international traffic growth by 15 per cent, taking the total market to more than 100 million passengers by 2010. India's civil aviation passenger growth, presently at 20 per cent, is one of the highest in the world. By 2020, 400 million Indian passengers are likely to be airborne. By 2020, Indian airports are expected to handle more than 100 million passengers including 60 million domestic passengers and around 3.4 million tonnes of cargo per annum. Moreover, significant measures to propel growth in the civil aviation sector are on the anvil. The government plans to invest US$ 9 billion to modernise existing airports by 2010. The government is also planning to develop around 300 unused airstrips. *Airport Infrastructure : Mumbai and Delhi airports have already been privatised and are being upgraded at an estimated investment of US$ 4 billion over 2006-16.Greenfield airports are operational at Bangalore and Hyderabad. These are built by private consortia at a total investment of over US$ 800 million. A second greenfield airport being planned at Navi Mumbai is going to be developed using public-private partnership (PPP) mode at an estimated cost of US$ 2.5 billion. 35 other city airports are proposed to be upgraded. The city side development will be undertaken through PPP mode. Over the next five years, AAI has planned a massive investment of US$ 3.07 billion—43 per cent of which will be for the three metro airports in Kolkata, Chennai and Trivandrum, and the rest will go into upgrading other non-metro airports and modernising the existing aeronautical facilities. *Aviation Policy : Many policies supporting the infrastructure are now in place. 100 per cent FDI under automatic route is permissible for greenfield airports. For existing airports, FDI up to 74 per cent is permitted through automatic approvals and up to 100 per cent through special permission (from FIPB). Private developers allowed setting up of captive airstrips and general airports 150 km away from an existing airport. 100 per cent tax exemption for airport projects for a period of 10 years. 49 per cent FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies. 100 per cent equity ownership by Non-Resident Indians (NRIs) is permitted. overhaul (MRO) and training offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020. 74 per cent FDI is permissible in cargo and non-scheduled airlines. The Indian government plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players. *Major Investments : Over the past year, various companies have shown an interest in the Indian aviation industry. US-based business jet maker, Hawker Beechcraft Corporation (HBC), opened its first authorised service centre in Delhi in partnership with Interglobe General Aviation with a total investment of US$ 8 million. Richard Branson, who controls UK carrier Virgin Atlantic Airways Ltd, has sought permission to start a domestic airline in India. GMR Infrastructure is looking to tap the growing corporate jet market in India with investment plans to the tune of US$ 151 million. It is also in talks with aircraft component manufacturers such as Honeywell and Safran to set up a components assembly plant in the country. The company plans to invest US$ 60 million for the proposed JV. US aircraft maker, Boeing Co, will deliver 100 planes worth US$ 17 billion over the next four to five years to India. *Road Ahead : The Indian aviation sector is likely to see clear skies ahead in the years to come. Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5 years. The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020. Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure. Associated areas such as maintenance, repair and


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