India’s aviation industry remains on a high-growth path and is one of the most promising in the world. According to the survey, the market will be the third-largest in the world by the year 2020 and the largest by 2030. The driving forces behind the market expansion include low-cost carriers, advancement in information technology, modern airports, Foreign Direct Investment, and emphasis on regional connectivity among others.
The contribution of the aviation industry to the Indian economy has grown tremendously in recent years. With a market size of approximately US$ 16 billion, India’s aviation market is the ninth-largest in the world. Coupled with government initiatives and untapped opportunities, the industry is likely to achieve its vision of rising to the top of the world in the next 15 years.
By the end of the second quarter of 2015, India registered domestic air passengers increased from 17 million to 20.3 million, representing a 19.2% of growth. In addition, international and domestic passage traffic grew from 5.3% in June 2014 to 16% in 2015.
With the prevailing market conditions in India, this domestic and international traffic is likely to go up with a margin range of between 12 percent and 8 percent in the next five years. During this period, domestic and international cargo is expected to rise at an average of 12% and 10% respectively.
According to Crisil Ltd, all the airlines operating in India will realize about Rs 8,100 crore (US$ 1.29 billion) in profits by the end of the 2016 fiscal year. This market size explains why the contribution of the aviation industry in Indian economy remains critical in driving the country’s overall growth.
The government of India plays a major role in creating a good business environment for the aviation market to thrive. Government agencies estimate that the country would be in need of at least 500 Brownfield and greenfield airports by 2020. To achieve this, the government is encouraging private investors to participate actively, through a wide range of Public-Private Partnership models. Besides, investors will receive state financial support, allocation of development land, and tax rebates among other incentives.
Here are more initiatives by the government to enhance the contribution of the aviation industry to the Indian economy:
- The government is putting up a second international airport in Gujarat at Dholera. To drive this, the state has established the D