AVIATION SECTOR

OUTLINES

Current Scenario of Indian Aviation industry

Market SizeAir TrafficType of marketAirport InfrastructureAviation PolicyEffect on Indian EconomyFactors influencing growth rateAviation Sector Outlook

Current Scenario of Indian Aviation Industry

India completed 100 years in aviation sector on 18 February, 2011

The Indian Aviation Industry is one of the fastest growing aviation industries in the world

454 airports and airstrips; 16 designated international airports

With the liberalization of the Indian aviation sector aviation industry has undergone rapid transformation

Being primarily a government-owned industry, Indian aviation now dominated by privately owned full-service airlines and low cost carriers

Private airlines account for around 75% share of domestic airline aviation market

Airline business growing at 27% per annum: Ministry of Civil Aviation

Market Size India is currently the ninth largest aviation

market in the world

India's domestic air traffic grew at a rate, which is the second highest after Brazil according to global figures for June 2011, compiled by IATA

Domestic traffic growth 25-30% annually and international traffic 15% in 2010 :CAPA

Domestic Airlines

Air India Go Air Airlines Indigo Airlines Jagson Airline Jet Airways JetLite Kingfisher Airline Paramount Airways Spice Jet Airways MDLR Airlines

Market share

Air Traffic The country's domestic traffic grew by 14 per Strong domestic passenger growth rate of

22.3 per cent in July 2011 Passenger traffic has grown at 18 per cent

year on year (y-o-y) basis and the year 2010 closed at 90 million passengers both domestic and international

In July 2011, airlines in India handled 5 million domestic passengers, according to data released by the Directorate General Civil Aviation (DGCA) on 12 September 2011, marking the 11th consecutive month of double-digit growth

Passengers carried by scheduled domestic airlines

Aircraft Class Statistics

A Aircraft

B Balloon

D Hang Glider

G Glider

H Helicopter

M Motor Glider

U Ultralight

X Experimental

Class Number

G 61

H 300

A 1169

U 40

0

X 8

M 1

D 24

B 20

Aviation Sector: Some facts

In present scenario around 11 domestic airlines operating in India

Growth of airlines traffic in Aviation Industry in India is almost four times above international average

Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia

Type of market

In 1953, all airlines merged into Indian Airlines or Air India

Monopoly perpetuated for next 40 years Controlled by Directorate General of Civil

Aviation On 1 March 1994, Government open the

gates for private entrants Sensing a huge opportunity, a large number

of players jumped into the fray Now the market is Oligopoly

Airport Infrastructure

Of the 454 airports and airstrips in India, 16 are designated international airports

97 airports owned and operated by Airport Authority of India (AAI)

India’s Civil Aviation Ministry aims 500 operational airports in next 12 years as per report by CAPA

Government aims to attract private investment in Aviation Infrastructure

Mumbai and Delhi airports already privatized, upgraded at an estimate investment of US$ 4 billion over 2006-16

Continued…

A Greenfield airport already operational at Bangalore and Hyderabad, built by private consortia at total investment of over US$ 800 million

A second Greenfield airport planned at Navi Mumbai, developed using public-private partnership mode at an estimated cost of US$ 2.5billion

35 other city airports proposed to be upgraded Over next five years, AAI planned massive

investment of US$ 3.7 billion – 43% of which for Kolkata, Chennai and Trivandrum and rest for other non metro airports

Aviation Policies

Many policies supporting the infrastructure are now in place

For Greenfield airports, FDI up to 100% permitted through automatic approvals

For existing airports, FDI up to 74% permitted through special permission from FIPB

Private developers allowed to set up captive airstrips and general airports 150 km away from existing airports

100% tax exemption for airport projects for a period of 10 years

Continued…

49% FDI permissible under automatic route, but not by foreign airline companies. 100% equity ownership by non-resident Indians (NRI’s) is permitted

74% FDI permissible in cargo and non- scheduled airlines

The “Open Sky” policy of the Government and rapid air traffic growth, resulted in the entry of several new privately owned airlines and increased frequency/flights for international airlines

How aviation industry is effecting India’s economy?Earlier there were just two airlines, both state

owned. In last few years economy has opened up. India experienced growth rate of 8% per year

Main factors which effect the Indian Economy are:1.Increased no. of domestic airlines2.Low cost airlines3.India’s improving economyOther factors:1.Increased in no. of business travelers to

different countries2.Increased no. of incoming tourist and business

enterprises

Known factors Influencing Growth Rate

Increase inward and outward tourism Increased competition driven down prices

and margins Additional purchasing power due to rapidly

rising real income amongst the middle class Increased business trade due to rapidly

growing economy and free trade agreements with neighboring countries

Favorable Government policies and tax reforms

Aviation Sector OutlookAs per the Investment Commission of India, aviation

sector is likely to boom further in the coming years, attracting huge investment

Passenger traffic is projected to grow at a compound annual growth rate (CAGR) of over 15% in next 5 years

The vision 2020 statement announced by 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 80 billion in new aircraft and US$ 30 billion in development of infrastructure

Air cargo traffic to grow at over 11.4% p.a. over next 5 years