1.

Growth and Evolution of Civil Aviation Industry in India:Overview

Not so long back air travel in India was limited to few. Its not that things have changed now, but they are different. Now also a large part of Indian population can not afford air travel and for most of the Indians, railway remains the preferred mode of transportation. In 2005, Domestic Air traffic accounted for mere 0.5% (Source: Zinnov Analysis) of the railway traffic. It will take many more booming years for Indian civil aviation industry, before air travel can even be compared with railways. Economic barriers and the lack of aviation infrastructure have emerged as the two most important constraints for the growth of aviation industry in India. Despite of these limitations and constraints aviation industry has hogged the lime light in past few years and is expected to do so in future Indian Aviation Industry (2009-10) Current Indian Population Annual Airline Passengers Annual Railways Passengers Airlines traffic growth (2005-10) Railways traffic growth (2005-10) Airlines operating (from India) Expected Air travelers by 2020 1.2 Billion 37 million (0.5 % of Railways) 5.4 Billion 15% 3% 11 262 Million

Growth & Evolution of Indian Civil Aviation Market:

Initial years of Indian civil aviation sector were marked by monopoly of state owned airlines Air Indiaand Indian Airlines which led to poor service offerings and high cost of traveling. These factors largely discouraged the air travel in India, restricting air travel to the ultra elitist Indians. Post 2000 scenario changed rapidly led by entry of almost eight private players. Most of the new airline operators had low cost carrier (LCC) model which ensured budget flying and competitive services. Phase-I The beginning: History of Indian civil aviation history goes back to 1932 when Air Indian was started as a freight liner. In 1933 TATA airline (later called Air India) became the first Indian passenger airline, next two decades showed a lot of consolidation in Indian skies and Indian airlines the domestic carrier- emerged as a result of nationalizing eight airline companies. In 1957 World Bank approved a loan of USD 5.6 million for including Boeing 707 in Indian fleet. Till late 80s there was no competition in the Airline market and national airlines were the only players in Indian skies. The lack of competition ensured public sector monopoly, it resulted in low service standards and high prices. Phase-II Entry of Private sector: In 90s Indian skies started opening up, in 1990 open sky policy for air cargo was announced. In 1994 air corporation act was revoked which paved the way for establishment of Jet Airways and Air Sahara, first big private players since TATAs in 1933.

Phase-III Indian Aviation Boom: In early 2000 Indian aviation sector started integrating with global industry, there were many noticeable shifts in the Indian civil aviation policy (more of this isdiscussed later) which led to: Because of liberalized policies, as many as five budget airlines started operation in span of 2 years Private airlines with 5+ year of domestic flying experience were given the permission to fly on international routes Increased landing rights were provided to international flights Extensive route sharing agreements with more than 30 countries Low cost carriers made flying economical 2.0 Current

Current Market Dynamics Indian Civil aviation is on fast lane with passenger traffic growing with healthy CAGR of above 6% since 2000 and 25% since last one year. 5 new airlines have started operations in last two years Increase in the passenger traffic: While the world air passenger traffic has recovered in last few years its Indian counterpart has witnessed a phenomenal growth in the same period. Zinnov expects Indian market to maintain the pace till 2015. Compared to world average of 5.3% Indian domestic passenger traffic has increased by 25% over last year and overall (international + domestic) traffic increase of 6% over last 6 years

India vs. World market: Growth of Indian aviation market has outperformed the world average and is projecting itself as the new hub of civil aviation. Boeing and Airbus have projected India to be the second most important growing market in the world after China. Indias 0.02 trips per capita is one third of Chinas 0.06 and far below the world average of ~0.2 trips per capita. Air trip is a function of GDP and measure of economic prosperity of a country, in developed country air trip is considered as just another mode of transportation and not luxury. With Indian economy growing with an eighth plus growth rate, there will be a sharp increase in the total air travelers. Considering Indias huge population 0.06 trips which India is expected to reach by 2015 - will mean an addition of around 50 million more passengers. This way India will surpass the UK, other European countries, North and South American countries except United States, becoming the third largest aviation hub after US and China Key Drivers for Indian civil Aviation Industry While railway figure dwarfs the Indian aviation statistics, the growth in latter has been phenomenal, especially in last couple of years. While railway passenger growth has declined and is creeping at 3%, air passengers are growing with a CAGR of 15% (200210) (Source: Zinnov Analysis). Indian aviation sector is growing, with push coming from multiple directions. Some of the key drivers being:

i. Indian economic boom

Since last few years India is consistently clocking a GDP growth in excess of 7%. Thanks to great Indian IT boom which has decimated the distance between the major Indian cities, at the same time ever increasing salaries in Indian service sector have empowered the large section of population with economic freedom. While the GDP/capita is still low at USD 722 but the PPP value for same is USD 3580. Some other indicators of rising prosperity in Indian middle class are:

 Median house hold income has increased by 50% in last 5 years. With USD 3580, GDP per capita (PPP) stands very high By 2008 46% of the Indian population will be earning in excess of USD 3000/Annum

ii. Evolving civil aviation market

Particularly the changes in Indian skies over the last couple of years have taken national and international watchers by surprise. Both Boeing and Airbus had to revise the forecast for Indian aircraft demand by 2020.According to the revised estimates India will need 650 odd more aircrafts in next 14 years Low Cost carriers (LCCs) or budget airlines fueled the growth, and brought the air travel within the reach of Indian middle class (700 plus million). It all started with Air Deccan-the first LCC in Indian skies- which operated on the no frill and cheap ticket business model. The business model of Air Deccan is high volumes & low fares. GROWTH OF THE INDIAN AVIATION SECTOR Indian Aviation industry has grown tremendously in the recent past. The credit goes to the sound demographic, macroeconomic, government aided reforms and market dynamics. Growth Increase in Consumerism Increasing Tourists Travel Increasing Business Travel Entry of Low Cost Carriers Untapped Market Rising Disposable incomes Rising Middle Class Population Increasing Competition

 Government Reform Measures

All the above strong favourable dynamics has placed Indias Aviation industry in a high growth trajectory in the foreseeable future. All over the world, there is a strong correlation with air traffic and economic growth especially in emerging markets like India where a rise of 1% in GDP is expected to result in a 2% increase in air traffic. Disposable income in India has gone up by 5 times in the last 2 decades and the expenditure on transportation has risen from 6% to 14% in the same period.2 This has resulted in increased demand. India is one of the least developed markets in the World and is among the most expensive in the world (after adjusting for purchasing power parity). Indian Airport

2. Service Profile
Aircraft Deals:
India has emerged as the biggest buyer at all major air shows Indigo airlines a new kid in Indian skies has placed an order for 100 Airbus Boeing and Airbus are wooing India by offering attractive offset plans. e.g. Airbus plans to set up a training centre for pilots in India with an investment of $75 million as part of the offset deal the Government Airline Planes Ordered Air India Indian Airlines Jet Airways Air Deccan GoAir Kingfisher Airlines Paramount Airways Spice Jet MagicAir East-West Indigo Indus Air One Total 68 43 50 62 50 78 5 20 20 40 100 10 _ 546

Services

Managing aircraft equipment entails complex technical decisions all the way through the asset's life cycle. Our people are committed to finding the right solutions for the many issues that arise.

Aircraft

delivery, re-delivery & auditing maintenance status of aircraft and

Inspecting

engines
Engine

shop visit planning, supervision & review and monitoring of airline maintenance facilities &

Assessment

standards including EASA 145 Auditing

General

terms agreements with overhaul shops &

manufacturer
Airframe

Power plants

CFM56, JT9D-7R4, PW2000, PW4000 RB211-535, CF6, V2500 'EASA licenced engineers, both B and C rating, on all airframes and engines'.

Aviation Services
Services Offered

Supervision of corporate and commercial jets in India and Nepal. Coordination towards Obtaining Govt. of India permits for Technical stops/ Overflight/ relief / cargo flights and tourist charters to India and Nepal.. Complete coordination with Airports Authority of India, D.G.C.A and Ministry of Defence. Obtaining the slots for Landing/Take-off at airports in India mainly Delhi, Mumbai, Kolkotta, Chennai, Agra, Trivandrum, Goa, Hyderabad, Ahmedabad, Udaipur, Jaipur, Chandigarh, Madurai, Aurangabad Cochin, and Banglore.

Providing Security Services in side and out side the airport om all over India Bases. Liaison with the state and the union government of India for all matters Pertaining to Security, Customs, Immigration and Health. Aircraft charter services in India and abroad on pre-negotiated rates. Arrangement of hotel accommodation and transport for crew and passengers on Cash/credit at specially pre-negotiated rates. Coordination with in-flight catering facilities. Coordination with refueling agencies. Compilation of Civil Aviation Requirements (C.A.R) and Aeronautical

Information Services (A.I.S) and class I & II Notams.

Effecting payments/accounts administration on behalf of our principals with AAI and other airport agencies.

Initiation/Negotiation of long term ground handling agreements with handlers in India

Other Activities Quick Aviation Services is representing various private jet operators, cargo airlines and tourist charter flights through this region. We are looking after all the interests of their handling, contracts with the handler and Supervision of their flights as per lATA section 13. We are also making arrangements for hotel and transport bookings for crew and passengers at various locations in India and Nepal on pre- negotiated rates.

3. Demand determination of the Industry:-

PRICE
THE PRICE EFFECT ON DEMAND FOR AIR SERVICES A steady fall in real prices of airfares has contributed substantially to increased air travel. While GDP growth and falling prices (in real terms) alone may not be representative of air traffic trends at the regional or country level, they do depict aviation trends at the global level. The illustration that follows (Exhibit 2.2 below) shows the downward trends in air fares world wide. Over the past four decades there appears to have been a change in the balance of importance between GDP and real price factors. During the period 1960-1990 some 80% of traffic growth was explained by GDP growth, with 20% due to price reduction, in the 1990s this appears to be nearer 60% and 40% respectively. Since the 1990s, price reduction has become more important as average world GDP growth rates have softened.

3.1) INCOME OF TARGET CUSTOMERS

3.2) FINANCE

3.3) PROMOTION SCHEMES

PROMOTION OF CIVIL AVIATION

In the Northeast region and other remote areas, the management of airport infrastructure as well as air services is not economically viable because of low utilisation and low fare structures etc. However, given the topography and inaccessability of the region, the need for such infrastructure and air services is much greater. But at the same time, forcing commercial airlines and airport operators to invest in these areas, distort the functioning in other areas also and affect their efficient functioning commercially. Therefore, there is need to correct these imbalances.

It has been decided to exempt all the currently operated routes in the North-East from payment of Inland Air Travel Tax (IATT). The decisions to provide ATF to turbo prop aircraft operations at par with price for international air services and capping of sales tax at 4% would also encourage new air services in the NorthEast. Operation of smaller aircraft and helicopters for passenger and cargo flights will be further encouraged through rationalisation of airport charges and Avgas prices.

Airport Infrastructure will be upgraded wherever necessary keeping in mind the linkage with the aircraft type and traffic profile. Adequate funds as grant-in-aid through North East Council (NEC) will be made available for the infrastructure development work needed to be carried out in the Northeast region.

The air-links between the capitals of the States in the Northeast region and between major stations on both sides of the Brahmaputra river will be encouraged.

Guwahati and Calcutta will be developed as hub station and main base of turboprop aircraft operations by the airlines Regular airservices will be encouraged at convenient timings to enable onward connections to other parts of the country without involving night stop. Suitable infrastructure like hotels, organised taxi-services at the airports and tourist spots in the North-East will be encouraged to help growth in tourism in the

region. TRADE PROMOTION

Tourism and trade sectors are closely linked to civil aviation sector. Therefore it is important that airport infrastructure and air services are planned keeping in view the requirement and promotion of these sectors. Multi-modal approach will be used for planning to ensure better connectivity.

A thrust for international tourism in India will be given by 1. Providing freedom to International Tourist Charters to all airports linking places of tourist interest 2. Declaring additional airports as international airports resulting in easy connectivity and better services, 3. Upgradation of airports at places of Tourist interest like Buddhist circuit, sanctuaries, beach resorts etc. 4. Encouraging private sector participation in building tourist infrastructure near airports like transport services from airports to nearby cities, golf courses, amusement park, business centres, duty free shopping complexes of international class, aviation recreation activities, adventure aviation, hang-gliding, microlight aircraft, parachuting etc 5. Efforts will be made to issue visa on arrival at the airport in larger number of cases. 6. Improvement in passenger facilitation and sensitisation of personnel of immigration, customs, security and AAI at airport to make them more courteous and passenger friendly.

For promotion to trade and industries , following steps will be undertaken : 1. Abolition of On-Board Courier Scheme to facilitate courier trade 2. Introduction of "Known Shipper " scheme for reducing dwell time in exports by doing away with "cooling off" requirement 3. Introduction of EDI (Electronic Data Interchange) interlinking trade agencies, customs , immigration for faster efficient trade transactions 4. Private sector participation in cargo handling for increasing competition and improved services.

4. Players in the Civil Aviation industries:

PLAYERS IN THE AVIATION MARKET At present, there is decent number of players compared to the one man army scenario prior to 1990s. These players include the following: I. Air India The history of Air India is the History of Indian Aviation. It is the oldest and the largest airline of India. Air-India was founded by J.R.D. Tata in July 1932 as Tata Airlines. Founded 2 ASSOCHAM Study: Road map to Civil Aviation, 2007. 11 as a small, private, domestic carrier in 1932, Air-India is now owned by government. It operates only on International routes and has negligible presence in the domestic traffic. II. Indian Airlines: With nationalization of Air Transport in 1953 via Air Corporation Act, 1953, National Flag carriers: Indian and Air India were born. Indian was born from merger of 8 domestic carriers. It caters mainly to domestic routes and in some neighbouring nations. It has a subsidiary Alliance Air. The two national carriers have enjoyed sole monopoly in the air transport segment over a long period of time as private carriers were barred from entering the segment under the Air Corporation Act, 1953. The private players like Jet, Sahara and others were made to enter the segment only after the New Economic Policy, 1991came into being. Yet another, turning point has come in the history of the Indian Aviation Sector when Air India was granted permission from the Government of India to merge with Indian Airlines, the two flag carriers of India. This Mega Merger marked the first marriage in the Indian skies which was followed by two more marriages. The name of the new airline remained Air India, since it is known worldwide. They have been in the works of completing the merger since January 2007, after permission.

III. Jet Airways: In May 1974, Naresh Goyal founded Jetair (Private) Limited with the objective of providing Sales and Marketing representation to foreign airlines in India. In 1991, as part of the ongoing diversification programme of his business activities, Naresh Goyal took advantage of the opening of the Indian economy and the enunciation of the Open Skies Policy by the Government of India, to set up Jet Airways (India) Private Limited, for the operation of scheduled air services on domestic sectors in India. Jet Airways is the only airline that stood the crunch of late 1990s. Jet started its International Operations in 2004 and carries more than 7 million passengers per annum. Recently, the company made news when Naresh Goel led Jet Airways took 100 % stake in their arch old rival Air Sahara in May, 2007. This earmarked the second marriage of the season in the Indian Skies after the AIIA deal. IV. Air Sahara: Like Jet, Sahara too began its operations in 1993 after the domestic Air Market was opened by the government in 1990s. Air Sahara Limited is a leading private airline in India, owned by the diversified Sahara India Parivar group. After Jet, it was only airline that could stand 12 the torrential winds of late 1990s. After series of controversies Air Sahara has been taken over by Jet Airways in May, 2007. The airline is now renamed as Jet Lite. Jet has intensions of converting Air Sahara in sync with LCC model to reach every segment of air travelers. V. Air Deccan: Indias first budget carrier and now the largest flew its first carrier in 2003.Headed by Captain Gopinath, Air Deccan truly redefined the accessibility to the Indian Skies. It injected competitive spirits into the system and gave common man wings by reducing airfares which matched the first Class Railway Fares. The third wedding in skies was marked when Dr Vijay Mallya of Kingfisher Airlines picked up 26 % stake in Air Deccan.

VI. Kingfisher: The Airline began its operation in May, 2005 .its the by far the most ostentatious airline in India, giving tough competition to Jet Airways in in-flight services. It is a major Indian luxury airline operating an extensive network to 34 destinations, with plans for regional and long-haul international services. Kingfisher Airlines, through one of its holding company UB holdings Ltd has acquired 26% stake in the budget airline Air Deccan and has offered to buy further of 20% stake from the secondary market.

VII. GoAir: GoAir is an Indian low-cost airline based in Mumbai, Maharashtra. It operates domestic passenger services to 18 cities with 131 daily flights and approximately 917 weekly flights. Established in June 2004, the airline started its operations in October 2005 with a fleet of 20 leased Airbus A320 aircraft. In July 2006, GoAir placed an order for 10 aircraft to Airbus. Further, in mid-January 2007 the airline announced that it plans to see a major minority ownership position for its expansion. On January 24, 2007, GoAir and Florida based airline reservation system provider Radixx International jointely announced that the latter had taken over all reservations and passenger management functions. VIII. Indigo: The airline made heads turn when it placed the ambitious order of 100 aircrafts with airbus. IndiGo Airlines commenced its operations in 2006 and went on to quickly establish itself as one of the premier budget airlines in the country. IndiGo Airways soon added IndiGo flights 13 and destinations to its network. The impeccable services and timely performances of IndiGo flights added to the popularity of the airline. IndiGo Airline won the award for the 'Best Domestic Low Cost Carrier' in 2008. The IndiGo Airline fleet of 20 contemporary aircraft offers travellers a network of 17 destinations in the country.

4.1 Top aviation companies in India

Air Charter Services Pvt Ltd: Air Charter Services Pvt. Ltd. performs its business operations with private business aircrafts, executive and corporate air charters, helicopter tours, VIP charter flights, and photo and video flights. Its client list incorporates VIPs, corporate firms, tour co-ordinators, travel agents and air medical evacuation professionals. It provides services such as relief, VIP, air ambulance and privacy services.

Air Charters India: Air Charter India is owned by the STIC Travel Group and has around 100 airplanes in India. It covers several international destinations with an unmatchable logistics support. The aviation company has 40 offices with a highly skilled manpower of above 1000 people. It offers services like heli-skiing, charter flights for pilgrimage in India, heli-sightseeing, corporate jets, executive jets, etc. Air Charter India provides airplanes such as helicopters, business aircrafts, aircrafts for corporates, individuals and group travelers.

Air India: National Aviation Company of India Limited (NACIL) was the first Indian aviation company which led the way for other companies in the aviation sector. It was initiated before the India gained its independence. Later it collaborated with Indian Airlines and gained the reputation of being the largest airline in South Asian airline. Air India Cargo, Air India Express and Air India Regional are its subordinates in aviation market. It offers First class, Executive class and Economy class services and has codesharing pacts with companies like Air France, Austrian Airlines, Aeroflot, Air Astana, Emirates Airline, Air Mauritius, Kuwait Airways, etc.

Aviation India: Aviation India provides services like cargo services, flight operation, air charter services, passenger services, freight control, advisory and consultancy, aircraft preservation and renovation, international flight operation,

air supervision and helipad engineering, etc. The airlines has skilled workforce and offers total control and functional back-up to several international schedule / non-schedule operations.

Indian Airlines: Indian Airlines was inaugurated on 1st August, 1953 and in collaboration with its fully governed subordinate in aviation market Alliance Air, it takes pride in being recognized as one of the biggest regional airline systems in Asia. It has a fleet of 70 airplanes and covers 76 destinations, 58 Indian destinations and 18 foreign destinations. Globally it covers Oman, UAE, Kuwait, Qatar, Singapore, Yangon, Pakistan, Maldives, Bangladesh, Sri Lanka, etc.

Deccan Aviation Ltd.: The aviation company has its presence in 8 places namely, Mumbai, Ranchi, Surat, Hyderabad, Bangalore, Katra, Colombo (Sri Lanka) and Delhi. It has 350 daily departures and covers 65 destinations in India. It offers the benefit of no-cost travel to infants, ticketing counters, lavish aircraft interiors and ticketing flexibility.

Indigo: Indigo is a utilitarian low-price domestic airline which offers feasible flying alternatives for millions. The airline was facilitated by the Air Passengers Association of India (APAI) as the Best Low-Fare Carrier in India for the year 2007. Indigo has 120 daily departures and a fleet of 19 Airbus A320. The airline covers 17 destinations namely, Agartala, Bangalore, Bhubaneshwar, Ahmedabad, Delhi, Chennai, Guwahati, Hyderabad, Goa, Imphal, Kolkata, Mumbai, Vadodara, etc.

Paramount airways: Paramount Airways is a business class airline which has its base in India and headquarters at Chennai. Endorsed by Madurai-based

Paramount Group and Paramount Railways was inaugurated in 19th October 2005. Its fleet comprises 5 aircrafts and it operates in 8 destinations.

Go Air Airlines: Like SpiceJet, a Go Air airline is also a low price airline endorsed by the Wadia group. It was inaugurated in Mumbai in June 2004. It operates in 11 cities with 61 daily departures. It has started its functions in Ahmedabad, Chennai, Bangalore, Coimbatore, Goa, Cochin, Jaipur, Mumbai, Pune, Delhi, Srinagar, etc.

Kingfisher Airlines: It is the one and only 5-star airline in India which offers excellent first class service on domestic itineraries also. A part of UB group, Kingfisher Airlines has received 30 awards for its novelty and customer satisfaction. After its tie-up with Deccan, the airline covers 64 cities and has 484 daily departures.

Spice Jet: Spice Jet is basically a low cost airline which incorporates many Boeing 737-800 airplanes in its fleet. It covers 14 destinations in India.

Air Sahara: Air Sahara was inaugurated on December 3, 1993 with a fleet of only two Boeing 737-200s. Now it comprise of 27 aircrafts, 135 daily departures and availability of 16500 seats on regular basis. It reaches various Indian destinations like Bangalore, Kolkata, Delhi, Lucknow, Mumbai, Chennai, etc.

Jet Airways: Jet Airways was established on May 5, 1993. It earns yearly revenue of Rs 2502.89 and total income of approx ` 117868.8 Million. At present it id India's biggest private domestic airline with 62 aircrafts and a market share of 25%. It covers 50 destinations with 340 regular departures. Jet Airways has pacts

with foreign airlines, such as Lufthansa, Swiss, Gulf Air, Austrian Airlines, Qantas and Thai.

Fleet Size Fleet-wise also Indian

carriers are quite small. Air India has a total fleet size of 33 aircraft; Indian Airlines is somewhat larger, being the size of Singapore Airlines with 62 aircraft. Alliance Air, a wholly owned subsidiary of Indian Airlines has 14 aircraft. Among the private airlines Jet Airways has 41 aircraft, Sahara 19 and Deccan Air 5. This is minimal when compared with American Airlines, one of the world's largest airlines with almost 1000 aircraft and carrying over 80,000,000 passengers and 650,000 Tonnes of freight a year. Even Singapore Airlines, a small Nation airline that operates only internationally, has almost twice the number of aircraft than its parallel Air India. This when India is lulled with the images of being a part of the bricks economy, the socalled economies of the future. This makes Indian carriers a small player in the passenger aviation world in general and International travels in particular.

4.2 MARKET SHARES Market share of key players in the Indian aviation sector

Name of the players

Market Share

Kingfisher Airlines and Kingfisher Red (previously Air 28% Deccan) Jet Airways and Jet Lite (previously Air Sahara) Air India and Indian (previously Indian Airlines) IndiGo SpiceJet GoAir Paramount Airways MDLR Airlines 25% 16% 14% 12% 3% 2% 0.004%

5 .Distribution channel in the Civil Aviation industries:

Distribution channels The Four methods of distribution are as following: A] Consolidation: The direct sale of tickets from airport to the passenger on the airline desk .B] Tour Operator/ Travel Agent: Customers approach travel agents or tour operators who book the tickets from the airline and take commission. E.g. SOTC C] Affiliated with companies: As the name defines, airlines gets affiliated with companies who carry all its trips with a same airline who in turn gives special discounts or offers inreturn. D] Direct through home leased system, e.g. phone, fax, email and also online e-booking.

Why Airline Distribution?

Distribution is a major cost for all airlines Distribution is shifting global channels are no longer traditional Online sales are changing the face of distribution Different models of low cost carriers are impacting network carriers models Industry challenges past, present and future challenges will redirect the industry

6. Key issues and current trends:

Promotion
The significant steps taken by the Indian government on liberalization of Indian aviation industry include24: (i) The Foreign Direct Investment limit in Air Transport Services (Domestic Airlines) has been increased from 40% to 49% and is soon expected to be increased further. However, the NRI`s and Persons of Indian Origin (PIO) have been allowed 100% FDI; (ii) Private scheduled carriers with five years experience in domestic sector and having fleet size of twenty aircraft permitted to operate on international routes; (iii) Liberal policy in the exchange of capacity entitlement / traffic rights paved the way for more foreign airlines to operate to / from India; (iv) Amendment of the various outdated provisions of Aircraft Rules to keep the provisions abreast with the international standards and developments in the civil aviation sector; (v) Tourist charter guidelines liberalized; (vi) Fleet expansion plans of Air India/Indian Airlines approved; (vii) Restructuring of Delhi and Mumbai airport and 24 Ministry of Civil Aviation: Regulatory Issues: available at work on development of Greenfield airports at Bangalore and Hyderabad undertaken25;

Civil Aviation Industry Current Trends

Calendar 2010 was a year of recovery for the aviation industry. Led by a strong rebound in business and leisure long-haul travel, particularly in emerging BRIC markets, international traffic grew by 8.8 per cent. The International Civil Aviation Organization forecast which highlighted the robust recovery during 2010 anticipates worldwide air traffic growth to continue well into 2011 and 2012 at 4.7% and 4.9% respectively. Economic growth and increased spending power have resulted in impressive international traffic growth and a robust domestic market. Most of the air-carriers across the world have seen strong rebound in demand since the pre-economic downturn level, bringing promises of improved profitability and renewed growth particularly to and within fast developing economies such as India, which is likely to surpass the 50 million passengers per year mark in 2011. According to a December report from aviation consulting firm Centre for Asia Pacific Aviation (CAPA), international traffic to India is expected to grow at 10-12% in fiscal 2011. The key challenge going forward will be to balance this burgeoning demand with capacity discipline, to ensure that yields are maintained. Operating full aircraft doesnt necessarily mean you are operating profitable aircraft! With respect to the IndiaUS market, there is still a lot of untapped demand from both ends of the route for both business and leisure travel. In many ways non-stop operations such as Americans are a good barometer of US-India relations. What we see now is increasing business travel demand from both ends of the route as economic ties continue to strengthen, particularly on the back of President Obamas recent visit. Interestingly some of the greatest surge in demand comes from SMEs, particularly US based companies that are looking to expand their footprint into developing economies such as India. The role AmCham plays in helping encourage trade and commerce cannot be understated.