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Monday, 9 December 2013

Growth and Development in Avaiation Industry

Even though the sector has grown significantly in the last decade, the industry is presently going through a severe economic crisis.

India Poised to be third biggest aviation market by 2020: Ajit Singh Addressing the members of Consultative Committee for the Ministry of Civil  Aviation in Panjim, Goa, Minister of Civil Aviation, Ajit Singh said that India is poised to be the third biggest aviation market in the world by 2020. He also 
expressed the hope that as per growth projections the air passenger traffic is estimated to double by 2019-20.

Following is the text of the opening remarks made by the Minister of Civil  Aviation Ajit Singh: “India is the 9th largest aviation market in the world and is poised to be the 3rd biggest by 2020. Indian aviation market witnessed rapid growth in the decade ending 2012-13. Air traffic passenger throughput at Indian airports recorded a CAGR of 13.8 % during the current decade. However, recently there has been a slowdown with Passenger throughput at Indian airports declining to 159.40 million in 2012-13 from 162.30 million in 2011-12, showing a negative growth of 1.8%. Nevertheless, the passenger traffic has picked up again in the second quarter of the current year. As per growth projections the air passenger traffic is estimated to double by 2019-20.

Even though the sector has grown significantly in the last decade, the industry is 

presently going through a severe economic crisis. The Airline industry combined 

reported estimated losses of Rs. 9771 crores and a debt of Rs. 85,865 crores in 

the FY 2012-13. The spiralling cost of ATF, economic slow-down, devaluation of 

rupee, low yield, high operational costs and the consequent widening gap between 

revenue and expenditure contributed to this financial crisis. The flawed 

perception that flying is the rich men preserve has resulted in the civil aviation 

sector bearing the burden of high tax regime.

The Central Government has taken many initiatives to lessen the stress in the 

sector and revive it. These include opening up of FDI by airlines up to 49%, 

permission to import ATF directly by the airlines, approval of TAP/FRP of Air 

India and a more liberalized policy regime. A decision to permit foreign carriers 

to invest in the airline industry in India (upto 49%) has already resulted in 3 

major investment proposals getting fructified. These investments along with the 

adoption of international best practices in Management and technology in the 

airline industry are expected to lay the foundations of a sound turnaround of the 

aviation industry in India.


Surbhi Maheshwari [MBA Fin / Mktg ] 
Manager Finance
On Line Assistence :

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