Still providing for some of the most attractive and well-paid jobs going around in the marketplace, Civil Aviation Industry in India is currently passing through a mix of stressful and exciting times. While the global economy with its period of ups and downs is indirectly affecting the industry worldwide including India, the Indian Aviation sector is seeing the entry of several new private and international airlines which is an indication of its growing healthy growth.
Add to this, in recent years the Government of India has undertaken several positive steps that have breathed a new life into the Aviation industry and given it a shot in the arm.
• Infusion of investment of Rs 50-100 crores for the revival of regional airports as no-frills airports.
• Raising the viability of running routes from regional airports, by abolishing airport charges, reduced service taxes and excise duty on aviation turbine fuel.
• Doing away with 5/20 rule which required domestic airlines to have 20 aircraft and five years of domestic operations to fly overseas.
• Introducing New ‘Open Sky Policy’ arrangement on reciprocal basis with SAARC countries and countries located beyond 5000 kms from Delhi. This will enhance air-traffic in South Asian countries and also make business of flying overseas viable for domestic airlines.
• Ensuring provision of free police and fire services by State Governments with power, water and other utilities made available at concessional rates.
• Initiating the creation of a Viability Gap Fund (VGF) that would take care of the losses borne by airlines.
Enthused by the various Government initiatives and low ATF prices, airlines in India are already charging Rs 2500 for an hour flight while getting tax incentives for operating on un-served routes, even though flyers will have to pay additional levies towards regional connectivity fund. Further, the Government’s ambitious ‘UDAN’ (Ude Desh Ka Aam Naagrik) Regional Connectivity Scheme (RCS) is all set to become a reality from early 2017.
The spin-offs of the above benefits as well as moderate ATF prices have made airlines a preferred mode of travel. Reports reveal that passenger traffic between January-November 2016 rose by 23.10% to 90.36 million.
The other good news is that Sydney-based Aviation think-tank CAPA has estimated that India’s airlines had made a combined profit of $122 million in FY2016 (first time in a decade). The year saw record profits for airlines like IndiGo, Jet Airways, Spice Jet, GoAir and Air India Express (AI making its first profit in a decade).
The think-tank has also estimated that India’s domestic market is well on its way to surpass 100 million passengers in FY 2017. This combined with an excellent 2016 means India is likely to overtake Japan in 2017 to become the world’s third largest domestic market behind the US and China.