India is fastest growing market for global aviation sector

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Going by the expected order list of the Indian domestic carriers, the global manufacturers of aircrafts, engines, spares and service providers will be eyeing the Indian contingent at the 45^th Farnborough International Air-show in Farnborough, U.K.

 

With orders worth more than $31 billion already in the market since last year for aircrafts, aircraft engines, simulators, services, etc. and another $5 billion expected from Air India, the country's national carrier, the 45^th Farnborough air-show has all the elements to make an exciting venue for global suppliers. Air India is evaluating medium and large capacity aircraft and is expected to order 50 wide-body jets.

 

The private sector low-cost airlines are also expected to make big purchases. For instance, Indian low-cost airline GoAir confirmed buying 10 of its A320 planes, worth $670 million from Airbus, the European aircraft manufacturer; Air Deccan will be finalizing an order for 60 jets for its Airbus A320 fleet while Kingfisher Airlines is expected to close the deal for 10 engines for the long haul A330 aircrafts.

 

"The second-fastest growing economy in the world has witnessed great traction in the aviation sector in the last couple of years. From being a service that few could afford, the sector has now graduated to being a fiercely competitive industry with the presence of a number of private and public airlines and several consumer-oriented offerings." said Bundeep Singh Rangar, Chairman, IndusView Advisors, an India-focused financial advisory firm.

 

In the last financial year (2005-06), India's civil aviation industry has achieved the biggest ever growth in aircraft movement and passenger traffic. Passenger traffic in the domestic airports increased by 22.3% to 59.54 million, while aircraft movement increased by 14.2% to 730,000.

 

Domestic air travel in India is predicted to grow 20% over the next five years. Further the growth story of the Indian aviation sector can be appreciated by the fact that in February 2005, Boeing had raised its 20-year market forecast for India for aircraft purchases from $25 billion to $35 billion.

 

The new low-cost airlines and price tags of the premium airlines also moving south ensured that people could travel at the fraction of the original price of air travel. The fare reduction has given the sector a huge boost with domestic and international traffic growing by 24.2% and 18%, respectively in April-December, 2005. Private airlines now account for 68.9% of domestic traffic.

 

The increase in passenger traffic calls for upgraded infrastructure facilities. The international airport in Delhi and Mumbai, the national capital and the financial capital of India respectively, are being modernized through public-private sector participation. The task of modernization of the Delhi International Airport has been given to GMR-Fraport consortium, while Mumbai International Airport modernization has gone to GVK-South African Airports consortium.

 

Then, the Bangalore International Airport, the first-ever 'Greenfield airport' in the country, is coming up through a private-public partnership, with the joint venture company comprising Karnataka State Industrial Investment and Development Corporation (KSIIDC) and Airports Authority of India (AAI) as well as a consortium of Siemens (Germany), Unique Zurich (Switzerland) and Larsen and Toubro (India).

 

The boom in the aviation sector in India can also be gauged by the fact that in one year, the number of people seeking pilot licenses has multiplied three times. In April 2005, it was 300. In April 2006, the number rose to 1,045.

 

"The growing influence of the private sector airlines in India has made Indian civil-aviation an interesting story to watch. Low-cost airline operators like Air-Deccan, Kingfisher, Go-Air, Spice Jet, among others, are expected to place orders to cater to their huge expansion plans. Apart from this, we should be expecting the launch of many new airlines this year," said Rangar.

 

 

                        Sourced From: IndusView