Aviation Industry in India is one of the fastest growing aviation
industries in the world. With the liberalization of the Indian aviation
sector, aviation industry in India has undergone a rapid transformation.
From being primarily a government-owned industry, the Indian aviation
industry is now dominated by privately owned full service airlines and
low cost carriers. Private airlines account for around 75% share of the
domestic aviation market. Earlier air travel was a privilege only a few
could afford, but today air travel has become much cheaper and can be
afforded by a large number of people.
The origin of Indian civil aviation industry can be traced back to
1912, when the first air flight between Karachi and Delhi was started by
the Indian State Air Services in collaboration with the UK based
Imperial Airways. It was an extension of London-Karachi flight of the
Imperial Airways. In 1932, JRD Tata founded Tata Airline, the first
Indian airline. At the time of independence, nine air transport
companies were carrying both air cargo and passengers. These were Tata
Airlines, Indian National Airways, Air service of India, Deccan Airways,
Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. After
partition Orient Airways shifted to Pakistan.
In early 1948, Government of India established a joint sector company,
Air India International Ltd in collaboration with Air India (earlier
Tata Airline) with a capital of Rs 2 crore and a fleet of three Lockheed
constellation aircraft. The inaugural flight of Air India International
Ltd took off on June 8, 1948 on the Mumbai-London air route. The
Government nationalized nine airline companies vide the Air Corporations
Act, 1953. Accordingly it established the Indian Airlines Corporation
(IAC) to cater to domestic air travel passengers and Air India
International (AI) for international air travel passengers. The assets
of the existing airline companies were transferred to these two
corporations. This Act ensured that IAC and AI had a monopoly over the
Indian skies. A third government-owned airline, Vayudoot, which provided
feeder services between smaller cities, was merged with IAC in 1994.
These government-owned airlines dominated Indian aviation industry till
the mid-1990s.
In April 1990, the Government adopted open-sky policy and allowed air
taxi- operators to operate flights from any airport, both on a charter
and a non charter basis and to decide their own flight schedules, cargo
and passenger fares. In 1994, the Indian Government, as part of its open
sky policy, ended the monopoly of IA and AI in the air transport
services by repealing the Air Corporations Act of 1953 and replacing it
with the Air Corporations (Transfer of Undertaking and Repeal) Act,
1994. Private operators were allowed to provide air transport services.
Foreign direct investment (FDI) of up to 49 percent equity stake and NRI
(Non Resident Indian) investment of up to 100 percent equity stake were
permitted through the automatic FDI route in the domestic air transport
services sector. However, no foreign airline could directly or
indirectly hold equity in a domestic airline company.
By 1995, several private airlines had ventured into the aviation
business and accounted for more than 10 percent of the domestic air
traffic. These included Jet Airways Sahara, NEPC Airlines, East West
Airlines, ModiLuft Airlines, Jagsons Airlines, Continental Aviation, and
Damania Airways. But only Jet Airways and Sahara managed to survive the
competition. Meanwhile, Indian Airlines, which had dominated the Indian
air travel industry, began to lose market share to Jet Airways and
Sahara. Today, Indian aviation industry is dominated by private airlines
and these include low cost carriers such as Deccan Airlines, GoAir,
SpiceJet etc, who have made air travel affordable.
Airline industry in India is plagued with several problems. These
include high aviation turbine fuel (ATF) prices, rising labor costs and
shortage of skilled labor, rapid fleet expansion, and intense price
competition among the players. But one of the major challenges facing
Indian aviation industry is infrastructure constraint. Airport
infrastructure needs to be upgraded rapidly if Indian aviation industry
has to continue its success story. Some steps have been taken in this
direction. Two of India's largest airports-Mumbai and New Delhi-were
privatized recently. Two greenfield airports are coming up at Bangalore
and Hyderabad in southern India. Investments are pouring into almost all
aspects of the industry, including aircraft maintenance, pilot training
and air cargo services. The future prospects of Indian aviation sector
look bright.
Note: The above information was last updated on 21-07-2007
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