India will be the 3rd largest aviation market by 2020 – India Aviation Report

According to the ‘India Aviation Report’ prepared by KPMG and FICCI; India is likely to become the 3rd largest aviation market by 2020. The report stated that with 81 million trips, India’s domestic aviation market grew over 20.3% in 2015. The growth rate that the country’s domestic aviation market exhibited is the highest ever growth rate recorded in the world. The report also claimed that the Indian civil aviation sector has shown tremendous amount of resilience to the global economic slowdown and it ranks 9th in the global civil aviation market.

This level of growth can be attributed to the growing economy, greater competition among the low-cost carriers, FDI (Foreign Direct Investment), greater use of technology, larger number of modern airports and the increasing emphasis on regional connectivity. According to the report the National Civil Aviation Policy (NCAP 2016), that will be out next month, will also prove to be very beneficial for the aviation sector.

The ‘India Aviation Report’ was launched by the Union Civil Aviation Minister Ashok Gajapathi Raju. He said that “The growing competition among the states would provide a further fillip to the growth of India as well as its aviation sector”.

The India Aviation Report also stated that certain aspects like fall in prices of aircraft turbine fuel (ATF), increasing disposable incomes, visa reforms and increasing tourism has brought the country much closer to achieving its vision of becoming the largest aviation market by 2030. The report also suggests that the steps taken to revive 160 airports will make a huge difference in improving the connectivity to regional and remote ares. Also the public-private partnerships in the aviation sector will get substantial support from the states.

India has registered a growth of 17.1% in the total passenger throughput for the FY 2015-16. The passenger throughput is expected to reach 370 million by the year 2020 with the domestic traffic constituting 80% of the total throughput. The passenger traffic on the international routes has also increased by 6.5% in 2015 as compared to the previous year.

This report emphasized the need to broaden the base of domestic flyers through greater air connectivity in Tier-II and Tier-III cities. In order to ensure a high growth in the aviation sector, many states are taking positive initiatives like development of modern airports, reduction in sales tax rates on aircraft turbine fuel (ATF) and direct subsidy to airlines for the improvement of connectivity.

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Harshavardhan Neotia, president, FICCI said that “Enormous growth in domestic passenger traffic, substantial strengthening through government initiatives, decrease in global crude oil prices and airlines showing profits indicate a significantly positive transformation for the Indian civil aviation market. The close partnership between the government and the sector in ongoing and future projects will further improve regional connectivity. I am certain that the sector will take complete advantage of the positive momentum and help sustain the growth”.

According to Amber Dubey, a partner and the India head of aerospace and defence of KPMG, the positive impact of National Civil Aviation Policy-2016, rise in disposable incomes and the fall in aircraft turbine fuel (ATF) prices are likely to help India leapfrog into the top three of the world.

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