223 Indian Civil Aviation Industry
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International Journal of Multidisciplinary Research and Development International Journal of Multidisciplinary Research and Development Online ISSN: 2349-4182, Print ISSN: 2349-5979, Impact Factor: RJIF 5.72 www.allsubjectjournal.com Volume 4; Issue 5; May 2017; Page No. 223-228 Indian civil aviation industry 1 Dr. N Vijayakumar, 2 Dr. C Vijai 1 Assistant Professor and Head, PG & Research Department of Commerce, Sriram College of Arts and Science Perumalpattu, Veppampattu, Thiruvallur, Tamil Nadu, India 2 Assistant Professor, PG & Research Department of Commerce, Sriram College of Arts and Science Perumalpattu, Veppampattu, Thiruvallur, India Abstract Aviation as an industry is structurally extremely unattractive. It is very difficult to make profit in this industry. The industry is, weighed down by regulations, and influenced by several uncontrollable factors. The combined effect of these factors is historically the industry has never earned a rate of return above its investors’ capital; in fact, it has destroyed more money than it has created. The main objective of the paper is to highlight the major characteristics of the industry. Factors such as cost of oil or security have direct impact on operational effectiveness and risk management of an airline company. Factors such as natural disasters or health emergencies and socio-political culture of a country too affect the financial health of the industry. The paper deals with Indian Civil Aviation Industry. This paper is a theoretical review. by providing some suggestions. Keywords: aviation industry, foreign direct investment, infrastructure, regulation Introduction Till date, the MCA has issued several policies including the India’s civil aviation industry is on a high-growth trajectory. Policy on Regional and Remote Area Air Connectivity, Policy India aims to become the third-largest aviation market by 2020 Guidelines of Air Freight Stations, Policy for Training of and the largest by 2030. The Civil Aviation industry has Officers under IATA Training Programs, and Policy on ushered in a new era of expansion, driven by factors such as Airport Infrastructure, 2011. Most recently, the MCA has low-cost carriers (LCCs), modern airports, Foreign Direct released a comprehensive National Civil Aviation Policy, Investment (FDI) in domestic airlines, advanced information 2016 (“NCAP 2016”). technology (IT) interventions and growing emphasis on regional connectivity. India is the ninth-largest civil aviation National civil aviation policy (NCAP) 2016 market in the world, with a market size of around US$ 16 The Government of India released the National Civil Aviation billion. India is expected to become the third largest aviation Policy on 15 June 2016.The NCAP 2016 covers the broad market by 2020. policy areas, such as Regional connectivity, Safety, Air “The world is focused on Indian aviation – from Transport Operations, 5/20 Requirement for International manufacturers, tourism boards, airlines and global businesses Operations, Bilateral traffic rights, Fiscal Support, to individual travellers, shippers and businessmen. If we can Maintenance, Repair and Overhaul, Air-cargo, Aeronautical find common purpose among all stakeholders in Indian 'Make in India'. The broad key features of the NCAP are: aviation, a bright future is at hand” said Mr. Tony Tyler, . VGF for operation under Regional Connectivity Scheme Director General and CEO, International Air Transport (RCS). Association (IATA). Revival of un-served or under-served routes under RCS. Introduction of a new Category 'Schedule Commuter Research Methodology Operator' under Commercial Air Transport Operations. The paper has been written on the basis of secondary data. The . Rationalization of Category-I routes under Route Dispersal secondary data were collected from published books, journals, Guidelines (RDGs) on the basis of criteria given in NCAP research papers, magazines, daily newspaper, internet and 2016. official statistical documents. The requirement of 5 years and 20 aircraft for international operation has been modified to 0 years and 20 aircraft or Ministry of civil aviation (“MCA”) 20% of the total capacity (in terms of average number of The MCA is responsible for formulating national policies and seats on all departure put together) whichever is higher for programs that help develop and regulate the Indian civil domestic operations. aviation sector. It administers the Aircraft Act and Rules, and . Liberalization of domestic code share points in India various other aviation related legislations. The MCA also within the framework of ASA. exercises administrative control over entities like the Directorate General of Civil Aviation (“DGCA”) 47 and the Vision Airports Authority of India (“AAI”), and has the authority to To create an eco-system to make flying affordable for the enter into Bilateral Airline Service Agreements with other masses and to enable 30 crore domestic ticketing by 2022 and countries. 50 crore by 2027, and international ticketing to increase to 20 223 International Journal of Multidisciplinary Research and Development crore by 2027. Similarly, cargo volumes should increase to 10 performed as follows: Asia-Pacific, which accounts for around million tonnes by 2027. 39% of freight traffic, expanded by a moderate 2.3%; Europe and North America, which between them comprise around Mission 43% of total cargo traffic, were flat in 2015; Latin America Provide safe, secure, affordable and sustainable air travel for suffered a steep decline (-6.0%); Middle East grew strongly, passengers and air transportation of cargo with access to up 11.3%; Africa also saw modest growth of 1.2%. The freight various parts of India and the world. load factor (FLF) fell to an average of 44.1% which compares unfavourably with the average of 45.7% in 2014. Objectives . Establish an integrated eco-system which will lead to Civil aviation in India significant growth of civil aviation sector, which in turn The Indian civil aviation sector is vital to the growth of Indian would promote tourism, increase employment and lead to a economy and enhances the globalization. Civil Aviation is a balanced regional growth. key sector facilitates the growth of business, trade and . Ensure safety, security and sustainability of aviation sector tourism, with significant multiplier effects across the through the use of technology and effective monitoring. economy. The civil aviation sector has several key . Enhance regional connectivity through fiscal support and subsegments: infrastructure development. Airports . Enhance ease of doing business through deregulation, . Airlines simplified procedures and e-governance. Maintenance repair and overhaul (MRO) . Promote the entire aviation sector chain in a harmonised . Air cargo and express industry manner covering cargo, MRO, general aviation, aerospace . Ground handling manufacturing and skill development. Aviation academies This sector is helmed by the Ministry of Civil Aviation Global trends in civil aviation (MOCA) which is responsible for formulation of national Generally, during good years, airline traffic grows around 1.5- policies and programmes for the development and regulation 2 times the rate of growth of GDP. During downturns, the of the Civil Aviation sector in the country. The Vision for the ratio turns negative, with traffic falling faster than GDP as MOCA is “Enable people to have access to safe, secure, seen during 1991 and 2001 slowdown. This ratio did turn sustainable and affordable air connectivity services with negative in 2009again, as global revenue passenger kilometres World Class civil aviation infrastructure”. (RPKM) shrank before staging a recovery in 2010. This Ministry exercises administrative control over attached IATA's global passenger traffic results for 2015 shows that and autonomous organizations such as Directorate General of demand in terms of RPKM rose 6.5% for the full year Civil Aviation (DGCA), Bureau of Civil Aviation Security compared to 2014. This is the strongest result since the global (BCAS) and Indira Gandhi Rashtriya Udan Academy and financial crisis and well above the 10-year annual average affiliated Public Sector Undertakings like National Aviation growth rate of 5.5%. Economic fundamentals were weaker in Company of India Limited, Airports Authority of India and 2015 due to the slowdown in China, continuing weakness in Pawan Hans Helicopters Limited. Europe etc., but these were nullified by the fall in oil prices. Capacity of airlines in terms of Available Seat Kilometres Evolution of the Indian aviation industry (AKSM) grew by 5.6% last year. Load factors grew to a India is the 9th largest civil aviation market in the world, In record annual high of 80.3%. While all regions in the world FY17, civil aviation sector witnessed a growth rate of around experienced positive traffic growth in 2015, carriers in the 2025 per cent. As of FY16, airports in India witnessed a Asia-Pacific region accounted for one-third of the total annual domestic passenger traffic of about 168.89 million people. increase in traffic. Cargo grew by 2.2% in 2015 compared to Investments worth USD 6 billion are expected in the country's 2014 which is a slower rate of growth compared to the 5% airport sector in 5 years. India’s civil aviation market is set to growth in 2014. This is due to the sluggish trade growth in become the world’s 3rd1 largest by 2020 and expected to be Europe and Asia-Pacific. The various regions of the world the largest by 2030. Fig 1 224 International Journal