The civil aviation sector has been witnessing a boom as the domestic passenger carriage, cargo movement and international air traffic have shown exponential growth. This followed the policy of increased liberalization, which as rigorously been followed by Government on both domestic as well as international arena. The competitive tendencies have resulted in adoption of aggressive, innovative pricing strategy and low cost model by the upcoming new airlines. On the international side, Government has taken several initiatives to increase the availability of seats as well as better connectivity by entering into several bilateral agreements. The year 2006 has been especially remarkable for the growth witnessed in passenger traffic. Domestic passenger traffic has grown @ 47 % as compared to 22 % last year. Further, the scheduled domestic air services are now available to/from 75 airports as against nearly 50 in the year 2000. Besides, metro and non-metro airports, scheduled air services are available to/from 17 regional airports. International passenger traffic has also grown @ 13.7 % in 2005-06 over 2004-05 whereas freight movement has witnessed a growth of 10.2% during this period.
In accordance with the policy of liberalization in the civil aviation sector and with a view to attract more foreign passenger, the Government has adopted a liberal approach in the matter of grant of traffic rights under bilateral agreements with various foreign countries. Additional traffic rights have been granted to 36 countries in the past two years or so which include USA, U.K., Germany, France, UAE, Thailand, Italy, Russia, Taiwan, Finland, Maldives, Tanzania, Japan, Sri Lanka, Kuwait, Spain, Oman, Scandinavian countries, Egypt, Bangladesh.
Besides, in a significant move to improve connectivity in the region and to foster friendship with the neighbouring countries, an offer has been made to SAARC countries, except Pakistan, on reciprocal basis during the last SAARC held in Dhaka in November, 2005. The offer has already been accepted by Sri Lanka, Bangladesh, Maldives and Bhutan. The matter is under finalization with Nepal.
Air India Limited has signed a purchase agreement with Boeing Company for the purchase of 68 aircraft. This is the biggest aircraft deal in the history of civil aviation in India. The deliveries of 50 aircraft to Air India Limited are scheduled between February, 2007 and February, 2012 and for 18 aircraft by Air India Charters Limited, the deliveries are scheduled between November, 2006 and October, 2009. M/s Boeing has also agreed to make its best efforts to complete the delivery of all aircraft by 2011 in place of 2012. The induction of new aircraft is expected to strengthen Air India as the State owned carrier would be able to offer better product/services thereby enabling it to compete more effectively in an increasingly competitive market.
The Government has also approved the proposal of Indian Airlines Ltd. For acquisition of 43 aircraft.
Taking note of the global trends in aviation industry towards mergers and coordination of airlines and formation of global alliances, which enable airlines to optimize fleet acquisition, to leverage the asset base, to strengthen network and to achieve economy of seats, the Government has decided in principle to work towards merger of Air India Limited and Indian Airlines Limited. A Consortium led by M/s. Accenture India Private Limited has been appointed as Consultant. The exercise is likely to be completed by the beginning of the next financial year. Upon merger, the combined airline would be by far the biggest airlines in the country comparable in size to other big airlines.
In a landmark decision, the Government has finalized the restructuring and modernization of the two International airports to Delhi and Mumbai through public-private partnership in the joint-venture mode. The two international airports at Delhi and Mumbai have been handed over to the Joint Venture Companies, namely, Delhi International Airport Private Limited and Mumbai International Airport Private Limited respectively. The two companies have submitted their Master Plans for development of airports. The Delhi airport will become capable to handle 37 million passengers per annum by the year 2010. Special care is being taken to ensure readiness of the Delhi airport in preparation for the Commonwealth Games, 2010.
Airport Authority of India (AAI) has decided to modernize 35 Non-Metro airports to world-class standards with focus on airside and city side development and enhancement of non-aeronautical revenue at an estimated cost of Rs. 4662 crores.
Besides the work of construction of a new Greenfield airport has been taken up at Devanhalli near Bangalore on a Build Own Operate and Transfer (BOOT) basis for 30 years with Public – Private – Participation (PPP). The target opening date of the airport is April 2008. The construction of the new airport with revised design and a revised cost of Rs. 1930 crores is on schedule.
Similarly, a Greenfield airport is also being developed at Shamshabad, near Hyderabad on Build Own Operate Transfer (BOOT) basis with Public Private Participation (PPP). The airport is likely to become operational by the middle of the year 2008.