Indian Aviation Market Booming

From a standing start at the beginning of 2004, India's aviation market is clearly in take-off mode for 2005. As regulatory changes finally materialise, the domestic sector is already starting to show its potential and further international liberalisation looks likely within a matter of weeks.

The Centre for Asia Pacific Aviation estimates Indian carriers will have purchased up to 200 new aircraft by the end of 2005. This is well ahead of manufacturers' forecasts for the market, causing manufacturers like Airbus to scramble to upgrade their market forecasts.

Airbus' latest market forecasts, issued only this month, had projected just 4.0% average annual growth in the domestic Indian Subcontinent market over the next 20 years, compared to a projected 8.7% annual growth in domestic China and 5.9% for the rest of Asia.

Airbus this week increased its forecast of sales of new aircraft to Indian carriers from 220 (by the year 2019) to “nearly 400”. This would make the Indian Subcontinent the third largest market for new aircraft in Asia, behind China (1,790) and Japan (640), according to Airbus' Global Market Forecast 2004-2023.

The Centre forecasts total air traffic in India alone will rise by 5 million passengers each year over the next ten years. India's domestic and international markets are expected to expand by up to 30% this calendar year, to around 20 million passengers each.

According to the Centre’s Managing Director, Peter Harbison, "the added stimulus of new low cost carriers and India's rapidly liberalising market will ensure India's recent strong growth continues for some time. The impending expansion of international operations will add further to this momentum".

Air Deccan ordered Tuesday, 30 A320s for delivery from 2007-2010, plus options for 25 more. Air Deccan currently operates three 180-seat A320s, leased from Singapore Aircraft Leasing Enterprise. Two more leased A320s and two ordered A320s will join the fleet in February and September 2005, respectively. The carrier has confirmed plans to increase its fleet to 60 aircraft within five years.

Kingfisher Airlines signed, on Saturday 18, a contract with Airbus for four A320s and exercised six options, making a total of ten aircraft on firm order. In addition, Kingfisher Airlines will take 20 options. Kingfisher expects to take delivery of these A320s at a rate of up to 9 aircraft per year until 2008. Kingfisher recently concluded an agreement to lease four A320s from debis Airfinance, to launch operations in April 2005.

Major orders for up to 100 aircraft by Air India and Indian Airlines are pending, while Jet Airways and Air Sahara are also planning to expand their fleets.

Meanwhile, two major new greenfield airport projects, at Bangalore and Hyderabad, received final government approvals in the past week, paving the way for construction to commence in early 2005.

As the economies of the Indian Subcontinent and Middle East expand, rising income levels and increasing trade links are expected to generate a dramatic increase in both domestic and international passenger traffic. Furthermore, the countries in this region include destinations that have the potential to attract far higher levels of inbound tourism than are currently being achieved.

However, in order to support the potential level of activity, significant investment is required to develop the aviation and tourism infrastructure to world class levels. The Indian government, for example, estimates that its aviation sector alone can absorb US$55billion of project financing over the next 10 years.

Opportunities exist across the region in the following areas:

* Funding of start-up airlines
* Privatisation of flag carriers
* Airport expansion and modernisation
* Hotel and resort development
* Tourism infrastructure including golf courses, marinas, theme parks, cruise terminals, highways, convention and exhibition centres

The Centre for Asia Pacific Aviation is to stage the Indian Subcontinent & Middle East Aviation & Tourism Investor Summit 2005 at Emirates Palace, Abu Dhabi, on 14-15 March 2005. This Summit will provide a forum to bring together investors with entrepreneurs/organisations/governments looking for funding in activities or projects related to aviation and tourism including airlines, airports, private jet operators, hotels/resorts, theme parks and golf courses.

See other recent news from: The Centre for Asia Pacific Aviation