Bilateral relations and opportunities for European firms in the Indian civil aviation industry

Abstract

The Indian civil aviation industry is currently the 9th largest in the world today. As per the Economic Survey 2010-2011, India is also expected to be the fastest growing civil aviation market in the world by 2020 with about 420 million passengers being handled by the airport system. The government has also been supportive of the civil aviation industry and the liberalization of the industry has led to a lot of private players entering the market starting with domestic routes. Most of the new domestic airlines are Low Cost Carriers (LCC) with the exception of Jet Airways and Kingfisher airlines. However, owing to the highly competitive market environment, the abovementioned full cost airlines also have their LCC divisions. The domestic airlines in India registered a growth of 19 percent in 2010, registering almost 51 million passengers as compared to 43 million in 2009 (according to the Economic Survey 2010-2011). The civil aviation industry is a highly fragmented market and the market leader is Kingfisher with a 19 percent share. Both the aircraft manufactures, Airbus and Boeing are optimistic with respect to growth in the civil aviation industry. The France based Airbus estimates that India would require 1032 new aircraft worth $138 billion by the year 2028. A bulk of these planes would be required by the LCCs and Airbus is keen to position its narrow bodied aircraft as the aircraft of choice for the LCCs. On January 11th, 2011 Airbus announced that it had secured the biggest jet order in aviation history when it struck a $15.6 billion deal to sell 180 planes to Indian budget carrier IndiGo. It was also able to secure sales for one of its revamped models as a part of this deal. IndiGo also had ordered 100 Airbus A320s at the Paris air show in 2005. Thus the Indian civil aviation industry looks like a very attractive market destination for Airbus.