The India Aviation Infrastructure Market is anticipated to grow at a CAGR of over 5% during the forecast period.
- The Indian commercial aviation industry comprises 91 carriers, wherein 85 of the operators are foreign carriers. The industry witnessed healthy growth during 2019 and is projected to be the second-fastest growing country in terms of passenger traffic.
- The passenger traffic in India is estimated to reach 520 million in 2037 and airline operators are projected to increase their fleet size to 1,100 aircraft by 2027. Hence, the demand for new aircraft in India has been projected to reach over 1,750 by 2037. Such induction requires the setup of new aviation infrastructure to accommodate the increasing passenger traffic and aircraft movement.
- However, in the recent wake of COVID-19, the current outlook for the Indian aviation industry remains negative since the outbreak has caused widespread disruptions in the country for both airline operators and passenger traffic alike, and has even halted the ongoing construction of aviation infrastructure.
Key Market Trends
Government Initiatives to Develop Aviation infrastructure and Promote Tourism
According to the Directorate General of Civil Aviation (DGCA), in 2018, India was the fastest-growing domestic travel market on a global scale with 139 million domestic air travelers, representing a YoY growth of 18.6%. Hence, to accommodate the rapid rise in passenger traffic, the Indian Government is investing significantly towards the modernization of the aviation infrastructure in the country and has initiated several greenfield and brownfield projects scheduled to be initiated or completed during the forecast period. In December 2019, the Indian Government launched the fourth round of the Regional Connectivity Scheme (RCS) or UDAN designed to stimulate affordable air connectivity. The RCS was initially launched in October 2017 and it enables airlines to compete to win subsidies for operating flights linking small airports with bigger ones. The country’s FY2020 budget allocates USD 23.7 billion to support the existing aviation infrastructure and envisions to construct 100 new airports in the country by 2024. Such developments are envisioned to drive the market in focus during the forecast period.
Greenfield Airport Segment to Dominate the Market
On account of the Indian Government’s ambitious plan to develop more than 100 airports in the country by 2024, several airport projects are currently underway at the allocated sites throughout India. In June 2019, the board of City and Industrial Development Corporation (CIDCO) awarded a contract to Larsen & Toubro Limited (L&T) to construct the Navi Mumbai International Airport. Since, the construction of an airport is an extensive affair and requires a large plot of land for construction, the Central and State Government agencies are working in tandem to facilitate the speedy acquisition of land resources to initiate such projects as early as possible. For instance, in March 2020, the Andhra Pradesh government-sanctioned around 2,200 acres of land to GMR Airports Limited, a subsidiary of the GMR Group, for the proposed Greenfield International Airport project at Bhogapuram. The project involves the design, construction, development, upgrade, modernization, operation, and maintenance of the Greenfield International Airport at Bhogapuram for 40 years, extendable by additional 20 years through an international competitive bidding process, with GMR airports having RoFR of 10%. The initiation of several other similar projects is scheduled during the forecast period, thereby driving the greenfield airport segment of the market in focus.
The India Aviation Infrastructure Market is marked by the presence of several regional players who compete based on their capabilities and specialization to secure new contracts for both construction and expansion of the aviation infrastructure in the region. Several new contracts have been awarded to support the new upcoming projects. L&T is one of the leading players in the market with contracts to modernize the existing international airports in the leading metropolitan cities of Delhi, Mumbai, Kolkata, and Bengaluru. Several new airports and modernization programs are scheduled to be initiated within the forecast period, driving the business opportunities for the market players.
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