The Way Ahead for the Aviation Sector in India – Top Aviation Stocks in India

28 Jun 2021by Pradeep U

The Way Ahead for the Aviation Sector in India – Top Aviation Stocks in India

Over the last few years, the civil aviation sector in India has emerged as one of the fastest-growing sectors in the country. According to the International Air Travel Association (IATA), India currently ranks as the fourth-largest domestic market for aviation and is likely to overtake the UK by the year 2024 to become the third-largest market.

India’s overall passenger traffic, which stood at 341.05 million in FY20, increased at a compound annual growth rate (CAGR) of 11.13% during FY16-FY20. Similarly, domestic passenger traffic, which stood at 274.50 million in FY20, grew at a CAGR of 12.91% over FY16.

       Growth in passenger traffic (2014-2020)

                       Source: Statista 

There was a substantial increase in freight traffic, from 2.70 million tonnes (MT) to 3.33 MT during FY16-FY20. Further, freight traffic is expected to grow at a CAGR of 7.27% to reach 4.14 MT in FY23.

To support this massive jump in air traffic, the Government of India has taken several initiatives including increasing the number of airports. By FY40 government plans to increase the number of operational airports to 190-200 from the current 153.

Other government measures to boost the aviation sector in India include the launch of a regional connectivity scheme named UDAN to make flying affordable to the common man and plans to start 14 new water aerodromes across the country.

Despite the temporary roadblocks caused by the Covid-19 pandemic such as lockdowns and travel restrictions, this enormous growth in India’s aviation sector over the next few years means there will be opportunities aplenty in the aviation sector in India and various allied activities such as ground handling and aircraft maintenance. Besides, it also means more job opportunities for crew to operate flights and additional staff to run the airports, etc.

Recognizing the immense opportunity in the sector the Adani Group backed by billionaire Gautam Adani has forayed into the aviation sector and won bids to operate and manage development of six airports of Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram for a period of 50 years .

In this article, let’s look at the different aspects of the aviation sector in India such as:

 1) History of Civil Aviation in India

A look at the history of civil aviation in India and how civil aviation in India evolved over the last several decades. We will also take a look at how the real boom in aviation occurred in the early 2000s after the entry of low-cost carriers.

2) Airline Companies in India

Various airline companies in India and their performance over the last decade. Briefly we will also take a look at some epic failures in the Indian airline industry.

3) Challenges for the Aviation Sector in India

Different types of challenges faced by airline companies in India and important lessons for investors from the failures of few airlines.

While the emergence of a 2nd wave of Covid-19 in the country may play a temporary spoilsport in India's path of becoming the third-largest aviation market by 2024, with the right policies and rational decisions on part of the key stakeholders, things should be back on track for the aviation sector in India, earlier than expected.

History of Civil Aviation in India

The roots of aviation in India can be traced back to the year 1911 when Henry Piquet a French pilot, flew the first commercial flight from Allahabad to Naini carrying air mail. 2 decades later, in 1932, Tata Air Services, an airmail carrier piloted by its founder JRD Tata, flew from Karachi to India. In 1938 the airmail carrier was renamed as Tata Airlines and transformed from a freight airline to a commercial passenger airline. In 1946, Tata Airlines was rechristened as Air India.

Nationalization and the emergence of Air India and Indian Airlines

 In the year 1953, the Indian government took control of the civil aviation industry by nationalizing it and taking control of all major airlines including Tata Airlines, Deccan Airways, Kalinga Airlines, Airways India, Himalayan Aviation, Bharat Airways, Indian National Airways, and Air Services of India–were merged into two government-owned entities named Air India and Indian Airlines.