increased costs of doing business, strict rules and regulations imposed by regulators,

competition from low-cost airliners, changes in passenger profile, in addition to the recent
airline related deaths, all have affected the viability and profitability of the global airline
industry badly. It will require a lot of patience and hard work for the industry to find its way
back to the right track.
fuel prices are the lowest in the last decade and hence it is helping airlines not only to recover
losses but generate profits too
Even current airlines in India are facing many challenges and except one airline i.e. Indigo no
other airline in Indian has been reporting profits.
in 1990 with enactment of Open Sky Policy that India showed its will to be in full fledge
completion with world aviation industry
Foreign direct investment (FDI) in Aviation: India needs USD 12.1 Billions of investment
in Aviation sector by 2017. Out of this amount USD 9.3 Billion is expected to come from
private investors. These private investors could be foreign investors as well. India has already
allowed 100% FDI in Greenfield airports and 74% FDI is allowed in existing airport Projects.
49% of FDI is allowed in Indian Airlines. Also 100% FDI is allowed in MRO sector. So the
investment opportunities are already open for foreign investors and Aviation Sector of India
is highly attractive for foreign investors because of its promising future based on following
reasons.
India is 9th Largest Civil aviation market and also fast growing market in the world.
Indian Aviation industry is projected to be 3rd largest Aviation industry of the world by
2020.
India Aviation market is one of the least penetrated markets with 0.04 trips per capita.
Because of the fastest growing middle class population this market is expected to grow a very
fast pace.
Airlines in India are expected to reach 800 aircrafts by 2020.
Based on above reasons foreign direct investment is easiest and best solution for the growth
of Indian Aviation as per required pace. Few good Signals of FDI are already received in last
02 years by the deals between Etihad Airlines and Jet Airways of Indian, Singapore
Airline and TATA group , Air Asia and TATA group.
REGULATORY ISSUES AND RECOMMENDATIONS
Many of the acts and regulations of aviation have not been changed since long time and they
seem to be outdated in modern industry. For example aircraft act of India is same since 1934.
Hence its very important to into the details of few acts and regulations which have a negative
impact on modern aviation industry in India.

Requirement of fleet to start up international operation: According to the norms of CAR

for an airline to start up international operations it should be in possession of minimum 20
Aircrafts purchased or leased plus minimum of 5 years of experience in domestic operations
within India.
Recommendation: This regulation is giving advantage to foreign International Airlines as
there is a barrier for Indian Airlines of minimum 5 years of domestic operations. We suggest
that new Government should consider to take off this regulation and should allow domestic
carriers to operate on international routes as soon as possible to increase the competition.
Guidelines for route dispersal: As per the orders of Ministry of Civil Aviation it regulates
how an airline allocates its fleet resources to different destinations within the country. For this
country has been divided into three categories. The first category is of Metro Cities or
regional hubs while in II and III category come smaller and unpopular cities. Its understood
this regulation serves the social need but economically its harmful for the airline as they may
be forced to disperse their resources that commercially are not feasible for airline to operate.
Recommendation: New government should consider to phase out this regulation and should
invite all the stake holders to suggest lucrative incentive program which will attract more and
more airlines to operate to smaller cities.

1. Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident Indian)
investment up to 100 per cent is permissible in domestic airlines without any government
approval. However, the government policy bars foreign airlines from taking a stake in a
domestic airline company.
2. Low entry barriers: Nowadays, venture capital of $10 million or

less is enough to launch an airline.