Exports grew by 20.9 per cent in dollar terms during April-October, 2007. Imports increased by 25.3 per cent in April-October, 2007.
Forex reserves (excluding Gold and SDRs) stood at $256.43 billion at the end of October, 2007.
Rupee appreciated against US Dollar, Pound Sterling and Japanese Yen and depreciated against Euro in October, 2007.
The annual inflation rate in terms of WPI (Base 1993-94=100) was 3.01 per cent for the week ended November 24, 2007 as compared to 5.55 per cent a year ago.
Source: Ministry of Finance, Government of India
2007 was a memorable year for the Indian aviation in many ways
The Industry continued to witness strong growths despite rising Aviation Turbine Fuel (ATF) prices, infrastructure bottlenecks, shortage of pilots and qualified manpower.
Indian carriers continued placing sizeable aircraft orders and expanded their domestic and international networks. The first non-stop flights to the US by Air India and the first international flights to US and Canada by Jet Airways were a welcome connectivity to both the national traveller as well as the large Indian diaspora in North America. Carriers remained optimistic to turn profitable, with increased operational efficiencies, cost management and, for some, synergies that would be derived through consolidation.
For the first 7 months of the fiscal year 2007-08, April - October 2007, the overall passenger traffic stood at 65.57 million, with Domestic at 49.35 million and International at 16.22 million respectively. The total cargo traffic recorded 989 thousand tones, with Domestic at 325 thousand tonnes and International at 664 thousand tonnes in the same period. The total aircraft movement numbers were 736,703 with Domestic at 599,346 and International at 137,357 during the same period.
Mergers
The year marked three major mergers in Indian aviation history:
Air India, the national carrier, and Indian (formerly Indian Airlines), the state owned domestic carrier, creating a unified, public-owned entity under the name National Aviation Company Ltd (NACIL).
The merger will create an airline that will have over 125 new-generation aircraft by 2010. Its fleet size would also see the merged entity break into the top 30 airlines in the world, and amongst the top 10 in Asia. It will also become India's first airline with a fleet of over 100
aircraft.
Private carriers: Jet airways and Air Sahara
Jet Airways bought over its smaller rival, Air Sahara, for Indian Rupees 14.50 billion ($363m), at a discount of 34% from the earlier agreed price of Indian Rupees 22.00 billion, after clearance by a three-member arbitration panel, ending months of animosity and legal
dispute. Air Sahara was renamed to JetLite.
Deccan, India's first low cost carrier, with Kingfisher airlines, the high profile airline promoted by the liquor baron, Vijay Mallaya
Kingfisher Airlines (a company of parent United Breweries Holdings Ltd) acquired 26% of Air Deccan parent, Deccan Aviation Ltd, and subsequently made an offer to acquire an additional 20% of Deccan priced at the same price of Indian Rupees 155 ($3.82) per share.
The combined fleet of 71 aircraft consisting of A320 family and ATR aircraft will operate 537 flights to 69 Indian cities.
Airports
There was heightened interest in airports during the year, and a collective effort by the government together with private participation to develop and improve the infrastructure that is so sorely needed by the industry for its future growth. The airport modernization programme took wing in Delhi and Mumbai, and the two greenfield airports of Bangalore and Hyderabad are approaching completion in March 2008, though with some degree of trepidation at Bangalore. The anticipated long commute over the inadequate approach road to the new Bangalore International Airport (BIAL) appears to have been omitted from the development plan, raising protests from potential users. Modernisation and expansion of Chennai and Kolkata are projected to begin in the first half of 2008. Besides, as many as 35 non-metro airports are planned to be modernised at an estimated cost of about Indian Rupees 50 billion. These are expected to be complete by March 2010.
New airports are also being constructed and developed at Vishakhapatnam in Andhra Pradesh; Shimoga, Bijapur, Gulbarga, Hassan and Karwar in Karnataka, Kannur in Kerala; Chennai in Tamil Nadu; Itanagar and Tawang in Arunachal Pradesh; Chiethu in Nagaland; Kokrajhar in Assam; Greater Noida and Agra in Uttar Pradesh; Ajmer (Kishangarh) and Kota in Rajasthan; Halwara in Punjab; Surankote and Kishtwar in Jammu & Kashmir; Durgapur in West Bengal; Sindhudurg, Shirdi and Chakan in Maharashtra. The government has also approved international airports at Bagdogra and Mohali.
Secondary airports at Sriprembadur near Chennai, Nodia near Delhi, merchant airports or small, private airports developed and owned by private players, are all the subject of interest and discussion. Several players, both Indian and International, have evinced interest in participating in the airport development programme.
Air Services Agreements
The government also did their bit to sustain the growth of Indian Aviation. Taking forward the policy of liberalization, the government signed air services agreements and enhanced traffic rights with the USA, Singapore, Cambodia, Jordan, UAE (Abu Dhabi, Dubai, Sharjah), Kuwait, Uzbekistan, Malaysia, Chile and Hong Kong, leading to more flights and better connectivity between these countries and India.
Also the government opened up the Gulf sector to private carriers by granting Jet Airways the traffic rights to the Gulf and Middle East routes.
Government's role
To benchmark international standards and practices, the government brought out an amendment to the Aircraft Act 1934. With the objective of creating a level playing field and fostering healthy competition amongst all airports, and regulation of tariffs of aeronautical services, the government has decided to set up an Airport Economic Regulatory Authority (AERA).
The government also increased the entry barriers for the industry by raising the minimum equity base needed to start an airline from the current requirement of Indian Rupees 100 million to Indian Rupees 200 million for smaller aircraft, and Indian Rupees 500 million from Indian Rupees 300 million for larger aircraft with takeoff weight of more than 40,000 kgs.
In order to expand air connectivity to Tier II and Tier III cities and to promote regional air connectivity, a separate category of permit, Scheduled Air Transport (Regional) Services, has been introduced by the government. Three airlines, one from the South, Star Aviation, and two from the North, Jagson and MDLR Airlines, have been granted the no-objection certificate to operate scheduled transport services.
To meet the growing demand of pilots, the government has tied up with leading Canadian aviation firm, Canadian Aviation Electronics (CAE) Inc, to set up a flight-training institute at Gondia in Maharashtra, and to manage operations at Indira Gandhi Rashtriya Udaan Academy (IGRUA) in Rae Bareilly.
International Airlines
Recognising the potential of the Indian market, various international airlines, including Air Arabia, Qatar Airways, Continental Airlines, Oman Air, Emirates, Egypt Air, Silk AIR, Tiger Airways, China Eastern, Srilankan Airlines, Malaysian Airlines and Finnair, boosted and expanded their India operations. British Airways listed India as their second largest market next to US.
Partnerships
While many international companies expressed interest and are evaluating options to forge alliances with Indian aviation companies, many inked varied deals this year. Among them were:
ATR and Deccan to set up new flight training centre at Bangalore.
L&T and EADS for exploring joint opportunities in aerospace and defense.
Indian formed an alliance with CFM international, GMR - Hyderabad International airport, Airbus, Jupiter Aviation for an MRO centre.
Jet Airways signed a MoU with Lufthansa Technik AG for its aircraft maintenance, and a Code-share agreement with Brussels Airlines and American Airlines.
Hawker Beechcraft signed a sales and services agreement with Interglobe Aviation, owners of Indigo.
Kingfisher signed a frequent flyer partnership programme with Continental Airlines.
Air India was invited to join the Star Alliance group of airlines, which will give Air India an access to a network of 17,000 daily flights to 897 destinations in 160 countries.
HAL tied up with CAE to set up helicopter simulator training centre in Bangalore
Boeing along with Air India is to set up a MRO in Bangalore
Punj Llyod and New York-based private investment firm Global Technology Investment firm picked up a stake in Air Works Engineering, an organization involved in aircraft maintenance, to expand their aviation infrastructure and services.
Air Cargo
Air Cargo experienced renewed interest demonstrated by government and private companies. In August, India Post launched its freight operations from Kolkata to Guwahati, Agartala and Imphal. Air India launched dedicated cargo services to Europe, and signed a wet lease pact with Gati for domestic operations. Several players, Safex, Avicore and Quick Jet are said to be planning a foray into the domestic airfreight market which is currently dominated by Blue Dart Aviation. First Flight, which launched its freighter operations in July 2006 and retreated from operations this year, has announced its plan to re-enter the market with Boeing 737-300 freighters. Deccan Chronicle-promoted Flyington Freighters is expected to launch international operations in the coming year.
The government also succeeded in reducing cargo dwell times at airports from five to three days.
Aircraft
Indigenous
The National Aerospace Laboratories (NAL), Bangalore, has prepared an Indian Rupees 12 billion preliminary proposal to build technologies for a 50-70-seater 'regional' aircraft designed to suit India's specific needs.
According to NAL projections, the market for a 50-70 seater turbo-prop aircraft in the country would increase over the next two and a half decades, with an overall requirement building up for nearly 200 aircraft of various sizes over the next five years.
To date, NAL has developed the two-seater trainer aircraft, Hansa, presently being used by a dozen flying clubs in the country, as well as the Saras, a multi-role light transport aircraft which has already completed 100 flight tests and is expected to go into commercial production by 2008.
World's largest aircraft
The Airbus A380 super jumbo, the world's largest passenger aircraft, landed at the New Delhi international airport on May 2006. Airbus has said that that it aims to sell 45 of its A380 super jumbo aircraft in India over the next two decades.
Business Jets
According to a new analysis from Frost & Sullivan on World Business Jets Markets, both the demand for business jets and the increase in corporate profits rise in tandem. Our India Inc illustrates this insight very well. The aircraft acquisition committee of the Ministry of Civil Aviation has provided its 'No Objection Certificate' to the Mukesh Ambani-promoted Reliance Commercial Dealers Private Ltd., for the import of a Boeing Business Jet (BBJ), one Global XRS and two Falcons. GVK Aviation Private Ltd. has been permitted to import three aircraft including one Global 5000, one Learjet 45 and one Bombardier Challenger 604.
Other companies buying such planes for business and private use include Sun TV Network Ltd., Taj Air, Emaar MGF Land Pvt. Ltd, Bharat Forge Ltd., Raymonds Ltd., VRL Logistics Ltd., Hindustan Constructions Ltd., DS Constructions Ltd., and Punj Lloyd Ltd.
The Air Charter market is also growing, with demand for renting out of aircraft growing in the recent years. Invision Projects Pvt. Ltd. has signed a contract for 18 Phenom 100 and two Phenom 300 executive jets at the Dubai Air Show 2007.
Fuel prices
Fuel prices continued to zoom to staggering heights.
As per a report compiled by the Federation of Indian Airlines (FIA), 'Improving the financial health of India's airline industry through reduction in the cost of ATF', the estimated annual fuel bill for the industry, based on the September 2006 rates (Indian Rupees 43,989 per kilolitre) is around $1.7 billion. The cost of ATF in India remains the highest in the Asia–Pacific region.
According to a report released by ASSOCHAM, domestic aircraft operators pay over eight times more taxes on aviation turbine fuel (ATF). The fuel used by jetliners is loaded with various tax levies, as a result of which domestic airlines pay a total of 66 per cent tax on ATF, compared with the 8 per cent paid by international airlines that fuel ATF in India. The largest component of operating expenses for airlines, ATF accounts for almost 35 to 40 per cent of the total operating costs.
Online Travel
The growing online travel is driven by easy access and convenience. The added benefit is that it is cheaper to book air tickets online. According to a recent media report, the online travel segment is expected to grow at a rate of 30 per cent and reach Indian Rupees 70 billion by the end of 2007-08
Online portals like makemytrip.com, yatra.com, ixigo.com, cleartrip.com and ezeego1.com, among others, are all enjoying strong, positive growths coupled with stiff competition, and enabling wider choice and quality of service to the increasing internet audience.
Forecasts
Boeing
The Boeing Company in its 2007 Current Market Outlook forecasts a $2.8 trillion market for new commercial airplanes over the next 20 years. Region-wise, the largest market is projected to be the Asia-Pacific region, with 36 per cent of the $2.8 trillion total.
According to the forecast, over the next 20 years, passenger and cargo airlines will take delivery of approximately:
3,700 regional jets - below 90 seats
17,650 single-aisle airplanes – 90 to 240 seats, dual-class
6,290 twin-aisle airplanes – 200 to 400 seats, tri-class
960 airplanes 747-size or larger - more than 400 seats, tri-class
Forecast International
In its latest study on 'The Market for Regional Transport Aircraft,' Forecast International projects that 3,800 regional aircraft will be produced from 2007 through 2016, including 2,539 regional jets and 1,261 regional turboprops. The new study estimates the overall value of this production at $99.7 billion, as measured in constant 2007 U.S. dollars.
ACMG
A forecast by the Air Cargo Management Group (ACMG) projects that the global freighter fleet wills more than double in size from 1,801 units now to 3,883 units in 2026.
Airbus
With orders for over 300 aircraft from airlines like Kingfisher Airlines, Air Deccan, Indigo, Go Air, Indian Airlines and a freighter company, European aircraft major Airbus has projected that India will need 1,000 new planes over the next 20 years.
IATA
The International Air Transport Association (IATA) released a new industry financial forecast estimating a global industry profit of $5.6 billion in 2007 falling to $5.0 billion in 2008.
The outlook is unchanged for 2007 at $5.6 billion. Higher oil prices (full-year average forecast of $73 per barrel) were offset by strong traffic growth (5.9 per cent for passenger traffic) and even stronger revenue growth of 8.4 per cent.
For the first time since 2000, the global airline industry turned profitable. Asian carriers will see minor drops in profitability but robust traffic growth to and within Asia is expected to partially insulate carriers from the impact of the crunch.
Looking into 2008
There will be more action to look forward to in the Indian aviation industry in 2008.The new aviation policy expected in the first quarter of 2008 will pave the way for improved infrastructure, better connectivity, an increased number of aviation careers and new regional airlines and freighters taking off into the Indian skies.
The airlines will anxiously look out for the much-awaited sops from the government on the ATF prices; airport developers will expect policy directives for green field and merchants airport projects.
Travellers will continue to look forward to cheap airfares, on-time arrivals and departures, new in-flight entertainment, retailing and internet connectivity in the skies. How far these will be fulfilled remains to be seen, with crude oil prices not showing signs of any let-up, and airlines more focused on returning value to their shareholders.
Along with the other players in the Industry, realty and information technology companies will benefit greatly by participating in the development of the Indian Aviation Industry.
