2007 was arguably the best growth period for India's civil aviation sector. Passengers carried by domestic airlines increased by 36.47 per cent (to 317.29 lac passengers) in the first three quarters of 2007, against 232.49 lac in the same period last year. Overall aircraft movements also increased by 27.2 per cent in April 2006 – August 2007, as compared to the same period in 2005-06. International movement was up by 12.9 per cent and the domestic, by 31 per cent. Simultaneously, overall passenger traffic increased by 28.5 per cent, while the freight traffic was up by 11.9 per cent.

The International Air Transport Association (IATA) in its latest estimates this year reckons India to be a driving force behind the world's civil aviation business that is globally expected to grow from US$ 5.1 billion to US$ 5.6 billion this year. Moreover India forms 12 per cent of the worldwide business jets market as the demand for private or business jets in India is expected to grow at 50 per cent on an annual basis over the next few years, according to an Ernst & Young report.

Air Traffic

India's air passenger travel is expanding at about 25 per cent a year, and at least six discount carriers have started flights in the country of 1.1 billion people. Growth in this sector will outpace the global average until 2025, according to government estimates.

Domestic air traffic is likely to more than double and touch 86.1 million passengers by 2010, up from 32.2 million passengers in 2007, states the market research firm PhoCus. During January-March period in 2008 domestic air passenger traffic in India registered a 10 per cent increase over the last year's first quarter with 11.90 million passengers travelling in various airlines.

According to data compiled by the Airports Authority of India (AAI), 21.7 million people flew on international routes to and from India during April-December 2007-08. This was a growth of 17.1 per cent over the same period last fiscal. The growth of domestic air passengers was at an even faster rate of 27.9 per cent, with 64.9 million people availing aircraft services.

Simultaneously, freight traffic on both domestic and international routes flew by a healthy 8.1 per cent and 12.5 per cent, respectively. Significantly, with such growth rates in the passenger and freight traffic, there has been a rise in the aircraft movement. International and domestic aircraft movement grew at the rates of 14.8 per cent and 25.4 per cent, respectively.

FDI in Aviation

India's liberalisation of the aviation sector has opened up 28 airports for foreign direct investment (FDI) in areas of operation and maintenance of airports.

• For greenfield airports, FDI up to 100 per cent is permitted through automatic approvals.
• For existing airports, FDI up to 74 per cent is permitted through automatic approvals and upto 100 per cent through special permission (from FIPB).