CIVIL AVIATION

Submitted By Anshika Srivastava(07) Aviral Pundir(15) Chetna Yadav(18) Kartik Menon(32) Rohit Menon(53)

Why Aviation: The Indian scenario

 Indian Civil Aviation completes 100 years in the year 2011. On February 18, 1911, the first commercial plane flew in India between Allahabad and Naini carrying mails. To commemorate this milestone, the year 2011-12 is being declared and celebrated as the Civil Aviation Centenary Year. With the liberalization of the Indian aviation sector, aviation industry in India has undergone a rapid transformation. From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned full service airlines and low cost carriers. With high growth and stability, India is having high trade and commerce activities the air traffic has increased by almost 20%.

 Aviation Industry in India has the highest requirement of aircrafts globally.

Thought current contribution of aviation to GDP is less than 1%, it is expected to double within next 5 years. Airlines have proved to be one of the most reactive industries and percussions of any event that happens in a country are instantaneously reflected in the airlines

History

Timeline
1912: Indian State Air service and Imperial Airways, UK collaborate to ply on first domestic route, between Delhi and Karachi. 1932: Tata Aviations established. It goes to Colombo in 1938. 1953: Indian Airlines Corporation formed through Air Corporation Act, 1953, by nationalizing Air India and Indian National Airways. 2003: Entry of low cost carriers. Air Deccan, Spice Jet, Go Air, Indigo.

1915: Tata Sons start airmail service between Delhi and Madras.

1948: Designated as flag carrier under the name Air India International with 49% govt. control.

1994: Air Corporation Act. 1953 repealed and thus allowed private players to come.

At the time of independence, nine air transport companies were carrying both air cargo and passengers. These were Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. After partition Orient Airways shifted to Pakistan. The inaugural flight of Air India International Ltd took off on June 8, 1948 on the Mumbai-London air route The Government nationalized nine airline companies vide the Air Corporations Act, 1953. Accordingly it established the Indian Airlines Corporation (IAC) to cater to domestic air travel passengers and Air India International (AI) for international air travel passengers. A third government-owned airline, Vayudoot, which provided feeder services between smaller cities, was merged with IAC in 1994. In April 1990, the Government adopted open-sky policy and allowed air taxioperators to operate flights from any airport, both on a charter and a non charter basis and to decide their own flight schedules, cargo and passenger fares To support the growth of the airline industry the Government in 1994-95 permitted direct import of aviation turbine fuel (ATF) under the special import license scheme

In 1994, the Indian Government, as part of its open sky policy, ended the monopoly of IA and AI in the air transport services by repealing the Air Corporations Act of 1953 and replacing it with the Air Corporations (Transfer of Undertaking and Repeal) Act, 1994.

Private operators were allowed to provide air transport services. Foreign direct investment (FDI) of up to 49 percent equity stake and NRI (Non Resident Indian) investment of up to 100 percent equity stake were permitted through the automatic FDI route in the domestic air transport services sector.

By 1995, several private airlines had ventured into the aviation business and accounted for more than 10 percent of the domestic air traffic. These included Jet Airways Sahara, NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental Aviation, and Damania Airways

Today, Indian aviation industry is dominated by private airlines and these include low cost carriers such as GoAir, SpiceJet etc, who have made air travel affordable.

Industry Overview and Competitors

Industry Statistics
Total Fleet size of commercial airlines india is more than 500 Fleet size of major domestic airlines in india are as below:
Airline Jet Airways Jet Lite Kingfisher Air India Spice Jet Indigo Air Go Air Fleet Size 97 110 66 48 22 39 10

Passengers carried by domestic airlines during Jan-Mar 2011 were 143.31 lakhs as against 118.54 lakhs during the corresponding period of previous year thereby registering a growth of + 20.9%.

Growth of Indian Passenger Traffic

The air passengers have been growing at a constant rate.

Indian aviation industry ranks 4th in the world after USA, China, and Japan in terms of domestic passenger volume

The civil aviation sector witnessed a slowdown in passenger traffic during 2008 due to a sharp rise in fuel prices coupled with global economic slowdown.

Indias domestic passenger growth is expected to grow at the rate of 9%-10% to reach a level of 150-180 million passengers by 2020.

It is also estimated that travel of international passenger to and from India

would go to 50 million by the year 2015.

Operational Airlines
Airline Commenced Operations

Air India Air India Express

Air India Regional GoAir IndiGo Jet Airways JetLite Kingfisher Airlines SpiceJet

October 1932 April 2005 1996 (as Alliance Air) June 2004 August 2006 May 1993 1991 (as Air Sahara) May 2005 May 2005

Market Distribution
IndiGo 20% Go Air 7% Spicejet 15% Kingfisher 20% Air India (Dom) 15% Jet Airways 18% JetLite 8%

Since the beginning of 2010, the Indian aviation industry has been on a revival path, with passenger numbers growing by 18 per cent against the previous year. And for 2011, the growth is forecast to be around 20 per cent, backed by a possible 9 per cent growth in the Indian economy.

Jet Airways and Kingfisher Airlines recently increased their fuel surcharge by up to Rs 200 to recover the extra outgo, as public oil marketing companies promptly increased aviation turbine fuel (ATF) prices to minimise their under-recoveries due to subsidies given on other fuels.

According to estimates by global aviation consulting firm Centre for Asia Pacific Aviation (CAPA), airlines could end the financial year 2010-11 with a combined net profit of $300 million. However, this calculation was made when oil prices were under control.

Jet Airways, for the first six months of the current financial year, reported a net profit of Rs 16 crore compared with a net loss of Rs 468 crore in the previous fiscal. SpiceJet, during the same period, reported a net profit of Rs 65 crore against a full-year net profit of Rs 61

crore in 2009-10.

Similarly, Kingfisher Airlines and Air India drastically cut down their losses due to

better cost management and improvements in yield. Kingfisher, during AprilSeptember 2010, reported a net loss of Rs 418 crore versus a full-year net loss of Rs 1,647 crore in 2009-10.

Though the profit and loss figures for Air India are not available, the national carrier
during April-November 2010 recorded revenue of Rs 7,250 crore compared with a revenue of Rs 5,911 crore during the same period of the previous year, an increase of 22.6 per cent. And notwithstanding its huge debt burden, Air India in November

2010 reported perhaps for the first time in recent times a cash profit of Rs 21.66 crore
due to significant improvement in efficiency.

Competition Analysis

Top 5 Airlines according to Market Share

Kingfisher Airlines
Indigo Jet Airways Air India SpiceJet

Fleet Share and Passenger Share of Airlines

 Air India has the largest share of the fleet as expected. Jet Airways has the second largest fleet share but Kingfisher manages to catch up with it in terms of passenger share The success of low cost strategy of Indigo Air can be seen in its passenger share which matches upto Kingfisher and Jet despite having a much smaller fleet

Passenger Occupancy Distribution

90 80 70

68 61.1

76.5 69.2

80.2 76.7

83.6 80.4

81

87.1 82.1 75.4

87.6 81.2

% Seat Factor

60 50 40 30 20 10 0

Feb-11 Mar-11

Air India

Jet Airways

JetLite

Kingfisher

Spicejet

Go Air

IndiGo

Again we can see that Indigo has the highest Seat Occupation ratio
GoAir comes a close second in terms of seat occupation mainly because of low cost strategy

Performance of Aviation Industry

Only five airline services companies are listed on the stock exchanges in India and hence only their quarterly financial information is available. Top three of the five companies in the aviation sector reported a robust sales growth of over 20% each during the December 2010 quarter. Higher passenger volumes coupled with improved realisations enabled the industry post healthy sales growth.

Jet Airways, Indias largest airline by sales, was the only company to register higher net profit. Net profit margin (net profit to sales ratio) dipped marginally to 3.3% in December 2010 quarter due to a more than proportionate increase in net sales vis--vis profit. Profits were lower due to deferred tax adjustment made by the company. Although sales of Kingfisher Airlines surged by 28.1%, it continued to record a loss at the net level during October-December 2010 compared to a yearago. Appreciation of Indian Rupee vis--vis $ enabled Kingfisher register a decline in rent and lease rent.

Financial Performance of Listed Airline Companies in December 2010 Quarter (% yo-y growth)
Net sales

Powe Salari Rent & Intere r& es & lease st fuel wages rent
23.5 21.5 49.9 15.6 -1.2 23.6 6.1 -7.0 9.8 1.0 23.6 -33.1

Deprec Net iation profit

Net Profit Margin Dec 09 3.6 -31.7 16.54

Net Profit Margin Dec 10 3.3 -15.1 11.28

Jet Airways Kingfisher Airlines Spicejet

19.9 28.1 27.9

-5.4 13.9 18.0

11.7 Lower Loss -13.3

Global Vectra Helicor 1.1 p Jagson Airlines

-70.9

Na

-2.3

Na

-8.5

-16.3

Profit to 8.37 Loss Profit to 2.22 Loss -73.6

-16.13

Na 26.5

Na 10.5

Na 0.6

-16.2 12.4

7.7 -2.2

-93.8

Average of the 22.8 above

Government Regulations

The air transportation operations in India are governed under

The Aircraft Act, 1934 The Aircraft Rules, 1937 The Air Corporation Act, 1953 The Air Corporation Act, 1953, The International Airports Authority Act, 1971, The Carriage by Air Act, 1972, The Tokyo Convention Act, 1975, The Anti-Hijacking Act, 1982, The National Airports Authority Act, 1985, The Airports Authority of India Act,1994 The Air Corporations (Transfer of Undertakings and Repeal) Act, 1994.

Ministry Of Civil Aviation

Ministry of Civil Aviation is responsible for formulation and implementation of national policies and programmes in the civil aviation sector. The Ministry also oversees the development and regulation of civil aviation in the country. Functions relating to Railway Safety, including enquiries into serious railway accidents are also performed by this Ministry. Ministry of Civil Aviation has following separate organizations for monitoring and regulating the civil aviation sector: i) Directorate General of Civil Aviation; and ii) Bureau of Civil Aviation Security

Functions of Ministry of Civil Aviation

a) To ensure aviation safety, security

b) Effective regulation of air transport in the country in the liberalized

environment c) Safe, efficient, reliable and widespread quality air transport services are provided at reasonable prices d) Flexibility to adapt to changing needs and circumstances e) To provide all players a level-playing field f) Encourage Private participation g) Encourage Trade, tourism and overall economic activity and growth h) Security of civil aviation operations is ensured through appropriate systems, policies, and practices

The Ministry of Civil Aviation has the following public sector undertakings/companies/autonomous bodies under its administrative control: National Aviation Company of India Limited (NACIL) Airports Authority of India (AAI) Pawan Hans Helicopters Limited (PHHL) Indira Gandhi Rashtriya Uran Akademi (IGRUA)

National Aviation Company of India Limited (NACIL) :- is a company

incorporated under the Companies Act, 1956 and has the functions and responsibilities of

providing safe, efficient, adequate, economical and properly coordinated international air
transport services. It has been set up after the merger of Air India and Indian Airlines in 2007. This merger aims to create the largest airline in India. The name of the new airline is Air India and its logo is Maharaja. NACIL is carrying its operations under two operating permits, viz., NACIL-A and NACIL-I. It has following wholly owned subsidiaries, namely,

Hotel Corporation of India Limited, Air India Charters Limited (AICL), Air India Engineering
Services Ltd (AIESL); Air India Air Transport Services Limited (AIATSL); and Alliance Air.

Airports Authority of India (AAI) :- was constituted in 1995 for creating,

upgrading, maintaining and managing civil aviation infrastructure, both on the ground and air space of the country. It aims at providing world class airport services for efficient operation of air transport in the country. It manages 127 airports, which include 16 international airports, 8 customs and 79 domestic airports and 24 civil enclaves at defence airfields. It controls the entire Indian airspace of 2.8 million square nautical miles.

Pawan Hans Helicopters Limited (PHHL) :- was established in 1985 as the country's national helicopter company for providing helicopter support services to the Oil Sector; operate scheduled/non-scheduled helicopter services in

inaccessible areas and difficult terrains; as well as provide charters for promotion
of travel and tourism. It has a well balanced fleet of 35 helicopters consisting of Bell 206L4, Bell 407, Dauphin SA 365N & AS 365N3 and Mi-172, which are most appropriate for multi-farious jobs. It is the only aviation company in India being

awarded ISO 9001:2000 certification for its entire gamut of activities.

Indira Gandhi Rashtriya Uran Akademi (IGRUA) :- was established by the

Government with the objective of improving the flying training standards in civil aviation and to impart line oriented flying training of international standards. It has been set up at Fursatganj in Rai Bareilly District of Uttar Pradesh. It is equipped with modern and sophisticated trainer aircraft, flight simulators, computer based training system, runway with modern navigational and landing aids and its own airspace. It is manned by highly qualified flying and ground instructors, with long experience in the field of aviation and flying training.

Directorate General of Civil Aviation

Directorate General of Civil Aviation (DGCA) is the regulatory body
responsible for regulation of air transport services to/from/within India and for the enforcement of civil air regulations, air safety and airworthiness standards. The regulations are in the form of the Aircraft Act,1934; the Aircraft Rules,1937; the Civil Aviation Requirements; and the Aeronautical Information Circulars.
The DGCA is headed by the Director General of Civil Aviation. It has its headquarters in New Delhi. Following Directorates exist under DGCA:-

i) Directorate of Regulations and

Information ii) Directorate of Air Transport iii) Directorate of Airworthiness

v) Directorate of Training and Licensing

vi) Directorate of Aerodrome Standards vii) Directorate of Flying Training viii) Directorate of Flight Inspection

iv) Directorate of Air Safety

ix) Directorate of Research & Development

x) Directorate of Administration

Functions of DGCA
Registration of civil aircraft; Formulation of standards of airworthiness for civil aircraft registered in India and grant of certificates to such aircrafts; Licensing of pilots, aircraft maintenance engineers; flight engineers; and air traffic controllers; Maintaining a check on the proficiency of flight crew, and also of other operational personnel such as flight dispatchers and cabin crew; Conducting investigation into accidents/incidents and taking accident prevention measures; Carrying out amendments to the Aircraft Act, the Aircraft rules and the Civil Aviation requirements for complying with the requirements of International Civil Aviation Organisation (ICAO); Granting approval to aircraft maintenance, repair and manufacturing organizations; Rendering advice to the Government on matters relating to air transport including bilateral air services agreements; on ICAO matters and on all technical matters relating to civil aviation;

DGCA and Airlines

DGCA, under the provisions of Rule 134 of the Aircraft Rules, 1937 grants permission to persons to operate an air transport service to, within and from India. The air transport services offered are the: Scheduled Air Transport Services (Passenger) (Civil Aviation Requirements Section 3 Series 'C' Part II) Non- Scheduled Air Transport Services (Passenger) (Civil Aviation Requirements Section 3 Series 'C' Part III) Air Transport Services (Cargo) (Civil Aviation Requirements Section 3 Series 'C' Part IV) Non-Scheduled Air Transport Services (Charter Operation) (Civil Aviation Requirements Section 3 Series 'C' Part V)

These permits are equivalent to the Air Operator's Certificate required to be granted by ICAO member States in accordance with the provisions of Annex 6. Permits for any other special type of operation can be granted subject to the applicant showing satisfactory capability to undertake the type of operations.

Guidelines for Obtaining a Permit

Air Transport Circular 1 of 1997 gives the procedure to be followed for grant of the permits and the various requirements which an applicant has to fulfill for obtaining the permit. The issuance of a permit is dependent upon the applicant demonstrating an adequate Organisation, method of control and supervision of flight operations, training programme and maintenance arrangements consistent with the nature and extent of the operations specified.

MINIMUM REQUIREMENTS FOR GRANT OF PERMIT TO OPERATE SCHEDULED PASSENGER AIR TRANSPORT SERVICES.

A Scheduled Operator's Permit can be granted only to:

a) a citizen of India; or
b) a company or a body corporate provided that: i) it is registered and has its principal place of business within

India;
ii) its chairman and at least two-thirds of its directors are citizens of India; and

iii) its substantial ownership and effective control is vested in

Indian nationals.

Commencement of Scheduled International Air Services by a Foreign Airline

The airline shall, in accordance with the provisions of the air services agreement, be formally designated either through diplomatic channels or by the aeronautical authorities of the country whose Government have concluded the Agreement with the Government of India. A copy of the letter designating the airline shall be submitted to the office of the Director General of Civil Aviation (DGCA). The designated airline shall, in accordance with the provisions of the bilateral air services agreement, obtain the approval of the competent authorities for the tariffs to be charged on the agreed services operated on the specified route(s) The designated airline shall file their proposed flight schedule with the office of the DGCA for approval, at least 30 days prior to the commencement of the agreed services. The flight schedule should contain information relating to the type of service and its frequency, the type of aircraft to be used and the flight timings. The flights shall be operated only after the schedule has been approved by DGCA.

Bureau of Civil Aviation Security

BCAS is an attached office of the Ministry. It is a regulatory body and is responsible for laying down the standards of pre- embarkation security and anti-sabotage measures in

respect of civil flights in India. The Bureau keeps a constant vigil and monitors the
enforcement of the security measures. BCAS has four Regional Offices in Delhi, Kolkata, Mumbai and Chennai. The Following Acts provide power and authority to the BCAS

AIRCRAFT ACT- 1934

AIRCRAFT RULES-1937 Tokyo Convention 1975 Act Anti-Hijacking Act 1982 Anti Hijacking Act 1994 (Amendments 1994) The Suppression of Unlawfull Acts Against Safety of Civil Aviation Act 1982 The Suppression of Unlawfull Acts Against Safety of Civil Aviation Act 1994 INTERNATIONAL CONVENTIONS

Open Air Policy

Need for Open Skies Policy
A recurring demand often voiced by interested parties is that, in order to promote Travel & Tourism, India should adopt an Open Skies policy. It is argued that the current policy restricts the access of foreign airlines. As a result potential tourists are not offered a choice of airlines or seats when travelling to India. This problem is exacerbated during the holiday season when it is difficult, if not impossible, to get a seat either into the country or out of it. It is argued, therefore, that India should adopt an Open Skies approach to any foreign carrier wanting to fly into India, which literally means allowing them unlimited service, capacity and points of call

Meaning of Open Skies

Strictly speaking Open Skies means unrestricted access by any carrier into the sovereign territory of a country without any written agreement specifying capacity, ports of call or schedule of services. In other words an Open Skies policy would allow the foreign airline of any country or ownership to land at any port on any number of occasions and with unlimited seat capacity. There would be no restriction on the type of aircraft used, no demand for certification, no regularity of service and no need to specify at which airports they would land.

Indian Bilateral Treaties

Almost 99 per cent of Members of the International Civil Aviation Organization (ICAO) follow the system of negotiated bilateral treaties determining the aviation relations between two sovereign Contracting parties. The Bilateral Agreements also protect the different kinds of aviation Freedoms granted to contracting parties by specifying the reciprocal rights to be enjoyed by each. To increase connectivity between India and other countries and facilitate travel for passengers, India has entered into Air Service Agreements (ASA) with 100 countries till date. These bilateral Agreements provide the basic legal framework for operation of air services between the two contracting parties. The number of flights each country can operate and the destinations that could be served are also specified in these Agreements. The Open Skies agreement provides for open routes, capacity, frequencies, designations, and pricing, as well as opportunities for cooperative marketing arrangements, including bilateral codesharing with domestic Indian carriers

Government Initiatives on Promotion of Aviation Industry

(i) The Foreign Direct Investment limit in Air Transport Services (Domestic Airlines) has been increased from 40% to 49% and is soon expected to be increased further. However, the NRI`s and Persons of Indian Origin (PIO) have been allowed 100% FDI; (ii) Private scheduled carriers with five years experience in domestic sector and having fleet size of twenty aircraft permitted to operate on international routes; (iii) Liberal policy in the exchange of capacity entitlement / traffic rights paved the way for more foreign airlines to operate to / from India; (iv)Amendment of the various outdated provisions of Aircraft Rules to keep the provisions abreast with the international standards and developments in the civil aviation sector; (v) Tourist charter guidelines liberalized;

Government Initiatives on Promotion of Aviation Industry(Contd)

(vi) Fleet expansion plans of Air India/Indian Airlines approved; (vii) Restructuring of Delhi and Mumbai airport and work on development of Greenfield airports at Bangalore and Hyderabad undertaken25; (vii) Up gradation/ expansion/ development of airports undertaken depending upon traffic potential, requirement of airline operators and need of air passengers.

Legal Aspects

Legal Aspects
In India, the Industrial Disputes Act, 1947 is the main legislation for investigation and settlement of all industrial disputes. The Act enumerates the contingencies when a strike or lock-out can be lawfully

resorted to, when they can be declared illegal or unlawful, conditions for laying off, retrenching,
discharging or dismissing a workman, circumstances under which an industrial unit can be closed down and several other matters related to industrial employees and employers.

The Act is administered by the Ministry of Labour through its Industrial Relations Division. The Division is concerned with improving the institutional framework for dispute settlement and amending labour laws relating to industrial relations. It works in close co-ordination with the Central Industrial Relations Machinery (CIRM) in an effort to ensure that the country gets a stable, dignified and efficient workforce, free from exploitation and capable of generating higher levels of output.

Under the Industrial Disputes Act, 1947, the Central Government is the appropriate Government for investigation and settlement of industrial disputes in regard to, the Indian Airlines, Air India, the Airport Authority of India and all air transport services..

Taxation

Taxation
Domestic Airline Income Taxes Rates: For Domestic Airlines the effective tax rate is 30% and the tax rate with surcharge is 30% Attention must be given on the factor that if the taxable income is more than ` 1 million then a surcharge of 10% of the tax on income is levied Attention must also be given on the fact that all of the companies formed in India are regarded as Indian domestic companies, even in the case of ancillary units with mother companies in foreign countries

Foreign players income tax rates:

For dividends 20% in case of non-treaty foreign companies and 15% for companies under the treaty based in United States For interest gains 20% in case of non-treaty foreign companies and 15% for companies under the treaty based in United States For royalties 30% in case of non-treaty foreign companies and 20% for companies under the treaty based in United States For technology based services in case of non-treaty foreign companies and 20% for companies under the treaty based in United States For other kinds of income and gains 55% in case of non-treaty foreign companies and 55% for companies under the treaty based in United States Attention must be given on levying inter corporate rates in case the holding is minimum

Attention must be given on the fact that the sanctions of the tax authorities on tax withholding
Attention must be given on the several of the tax treaties India signed with the other countries and also the various encouraging tax rates

Union Budget 2011

Increase in MAT rate from 18% to18.5%. Since most airline companies are reeling under huge accumulated losses, there should not be any immediate additional cash outflow on account of this change

Reduction in surcharge from 7.5% to 5%. The reduction in effective corporate tax rate will not have an immediate impact on account of accumulated losses.
Exemption from education cess and secondary and higher education cess presently available to aircrafts is being withdrawn A basic custom duty of 2.5% is being imposed on import of aircrafts for non scheduled operations. The exemptions from addiditional duty of customs(CVD) and special additional duty of customs (SAD) would continue

 The rate of service tax on travel by air are being

SL Travel Type Present Rate Proposed Rate

Domestic Travel (Economy Class)

100

150

International Travel (Economy Class)

500

750

Domestic Travel( Other than Economy)

100

10%

Foreign Investment

Current Foreign Policy

FDI up to 100 per cent is allowed under the automatic route for greenfield

projects.

For existing projects, FDI up to 100 per cent is allowed; while investment up to 74 per cent under the automatic route and beyond 74 per cent under the government route.

FDI up to 49 per cent is allowed in the domestic airlines sector under the automatic route, but not by of foreign airline companies.

FDI in Civil Aviation

Airports (a) Greenfield projects - 100%, Automatic (b) Existing projects- 100% ,Automatic up to 74%, Government route beyond 74%
Air Transport Services
(a) Air Transport Services would include Domestic Scheduled Passenger Airlines; Non-Scheduled Air Transport Services, helicopter and seaplane services.

(b) No foreign airlines would be allowed to participate directly or indirectly in the equity of an Air Transport Undertaking engaged in operating Scheduled and Non-Scheduled Air Transport Services except Cargo airlines.
(c) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services.

 Scheduled Air Transport Service/Domestic Scheduled Passenger Airline 49% FDI (100% for NRIs) Automatic Non-Scheduled Air Transport Service 74% FDI (100% for NRIs), Automatic up to 49% Government route beyond 49% Helicopter services/seaplane services requiring DGCA approval 100% Automatic Other services under Civil Aviation sector Ground Handling Services(subject to sectoral regulations and security clearance) -74% FDI, (100% for NRIs), Automatic up to 49%, Government route beyond 49% and up to 74 % Maintenance and Repair organizations; flying training institutes; and technical training institutions 100% Automatic

Asset Reconstruction Companies

Asset Reconstruction Company (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest

Act,2002 (SARFAESI Act). FDI limit 49% of paid-up capital of ARC, Government

Other conditions:
(i) Persons resident outside India, other than Foreign Institutional Investors (FIIs), can invest in the capital of Asset Reconstruction Companies (ARCs) registered with Reserve Bank only under the Government Route. Such investments have to be strictly in the nature of FDI. Investments by FIIs are

not permitted in the equity capital of ARCs.

(ii) However, FIIs registered with SEBI can invest in the Security Receipts (SRs) issued by ARCs registered with Reserve Bank. FIIs can invest upto 49

per cent of each tranche of scheme of SRs, subject to the condition that
investment by a single FII in each tranche of SRs shall not exceed 10 per cent of the issue. (iii)Any individual investment of more than 10% would be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Conclusion

Future Trends
Consolidation in aviation sector

The rise in the number of alliances in aviation industry will help in further growth of aviation sector in India.
Number of passengers is on the rise

With passenger boardings expected to double by 2025, and aircraft operations expected to triple by the same time
Price is paramount in selecting carrier:

Due to the Internet and round-the-clock search capability, airfares are fully transparent to the public and travelers are choosing the lowest price option. Air travel is now a commodity business, and legacy carriers will have to adapt further to a low-cost/low-fare environment in order to survive

 Growing Capacity:
Indian carriers are placing orders for new aircraft for delivery in the coming period, without clear plans to retire older planes. They are also adding significant numbers of regional jets. The air taxi fleet is also expanding rapidly

Oil prices are not expected to fall:

The public sector oil marketing companies (OMCs) have raised the prices of Aviation Turbine Fuel (ATF) by 3.5 per cent, in line with the rise in international oil prices. This is likely to trigger a marginal increase in airfares.

Outsourcing:
Private airlines are known to hire foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines, in senior management positions. Further, they outsource such functions as ground handling, check-in, reservation, aircraft maintenance, catering, training, revenue accounting, IT infrastructure, loyalty and programme management. Airlines are known to take on contract employees such as cabin crew, ticketing and check-in agents.

THANK YOU

References
http://india.gov.in (Government of India) http://www.bcasindia.nic.in/ (beaureau of Civil aviation security) http://dgca.nic.in/ (Directorate General of Civil Aviation) Wikipedia Ministry of Civil Aviation Various Journals