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2nd

U.S.-India Aviation Partnership SummitWashington, D.C., USA

December 7 - 11, 2009

Submitted to the Association of American Airport Executives (AAAE)

for the U.S. Trade Development Agency (USTDA)

INDIA’S AVIATION INDUSTRY:

AN OVERVIEW

Prepared by The MITRE Corporation/CAASD

Authors:

Dr. Satish C. Mohleji

Cheryl R. AndrewsMimi Dobbs

Bob Humbertson

December 7, 2009



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EXECUTIVE SUMMARY

The civil aviation sector in India had been growing at a dramatic rate into 2008; however the

global economic recession in 2009 negatively affected this growth. During fiscal year 2005-06

(April 1, 2005 to March 31, 2006), the sector experienced a 22 percent increase in domestic airtravel. International air travel grew 15 percent, while air cargo grew at an annual rate of 20

percent. During fiscal year 2006-07, total passenger traffic grew 27.2 percent, while cargo traffic

grew 11.2 percent. This year total aircraft movements increased 27.5 percent. However, in fiscal

year 2008-09, the global economic slump and higher fuel prices adversely impacted growth,

resulting in a 5 percent decline in domestic passenger traffic. Domestic air cargo continued to

grow at 14.5 percent.

With the economy now stabilizing, domestic air traffic is projected by various sector experts and

observers to grow by up to 180 million passengers and international traffic is expected to increase

by 50 million passengers by 2020. International traffic is expected to grow at an average annual

rate of 8 percent by 2013 and by 7 percent from 2014 to 2023. Domestic traffic will experience a

slower growth rate of 3.4 percent annually until 2013 and increase to an average rate of 8 percent

until 2023. International passenger growth will average 10 percent until 2013 and 9 percent until

2023. Annual growth in domestic and international cargo operations is estimated to increase by

4.5 percent and 12 percent annually until 2013.1

In the last few years, the sector experienced tremendous growth for a number of new air carriers

providing domestic services. Starting from a relatively small base, the civil aviation sector in India

faces the prospect of significant expansion as the overall economy recovers and India retains the

second-highest growth rate worldwide. Some 639 new commercial jet aircraft were ordered by

November 2008 and the number of General Aviation (GA) aircraft is projected to grow to 1,000 by

2020.

Much of this significant growth has been made possible by a combination of favorable policies

and timely initiatives that liberated much of the sector from the earlier highly regulated regime.

These include:

An Open-Sky policy adopted in April 1990. The policy allowed air taxi operators to

operate flights from any airport and decide their own flight schedules, cargo, and

passenger fares.

Repeal of the Air Corporation Act effective from March 1, 1994 that led to:

– Removal of monopoly of air corporations on scheduled services,

– Ability of private airlines to operate scheduled services,

1Latest ANS Development in India, P. Seth, 4th CANSO Asia Pacific ANSP Conference, Singapore, 26-28April 2009.





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AAI has been granted Mini-Ratna status under Category-I (CAT I). Mini-Ratna status will enable

AAI to make investments in projects up to $107.5 million (Rs 500 Crore) and provide greater

decision making autonomy to its management.2

The Airport Economic Regulatory Authority (AERA) Bill was passed by the Indian

Parliament to ensure that India’s aviation infrastructure meets cost, efficiency, and

service targets by making policies consistent with the International Civil Aviation

Organization (ICAO) standards.

The GOI merged Air India and the Indian Airlines to form the National Aviation Company of India

Limited (NACIL), which consolidated international and domestic flight operations.

Based on the strategic and guiding principles of the ICAO ATM vision of global harmonization,

India developed a Future Indian Air Navigation System (FIANS) Master Plan for seamless

airspace operations.

Clearly, these are interesting times for identifying investment opportunities for those who follow

civil aviation sectors around the world. External commercial borrowing to finance aviationinfrastructure development increased from $145 million in fiscal year 2005-06 to $4.74 billion in

fiscal year 2007-08, but decreased due to the economic downturn during fiscal year 2008-09 to

$1.91 billion. However, the direct investment potential of the sector is about $9 billion, not

including spill-over benefits and positive externalities. In order to facilitate overall economic

growth, these investments will have to take place in a short period of time. For a country that is in

the middle of a transition process involving sector and institutional reforms, materialization of new

opportunities may take time. While some investments and business opportunities may be closer

to fruition, many others depend on the speed at which new reforms are implemented, economic

growth is sustained, and bureaucratic procedures are relaxed.

The first section of this report provides a broad overview of the economy and the civil aviation

sector. The second section documents investment and business opportunities, in different

phases from conceptualization to maturation, for possible involvement by U.S. firms.

2Mini Ratna is a status granted by the Department of Public Enterprises (DPE) to Indian public sectorundertakings in view of consistent performance records, annual investment figures, and profitability.



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TABLE OF CONTENTS

Section 1. Country Overview: India ............................................................................................1Section 2. Sector Overview: Civil Aviation ................................................................................6Section 3. Sector Overview: Institutional Arrangements .......................................................12

Section 3A. Ministry of Civil Aviation and Airports Authority of India ........................................121. Joint GOI/Private Partnership for Airport Development...............................................15

Section 3B. Directorate General of Civil Aviation......................................................................171. The Organizational Framework ....................................................................................17 2. The Regulatory Framework..........................................................................................17

Section 4. Sector Opportunities................................................................................................ 21Section 4A. Airports: Selected Opportunities............................................................................22

1. Opportunity for Airport Modernization and Expansion..................................................22(a) Delhi and Mumbai Airport Modernization and Expansion.....................................22 (b) Modernization of Airports at Chennai and Kolkata ...............................................25(c) Modernization Programs at 35 Non-Metro Airports ..............................................27(d) Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) .................28(e) Completion of Greenfield Airports at Bangalore and Hyderabad .........................29

2. Procurement of Materials for Airside and Landside Modernization..............................30Section 4B. Air Transportation Management: Selected Opportunities......................................32

1. Opportunities for CNS/ATM Modernization ..................................................................32(a) Future Indian Air Navigation System (FIANS) Master Plan..................................32(b) Current Airspace and Operations .........................................................................32 (c) CNS/ATM Master Plan Update.............................................................................34(d) CNS Upgrades .....................................................................................................35(e) GAGAN Certification and Implementation............................................................35(f) ATM Enhancements ..............................................................................................37

2. Weather System Enhancements..................................................................................37 3. Opportunities for Commercial Aircraft MRO.................................................................384. Opportunities for Training.............................................................................................39

Some Useful References ............................................................................................................41U.S. Government Resources......................................................................................................43Key Point of Contacts .................................................................................................................44

Appendix: Airports in India and Institutional Arrangements..................................................48



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TABLE OF FIGURES

Figure 1. Offshore BPO Market: Total and India ............................................................................2Figure 2. Foreign Direct Investment (FDI) Stocks Inward .............................................................2Figure 3. India: Share of Top Investing Countries' FDI Inflows (Aug. 1991 to Sept. 2005)............3Figure 4. Aircraft Movements in India.............................................................................................6Figure 5. Traffic Network in India ...................................................................................................8Figure 6. International Tourism: In and Out of India .......................................................................9Figure 7. Orders of New Aircraft by Specific Airlines (2009)........................................................11Figure 8. Organizational Structure of the Ministry of Civil Aviation ..............................................13Figure 9. Corporate Functioning of AAI ........................................................................................14Figure 10. Organizational Structure of the DGCA ........................................................................17Figure 11. Consortium of Partners ...............................................................................................22Figure 12. Vertical Segmentation of Typical Airspace: An Example ............................................33Figure 13. GAGAN Network in India ............................................................................................37

Figure 14. Airline Order Book in India (End of 2006) ...................................................................38

TABLE OF TABLES

Table 1. Planned Investments in Indian Aviation Infrastructure ...................................................10 Table 2. Financial Profile of AAI ...................................................................................................15Table 3. Non-Metro Airport Development.....................................................................................27



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CONVERSION TABLE

US $ 1 = Rupees 46.5 (Average rate November 2009)

1 Crore = 10 million

1 Lakh = 100,000

All monetary references in US Dollars ($)

LIST OF ABBREVIATIONS

A-SMGCS Advanced-Surface Movement Guidance and Control System

AAAE American Association of Airport Executives

AAI Airport Authority of India

ACC Area Control Centers

ACP Aviation Cooperation Program

ACSA Airports Company of South Africa

ADS-B Automatic Dependent Surveillance-Broadcast

ADS-C Automatic Dependent Surveillance-Contract

AERA Airport Economic Regulatory Authority

AFTM Air Traffic Flow Management

AFTN Aeronautical Fixed Telecommunication Network

AMSS Aeronautical Mobile Support System

ANS Air Navigation Service

ANSP Air Navigation Service Providers

APD Airport Planning DirectorateASEAN Association of South East Asian Nations

ATC Air Traffic Control

ATF Aviation Turbine Fuel

ATM Air Traffic Management

ATR Avions De Transport regional

ATS Air Traffic Services

BCAS Bureau of Civil Aviation Security

BIAL Bangalore International Airport Limited

BOO Build-Own-Operate

BOOT Build-Own-Operate-Transfer

BOT Build-Own-Transfer

BPO Business Process Outsourcing

CAASD Center for Advanced Aviation System Development

CAGR Cumulative Annual Growth Rate



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CANSO Civil Air Navigation Services Organization

CAR Civil Aviation Requirements

CAT Category

CFR Code of Federal RegulationsCIAL Cochin International Airport Limited

CNS Communications, Navigation, and Surveillance

CPDLC Controller Pilot Data Link Communications

DGCA Directorate General of Civil Aviation

DGPS Differential Global Positioning System

DIAL Delhi International Airport Limited

DME Distance Measuring Equipment

DOC Department of Commerce

DPE Department of Public Enterprises

DPR Detailed Project Report

DVOR Doppler Very High Frequency Omnidirectional Range

EMARSH Europe Middle-East, Asia Route Structure of Himalayas

FAA Federal Aviation Administration

FANS Future Air Navigation System

FAR Federal Aviation Rules

FBO Fixed Base Operator

FDI Foreign Direct Investment

FDPS Flight Data Processing System

FIANS Future Indian Air Navigation System

FIR Flight Information Region

FOP Final Operational Phase

GA General Aviation

GAGAN GPS Aided Geo Augmented Navigation

GDP Gross Domestic Product

GE General Electric

GEO Geostationary earth Orbiting

GOI Government of India

GOK Government of KarnatakaGPS Global Positioning System

HIAL Hyderabad International Airport Limited

IAAMS Integrated Automatic Aviation Meteorological Systems

IATA International Air Transport Association

ICAO International Civil Aviation Organization



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ILS Instrument Landing System

IMD Indian Meteorological Department

INRSS Indian Navigation Regional Satellite System

ISO International Organization for StandardizationISRO Indian Space Research Organization

IT Information Technology

ITes Information Technology-enabled Services

JVC Joint Venture Companies

LCCs Low-Cost Carriers

MADC Maharashtra Airport Development Company

MET Meteorological

MIAL Mumbai International Airport Limited

MIHAN Multi-modal International Cargo Hub and Airport of Nagpur

MOCA Ministry of Civil Aviation

MRO Maintenance, Repair and Overhaul

MSSR Monopulse Secondary Surveillance Radars

NACIL National Aviation Company of India Limited

NDB Non-Directional Beacon

NH8 National Highway No. 8

NRI Non-resident Indians

O&M Operations and Maintenance

OAG Official Airline Guide

ONGC Oil and Natural Gas Commission

PPP Public Private Partnership

PSR Primary Surveillance Radar

PSU Public Service Unit

R-FDPS FDPS with Radar

RCAG Radio Controlled Augmentation

RJ Regional Jets

RNAV Area Navigation

RNP

RVSM

Required Navigation Performance

Reduced Vertical Separation MinimumSAARC South Asian Association of Regional Cooperation

SBAS Satellite Based Augmentation System

SESAR Single European Sky ATM Research

SID Standard Instrument Departure

SITA Societe Internationale de Telecommunication Aeronautiques



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SOW Scope of Work

STAR Standard Terminal Arrival route

TA Technical Assistance

TAR Terminal Area RadarsTDS Technology Demonstration System

TDWR Terminal Doppler Weather Radar

U.N. United Nations

U.S. United States

UPA United Progressive Alliance

US $ US Dollars ($)

USTDA United States Trade and Development Agency

VHF Very High Frequency

VOR Very High Frequency Omnidirectional Range



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SECTION 1. COUNTRY OVERVIEW: INDIA

India is the world’s second most populous country with more than 1.1 billion people,

encompassing a rich diversity of cultures, regions, and languages. India has experienced

tremendous economic and social development in recent years. Since its independence in 1947

from the United Kingdom, India has reached several key milestones [World Bank (2009)]:3

Maintained electoral democracy.

Reduced absolute poverty by more than half.

Improved literacy and health conditions.

Developed into one of the world’s fastest growing economies with an average growth rate

of about 9 percent from 2003 to 2007, and is expected to grow at an average rate of 8.5

percent from 2009 to 2011.

Emerged as a global player in information technology, business process outsourcing

(BPO), telecommunications, and pharmaceuticals.

Ranked as the world’s fourth largest economy in terms of purchasing power parity.

Although India is one-third the size of the United States and almost four times larger in terms of

population, India has a relatively small economy (approximately 7 percent of the U.S. nominal

Gross Domestic Product [GDP]). However, as the country integrates with the global economy,

which is happening at a faster pace since the economic liberalization of 1991, a greater

opportunity exists for the outside world to collaborate, cooperate, enhance trade, and increase

production of goods and services with India.

India’s development embodies contradictions, and the path to economic growth is rarely linear as

evidenced by sector inequality and the overall pace of reforms. However, what has been

accomplished in the service sector can be used as an example of what India can deliver in a

short time. Using the country’s available human resources, a supportive policy environment, and

the opportunities that a global marketplace offers, India has nurtured, led, and is now at the

forefront of a knowledge-based economy that promises to play a key role in shaping the future of

the global economy.

3See India: Country in Brief at www.worldbank.org .



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Starting from less than $1

billion per year, India’s BPO

and Information Technology-

enabled Services (ITes) sector

has become a $14 billion

industry, which represents over

a 14-fold increase in just six

years, as shown in Figure 1.

With a cumulative annual

growth rate (CAGR) of almost

70 percent, Gartner Research4

estimates that India now holds

approximately 60 percent of

the total offshore BPO and

ITes market share. Total BPO

and ITes markets are

estimated to be somewhere between $173 and $200 billion in fiscal year 2006-07. As shown in

Figure 2, the sector continued growth from year 2000 to 2005. Based on Foreign Direct

Investment, it is likely that the sector growth will continue as the economy recovers because of

India’s unique market position.

Despite this success, uneven

economic growth has spurred rising

inter-state disparities. For example,

while larger and relatively

economically advanced states have

reduced poverty by successfullyattracting private investment,

relatively poorer states—Assam,

Bihar, Chhattisgarh, Jharkhand,

Madhya Pradesh, Orissa,

Rajasthan, and Uttar Pradesh—are

lagging behind.

Private investments have been a

major vehicle fueling India’s

economic growth. As India opened

its economy during the last 15

years, foreign investments slowly began to trickle into the country. The World Investment Report

(2006) by the United Nations (U.N.) Conference on Trade and Development5

indicates that FDI in

4See http://www.gartner.com/research/ for more details.

5See http://www.unctad.org/Templates/Page.asp?intItemID=1465 for more details.

Figure 1. Offshore BPO Market: Total and India

Figure 2. Foreign Direct Investment (FDI)Stocks Inward



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India lags far behind that of China. In recent years, however, India has been more successful in

attracting FDI. A.T. Kearney6

reports that China’s FDI flows in 2008 were larger ($108.3

billion/year) and primarily capital-intensive, while FDI flows into India are comparatively smaller

($41.5 billion/year), but also skill-intensive and concentrated primarily in ITes.

While total FDI inflows into

India remain relatively

lower than China, the U.S.

has been at the forefront

of investment in India. The

Government of India (GOI)

reports that from 1991 to

2005, the U.S. invested

almost $5 billion in India

and remains India’s

second largest investmentpartner based on FDI

inflows. Figure 3 shows

that Japan, the

Netherlands, the United

Kingdom, Germany,

Singapore, France, South

Korea, and Switzerland

are some of the other

major foreign investors in India.

While the majority of U.S. FDI has focused on service provisions targeted for U.S. domestic

markets, U.S. exports to India are primarily of goods and services where it has global

comparative advantages. These exports include educational services, computers and

peripherals, telecom equipment, pollution control equipment, and equipment for mining, medical,

and construction.

Expenditures in the economy are also accelerating. Greater use of financial tools (e.g., credit

cards, automatic teller machines, and cell phone-linked money transfers) will enhance

consumption expenditure. Transition from cash to credit will likely boost the overall consumption

and induce even more FDI flows into the country.

India’s infrastructure needs a major overhaul. The World Bank conservatively estimates that India

needs to invest, on average, an additional three to four percent on planned infrastructure

improvements to sustain benefits of growth across the transportation sector. Given the presentGDP, this amount would represent an annual investment of around $24-$30 billion.

6See http://www.atkearney.com/mainfor more details.

Figure 3. India: Share of Top Investing Countries' FDI Inflows(Aug. 1991 to Sept. 2005)

Source: Ministry of Statistics and Programme Implementation: http://mospi.nic.in/



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Indian airport infrastructure investment was $5 billion in 2008 and is expected to reach $9 billion

by 2013. India’s aviation sector offers investment opportunities of $200 to $300 billion by 2020.

India is confident of overcoming temporary economic hurdles in order to continue civil aviation

growth. The current fleet replacement offers an investment opportunity of $80 billion, while $30

billion will be required for airport infrastructure development by 2020.

Many of these investments will be made possible through Public Service Unit (PSU) reforms.

Systematic reforms in healthcare, education, power, mining, water supply, and transportation will

likely induce private investments at a rapid rate, thus closing the gap between demand from an

expanding economy and supply through available infrastructure.

The GOI has guided many of these investments carefully, particularly in civil aviation. Although

full private participation, including foreign equity, is allowed and encouraged at greenfield airports,

the GOI limits private equity (both domestic and foreign) in PSUs. Thus, PPPs have become a

common vehicle for building and delivering public services, particularly in the transportation

sector. In reforming the PSUs that were former monopolies, the GOI has taken a minority role

and allowed private involvements—either foreign or Indian private or joint ventures—to use threemuch tested models (build-own-transfer [BOT], build-own-operate [BOO], or build-own-operate-

transfer [BOOT]) for service deliveries. While the needs remain great, the sudden surge in

transportation investments, particularly post-2000, demonstrates that the GOI’s policy may be

bearing fruit.

India’s recent economic growth has been impressive compared to the country’s development

record in the decades following independence in 1947. With growth, the economy has become

flexible, people-driven, and more responsive to institutions. Nevertheless, numerous challenges

remain.7

Rigid elements that once characterized the economy are still visible in certain areas

including [Khandelwal (2006)]:8

High intermediation costs in economic and business transactions,

Low productivity in many sectors of the economy,

Lack of infrastructure,

Lack of transparent corporate governance,

Need for improvement in productivity and efficiency in line with advanced markets, safety,

and environmental procedures and standards, and

Lack of trained human resources in advancing sectors of the economy.

Empirical evidence indicates that these factors are inversely related to the pace of economic

growth and development. While the regional unevenness and inequality in sectors (rural vs.

7For an excellent presentation of these issues in contemporary India, see the recently released “In Spite ofthe Gods: The Strange Rise of Modern India,” by Edward Luce, Doubleday, 2007.

8“Doing Business in India. The Big Picture: A Banker’s Perspective” by A. K. Khandelwal at the U.S.-IndiaBusiness Summit, November 29, 2006.



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urban) and across classes (skilled vs. non-skilled) is skewed and both are areas for improvement,

the pace of economic reforms will likely continue in the country. In a marked departure from

earlier policies, 1990 economic reforms that have been accelerated in recent years have started

to produce results. If the GOI continues to be fiscally responsible by managing the budget deficit,

carefully monitoring the large trade deficit, and continuing the pace of overall economic

liberalization, India will continue to improve its economic performance before the end of this

decade.



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SECTION 2. SECTOR OVERVIEW: CIVIL AVIATION

Aviation growth in India has been tremendous in recent years. Aircraft movements, consisting of

one aircraft arrival or one departure, have grown 50 percent in the last three years. Starting from

a total of less than 838,000 movements per year in fiscal year 2005-06, total aircraft movements

in India are estimated at 1.24 million in 2008-2009. Approximately 400 commercial aircraft

operated those scheduled movements. Figure 4 shows the expected future growth of aircraft

movements in India until 2017.

Figure 4. Aircraft Movements in India

Source: Airports Authority of India (AAI)

As the economy has grown at an extraordinary rate (about 9 percent in the past few years, and

forecasted to have an average 8.5 percent growth until 2011) and in addition to the liberalization

of the aviation sector, both domestic and international aircraft movements have experienced

significant growth. As a result of the open skies policy that India adopted, India now has bilateral

Air Services Agreements with 103 countries. These air service agreements are subject to several

directives: a designation clause allowing multiple destinations between countries; code share

arrangements allowing airlines from both countries to enter into code share arrangements; and atariff clause allowing free fare setting by airlines. Airlines are also no longer required to submit

fare schedules to AAI. Aviation safety and security clauses guarantee India’s compliance with the



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ICAO standards.9

Within these broad guidelines, the bilateral agreements ensure different levels

of access. For example, the agreement with the U.S. (signed in April 2005) allows the designated

airlines of one country to operate unlimited air service to and through any point in the territories of

the other country via any intermediate points and without any restriction on the aircraft type,

except cabotage.10 Under the agreements with the Association of South East Asian Nations

(ASEAN) and the South Asian Association of Regional Cooperation (SAARC),11

designated

countries are allowed to fly up to seven times per week to Mumbai, Delhi, Chennai, and Kolkata,

in addition to eighteen specific tourist points within the country. Following these agreements,

growth of international traffic skyrocketed in India.

At the opening ceremony of the Aero India conference12

, the Honorable Mr. Praful Patel, Minister

of Civil Aviation, said, “Not long ago we were spectators to the world of aviation. Today, the clock

has turned full circle and the whole world wants to know what's happening in India…I wouldn't be

surprised if that number increases to 100 million [number of domestic passengers] in a few

years.” International traffic is expected to grow at an average rate of 8 percent up to 2013 and at

7 percent from 2014 to 2023. Domestic traffic will have a slower growth rate of 3.4 percent until2013 and will increase to an average rate of 8 percent until 2023. International passenger growth

is expected to be 10 percent until 2013 and 9 percent from 2014 to 2023. Corresponding

domestic passenger growth is expected to be very low until 2013, but will pick up from 2014 to

2023 at a rate of 8 to 10 percent annually. Annual growth in domestic and international cargo

operations also is estimated to increase by 4.5 percent and 12 percent annually until year 2013.

For a country of more than one billion people with a sizeable middle class (200-250 million) that

can afford air travel, the size of the aviation sector is relatively small. While the U.S. has, on

average, 50,000 commercial scheduled aircraft movements per day, India has a little over 2,200

each day. Furthermore, much of the traffic flow is located in the five major cities of the country:

Mumbai in the West; Delhi in the North; Bangalore and Chennai (Madras) in the South; and

Kolkata (Calcutta) in the East, as shown in Figure 5.

9See “India’s Internal and External Policies and Challenges”, by R. K. Singh, Joint Secretary, MOCA at theEU-India Aviation Summit, November 22-24, 2006; Retrieved fromhttp://www.euindiaaviationsummit.com/ on March 6, 2007.

10Cabotage means transporting domestic passengers within a country for commercial purpose.

11

Association of South East Asian Nations and South Asian Association of Regional Cooperation. ASEANwas formed on August 8, 1967 and presently consists of the following member countries: Brunei,Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. SAARCwas established on December 8, 1985 and composed of the following member countries: India, Pakistan,Bangladesh, Sri Lanka, Nepal, Maldives, and Bhutan.

12This conference was organized by MOCA, the Federation of Indian Chambers of Commerce, andIndustry (FICCI), and Farnborough International Limited and took place in Bangalore during February 7-11, 2007; See http://aeroindia.gov.in/ for more details.



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Figure 5. Traffic Network in India

Source: Official Airline Guide (OAG): August 1-7, 2005; from Williams (2006)

These five major cities make up almost 70 percent of the traffic, with Bangalore (recently

renamed Bengaluru) and Hyderabad emerging as new traffic destinations.

In the past, India had few international tourists. However, liberal bilateral aviation pacts with other

countries have started to impact tourism, as shown in Figure 6.



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Figure 6. International Tourism: In and Out of India

Trends in International Tourism: Projections for India

Source: Market Indicators and Forecasts, India May 2009, Copyright 2009 Economist Intelligence Unit

Given this sizable growth and the state of aviation infrastructure, MOCA faces numerous

challenges. The most critical among these is the country’s need to improve infrastructural

bottlenecks. The Committee on Infrastructure, headed by the Prime Minister and other experts

from both inside and outside the federal United Progressive Alliance (UPA) cabinet, has taken up

the urgent task of improving the country’s infrastructure. According to the GOI/MOCA’s estimate,the aviation sector alone will need over $9 billion in investment by 2013. This figure represents a

significant boost over prior investments, and will test the absorption capability of the sector and

the country as a whole. It is likely that most of these investments will come from private sources,

as opposed to direct government subsidies or public funds. A breakdown of these investments is

given in Table 1.



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Table 1. Planned Investments in Indian Aviation Infrastructure

Particulars AirportIndicative Cost

US $Million

Restructuring/Modernizationfor world class airports

Delhi & Mumbai

Chennai & Kolkata

3,488.37

1,162.79

Greenfield Airports Bangalore, Hyderabad, Pakyong,Sikkim, Cheithu-Nagaland, Itanagar,Goa, Pune, Nagpur (Hub), NaviMumbai, Halwara-Punjab

2,325.58

Upgradation 35 selected airports 1,627.91

Modernization/Improvement Other than above airports 697.67

Total investment by 2013 9,302.33

Source: Committee on Infrastructure as reported by MOCA, GOI, October 2006.http://www.infrastructure.gov.in/airports.htm

Traffic growth and the GOI’s decision to accelerate aviation infrastructure development—prior to

the Commonwealth Games to be held in Delhi in 2010—have accelerated the reform process.

Currently, a foreign airline is not permitted to invest in Indian scheduled passenger airlines, non-

scheduled airlines, and chartered airlines. Equity ownership is likely to be further relaxed to

facilitate new investments in the sector. Limited equity share ownership of FDIs may be relaxed

from its present 49 percent cap to 74 percent for airline-airport investments under the pending

aviation reform bill. Similarly, there is a possibility of cargo being placed under 100 percent

foreign ownership. Finally, foreign equity of 100 percent is already allowed in Greenfield airportsinvestment.

The GOI’s decision to liberalize the aviation market for private airlines, slowly in the beginning

and then rapidly over the last five years in particular, has brought tremendous interest from both

low-cost carriers (LCCs) and full-service carriers.13

This interest is reflected in the airlines’ order

book, which shows that the Indian fleet will double in size (from 287 to 745) over the next five to

seven years.14

The projections indicate that the Indian aviation sector will require about 1,000

aircraft by 2020. Figure 7 highlights current orders of new aircraft by specific airlines.

13This liberalization is far from complete. Numerous regulatory hurdles still exist today. In the past, the GOI

maintained the monopoly rights of Indian Airlines and Air India over the Middle Eastern and Gulf markets.However, with the incorporation of NACIL, the Competition Commission may rule in favor of allowingprivate carriers to fly into these markets as well.

14Over the next two decades, Boeing forecasts that India will need 856 extra aircraft worth a total of US $72billon. Airbus, on the other hand, forecasts that the country will need 1,100 aircraft worth US $105 billionover the same period. In their respective forecasts [see www.boeing.com; and www.airbus.com formarket forecasts], both companies note that improvements in the aviation infrastructure would tend toeven faster growth.



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Figure 7. Orders of New Aircraft by Specific Airlines (2009)

India’s largest airline company is actually a combination of two state-owned carriers, plus

subsidiaries. The GOI formed the National Aviation Company of India Limited (NACIL) to merge

Air India and Indian Airlines, consolidating international and domestic flight operations. The

NACIL inherited flights from Mumbai and 12 other cities as well as flights to 28 international

destinations from Air India. In addition, the NACIL inherited domestic operations from 58 airports

in India and 18 international destinations from Indian airlines. The NACIL also code-shares flights

with other operators to Europe, North America, Asia Pacific, and the Middle East. The NACIL

inherited 115 aircraft from the two airlines and has 68 new aircraft on order to be delivered by2012. The NACIL also recently launched a low-fare airline with 21 B-737-800 aircraft fleet

operating from 16 Indian cities to 14 international destinations, mostly in the Middle East.

India has large GA operators as well. For example, Pawan Hans Helicopters Limited is a GOI

helicopter operator established in 1985. It has a fleet of 36 helicopters servicing Oil and Natural

Gas Commission (ONGC), Hydroelectric Power Corporation Limited, ministry of home affairs, the

state governments, the North Eastern States, as well as other remote inaccessible areas.

Expanding aircraft fleets over a very short period time has put operational and safety agencies

under tremendous strain. Broadly speaking, MOCA has two autonomous agencies described in

Section 3 that are entrusted with the country’s air traffic operational and safety needs: the Airport

Authority of India and the Directorate General of Civil Aviation.



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SECTION 3. SECTOR OVERVIEW: INSTITUTIONAL ARRANGEMENTS

The civil aviation sector in India is under the union (or federal) jurisdiction of MOCA [see

http://civilaviation.nic.in/] and headed by the Honorable Minister Praful Patel. At present, the

federal government is led by the UPA.

AAI was formed on April 1, 1995 by an act of the Indian Parliament and was assigned the

following responsibilities:

Design, construction, and maintenance of aerodrome infrastructure.

Commercial utilization of this infrastructure.

Management of Indian air space.

Provision of route navigation facilities to aircraft flying in Indian air space.

AAI is responsible for airport operations and management, except for the two metro airports in

New Delhi and Mumbai and two Greenfield airports in Bangalore, Hyderabad. Additionally, AAI

meets air traffic service needs by providing the CNS services.

The DGCA is primarily responsible for overseeing the airworthiness certification, licensing, and

operations safety, and ensuring proper standards and procedures.

Recently, the Ministry of Civil Aviation also established an Airport Economic Regulatory Authority

(AERA) as an independent regulator to facilitate the development of airports. The AERA will also

approve tariff structure and user fees, as well as monitor quality, continuity, and reliability of

service provided by the airports under their purview with an annual passenger throughput

exceeding 1.5 million.

Section 3A. Ministry of Civil Aviation and Airports Authority of India

The minister is an elected official and a member of the federal cabinet. The organizational

structure of the ministry is given in Figure 8.



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Figure 8. Organizational Structure of the Ministry of Civil Aviation

A senior civil service official, called the Secretary, serves as the functional head of the Ministry.

Depending on the structure and workload, the Secretary is assisted by additional and joint

secretaries. In addition, MOCA now has one additional secretary and a financial adviser, three

joint secretaries, several directors, and deputy secretaries. At present, ministry functions are

distributed over 16 sections and an administrative wing that oversees pay and accounting [see

http://www. Civilaviation.nic.in/ for more detail].

In addition to framing policies, MOCA provides policy guidelines, monitors and evaluates

performance, and facilitates interactions with the federal elected body (called Parliament) and the

organizations listed above. Furthermore, MOCA supervises implementation of special programs

(e.g., minority reservations).Under the ministry, three organizations have direct influence over the daily functioning of civil

aviation in the country. In addition to NACIL, AAI, DGCA, and BCAS are three of the most

important organizations in the civil aviation system. AAI is directly responsible for safe and

efficient functioning of both airports and air navigation service provisions at the airport terminals

and en route, BCS is responsible for security, and the DGCA is the regulatory authority over civil

aviation in the country. Figure 9 shows the broad organizational structure of AAI.



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Figure 9. Corporate Functioning of AAI

Source: http://www.aai.aero/about_us/aai_organisationalstructure.jsp

In addition, there are parallel agencies that oversee different aspects of AAI in particular and civil

aviation in general. For example, the Finance Controller and the Joint Secretary of MOCA

oversee the financial and operational functioning of AAI while representing the sector in the

parliamentary and union ministry discussions and decisions. The DGCA, on the other hand, has

the regulatory authority over the civil aviation while the Bureau of Civil Aviation Security is

responsible for civil aviation safety and security [see http://www.moca.gov.in/ for more details].



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The financial profile of AAI is fairly robust (see Table 2 below). At present, there are 11

international airports (excluding Delhi and Mumbai and three civil enclaves), seven custom

airports where aircraft can land and take-off to and from international destinations, 26 civil

enclaves (Goa, Srinagar, and Bangalore are declared international airports), 89 domestic airports,

and two joint venture airports (Delhi and Mumbai). Altogether, there are 86 operational and 41

non-operational airports under the direct jurisdiction of AAI (See Appendix for an overview of the

locations and airport infrastructure in India). AAI provides CNS/ATM services to all civil airports,

air navigation services, and the entire civil airspace in India.

Table 2. Financial Profile of AAI

Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Revenue

US $Million 482.77 512.79 565.72 644.60 750.63 801.34 922.41 836.75 869.90

Expenditure

US $Million 380.18 405.90 448.74 497.33 490.72 472.45 548.36 603.75 679.88Profit Before

Tax

US $Million102.49 106.89 116.98 147.27 259.91 328.89 374.05 233.00 190.03

Profit AfterTax

US $Million57.42 60.65 67.24 69.97 154.33 184.71 232.66 139.80 114.02

Source: MOCA http://civilaviation.nic.in/reports/Annual%20Report%2009%20English.pdf

1. Joint GOI/Private Partnership for Airport Development

Ownership of the Mumbai and Delhi airports was transferred to Mumbai International Airport

Limited (MIAL) and Delhi International Airport Limited (DIAL) in May 2006. However,management of these two airports was not transferred until September 2006. Both groups are

now held by a PPP model that is the primary instrument for reforming not only these two

extremely important Indian airports but also the entire airports sector. Instead of completely

privatizing airports, the GOI has decided to form joint venture partnerships in the form of PPPs.

While most of the project risks are shouldered by the private owners, the public/government

sector shares the rewards. Thus, the public sector would typically share in additional revenues or

profits if the PPP achieves greater results than expected in the plan. This anticipated result is

common in PPP agreements.15

15The present arrangement appears to be no deterrence to further private sector involvement judging fromthe recent developments in the sector. For example, Delhi’s DFS Construction Limited has formed apartnership consortium with Austria’s Vienna International Airport; Tata Group has formed a partnershipconsortium with Singapore’s Changi International Airport in early 2007. Similar partnerships are expectedin the future as MOCA and AAI firm up the liberalization process even more.



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DIAL is led by the GMR Group16

consortium, while MIAL is led by the GVK group consortium17

.

The ownership composition of the Bangalore International Airport Limited (BIAL) is given as an

example. The Government of Karnataka (GOK) [http://www.karnataka.com/watch/blr-airport],

and AAI together hold 26 percent ownership, representing public or government interests, while

the private entities hold the rest: Larsen & Toubro, India with 17%; Germany’s Siemens AG with

40%; and Unique Zurich International Airport with 17%. A similar structure of equity ownership

exists for the other three airports that are under PPP.

16GMR Group of India is a private business group focused on developing infrastructure in India.

17The GVK-SA Consortium consists of Airports Company South Africa (ACSA), Bidvest Group Limited Indiaand GVK Industries of India. The Consortium was awarded a contract in 2006 valued at US$1.5 billion tomodernize Mumbai airport.



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Section 3B. Directorate General of Civil Aviation

The DGCA is the regulatory authority of Indian civil aviation. It ensures the safety of operations by

issuing appropriate certifications and licenses designed to guarantee air worthiness of aircraft

within the Indian airspace and also by providing inspections to flight operations. In addition, theDGCA issues civil aviation requirements and conducts other procedures.

1. The Organizational Framework

The organizational structure of the DGCA is presented in Figure 11. [See http://dgca.gov.in/]

Figure 10. Organizational Structure of the DGCA

2. The Regulatory Framework

The guiding regulatory framework for civil aviation is referred to as Civil Aviation Requirements

(CAR). The CAR is defined in Section 3, Air Transport, Series C, Part II, issued in 1994. It

stipulates the minimum requirements for granting permission to operate and maintain scheduled

passenger air transport services in the country [see Gohain (2006)18

and

http://dgca.gov.in/operator/sch-ind.htm for more detailed discussions on requirements].

A scheduled operator's permit can be granted to:

A citizen of India.

18“Airline Operations Regulatory Issues in India,” K. Gohain; DGCA, internal document, 2005.



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A company or a corporation provided that:

o It is registered and has its principal place of business within India.

o Its chairman and at least two-thirds of its directors are citizens of India, and

o Its substantial ownership and effective control is vested in Indian nationals.

Furthermore, an airline wishing to operate international air services (under the existing numerous

bi-lateral agreements) must receive permission from both MOCA and the aeronautical authorities

of the destination country.

In order to receive a permit for scheduled operation, an applicant is required to show the

following:

A subscribed equity capital of $2.3 to $7 million, depending upon the types and weights

of aircraft.

A fleet of five or more aircraft either directly owned or leased with maximum certified

take-off weight of 5,700 kilograms (kg) and other category of aircraft carrying passengers

acceptable to DGCA. However, to facilitate initiation of operations, scheduled operators

are allowed to operate with three aircraft and given one year to expand the fleet size to

five. The aircraft should be registered in India with a current certificate of airworthiness in

the normal passenger category.

The existing Aircraft Rules (#60 of 1937) require that all registered aircraft be in

possession of a Certificate of Airworthiness. Therefore, it is mandatory to have approved

maintenance schedules. Maintenance and repair can be accomplished by reputable

organizations, but operators are encouraged to establish their own facilities within the

country.

A sufficient number of flights and cabin crews are required, depending upon the size of

the aircraft. The flight crew must possess current licenses issued by DGCA.

For meeting operations and maintenance requirements, the operators are required to prepare the

following manuals [see http://dgca.gov.in/operator/gm-aero.htm for detailed directives]:

Operations manual in accordance with CAR Section 2, Series O, Part X. The manual

should contain the operations procedures and policies to be adopted during operations.

Maintenance Control (Quality Control) manual in accordance with CAR Section 2, Series

E, part I. This manual will describe the operator’s quality control and maintenance

policies.

Training manual for flight crew and cabin crew.

There are numerous other requirements that an operator must follow. Among them:

Fares charged by the airlines have to be submitted at least 90 days before the proposed

implementation date. However, this can be shortened by the DGCA. The airlines are also

required to submit their proposed flight schedules (i.e., types of services, frequency,



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types of aircraft, and flight itineraries) with the DGCA for approval at least 30 days prior to

the planned commencement of services.

Operators are required to pay aeronautical charges and non-aeronautical charges.

Aeronautical charges include landing and parking charges and route navigation

facilitation charges. Non-aeronautical charges include fees to be paid by the airlines

toward security requirements and facilities leased in the terminal building and operational

areas.

The operator is required to submit information relating to operational, engineering, and

commercial and financial performance to the DGCA.

The operator is required to submit statistical data on operations (i.e., capacity,

passengers carried, number of aircraft flown, cargo carried) to the DGCA before the 10th

day of every month.

The scheduled operators shall issue passenger tickets in accordance with the provisions

of the Carriage by Air Act, 1972. The tickets shall stipulate the conditions of carriage,including the liability of the operator.

The operator is required to maintain current insurance for an amount adequate to cover

its liability towards passengers and their baggage, as well as crew, cargo, hull loss, and

third party risks in compliance with the requirements of the Carriage by Air Act, 1972, or

any other applicable law.

India’s regulatory environment [see http://dgca.gov.in/ for more details] is fairly similar to that of

other countries.19

However, two regulatory requirements unique to India are worth mentioning:

social routing and aviation turbine fuel (ATF) tax. The route dispersion guidelines are guided by

the Route Dispersal Guidelines of March 1, 1994, issued by the DGCA. In accordance with these

guidelines, all routes are divided into Categories (CAT) I, II, IIA, and III. CAT I routes link the mostprofitable 12 trunk routes that link the major metropolitan cities directly. These include: Mumbai-

Bangalore, Mumbai-Chennai, Mumbai-Delhi, Mumbai-Hyderabad, Mumbai-Kolkata, Mumbai-

Trivandrum, Delhi-Bangalore, Delhi-Chennai, Delhi-Hyderabad, Kolkata-Bangalore, Kolkata-

Chennai, and Kolkata-Delhi. CAT II routes consist of stations in Jammu and Kashmir, north-east

region, Andaman and Nicobar and Lakshadweep Islands. CAT IIA involves routes that are

exclusively within destinations in Jammu and Kashmir, the northeast region, Andaman and

Nicobar and Lakshadweep islands. Finally, CAT III consists of routes other than those included in

CAT I and II.

Under the present route guidelines, scheduled carriers are required to deploy a specified

percentage of capacity deployed (i.e., social routing) in CAT I routes in CAT II, IIA, and III routes

as per the following specifications: CAT II will have at least 10 percent of capacity deployed on

routes in CAT I; CAT IIA will have at least 10 percent of capacity deployed on routes in CAT II;

19These are laid out in Federal Aviation Rules (FAR) 49 of the U.S. Code of Federal Regulations (CFR) forthe U.S. carriers. See www.usdot.gov for more details.



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and CAT III will have at least 50 percent of capacity deployed on routes in CAT I. Clearly, these

social route allocations are restrictive and may obstruct carriers’ natural development of networks

based on economic forces and operational considerations (e.g., maintenance and crew, over-

night positioning).

Airlines are required to pay passenger-related charges on the airside (i.e., aeronautical fees) and

ATF tax. These fuel taxes are charged on all turboprop and turbofan aircraft operated by

scheduled air carriers. The present tax regime does not provide any incentive for air carriers to

operate smaller aircraft to secondary or smaller airports (i.e., Tier II and III airports). If some tax

incentives for smaller aircraft with less than 100 seats were introduced,20

for example, regional

jets (RJs) may be induced to fly to smaller cities. These incentives may induce RJ expansion in

India by encouraging a point-to-point network. The load of congestion on major metro airports

may also lessen once the secondary cities develop air traffic. A number of concessions to the

small aircraft operations, such as the waiver of aeronautical charges, are already in place.

Regulatory reform in civil aviation is relatively new in India. The past decade has seen significant

development in the aviation sector, a part of which is clearly driven by sustained overall economicgrowth. Factors such as enhanced competition, increased efficiency, and growing access to

markets in such a short period of time are facilitated by gradual liberalization of the sector, which

is expected to continue with the budget for the next fiscal year and with the pending aviation bill.

20Smaller aircraft have been given ATF tax benefit in the latest budget that was submitted on February 28.



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SECTION 4. SECTOR OPPORTUNITIES

India is in the middle of a transition in its civil aviation sector. A large part of how the sector will

develop and its success depends on how quickly the infrastructure bottlenecks are removed to

accommodate the growing demand. This process took a concrete step forward with MOCA/AAI’s

decision to put two Greenfield airports at Bangalore and Hyderabad under PPP. The first private

airport was Cochin International Airport Limited (CIAL), which began operations in June 1999.

The liberalization process continued with the decision to put the two most important operational

airports, Mumbai and Delhi, under PPP in May 2006. Similar plans are in the early stages of

development for other airports. With these developments, however, comes the need for

associated improvements in overall ATM. Although AAI has already undertaken some

improvements, private stakeholders may also be involved in the decision process. However,

numerous new opportunities will only become visible as the sector grows and the needs of

different stakeholders are met.

U.S.-India Aviation Cooperation Program

The U.S.-India Aviation Cooperation Program was established in 2007 as a PPP between the

U.S. FAA, USTDA, U.S. aviation sector companies, and the GOI. The ACP supports the growth

of Indian civil aerospace sectors and joint development projects with collaborative cooperation

among U.S. and Indian stakeholders. ACP objectives include:

Advance cooperation and activities among U.S. Government Agencies and industry.

Enhance awareness in India to facilitate access to U.S. aviation expertise, technologies,

and best practices.

Promote cooperation between U.S. and India for aviation safety airport/airspace security,

regulatory oversight, and ATM.

Provide training and technical guidance for performance based operations.

ACP focus areas include:

ATM modernization.

Airport/airspace capacity analysis, planning, and development.

Aviation human resource development.

Aviation support industry development.

Aviation safety, efficiency, and security enhancements.

The panorama of the infrastructural opportunities ranges from advanced projects, such asKulkada, Chennai, and 35 non-metro airports, to those that are now being expanded, such as

Mumbai and Delhi. Due to the nature of the partnerships at Mumbai and Delhi, these projects

may provide open competitive business opportunities to U.S. firms. These and many other

projects will continue to be detailed and developed in the coming years. Accordingly, it is

imperative that companies seeking involvement in the growing Indian market engage at the

earliest possible stage with a keen understanding of the need of the stakeholders—owner-



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operators at the airports, AAI, and others—thus yielding fruitful commercial positioning in the

years to come.

Section 4A. Airports: Selected Opportunities

This section provides a broad overview of airports, locations, trends, the challenges faced, and

the types of business opportunities offered. Some opportunities are already well defined and in

progress, while others continue to be developed.

1. Opportunity for Airport Modernization and Expansion

(a) Delhi and Mumbai Airport Modernization and Expansion

Two of the first four airports that transformed through a PPP are the DIAL and MIAL. On May 3,

2006, the airports at Delhi and Mumbai were handed over to PPP joint venture groups. The other

two airports that are under PPPs are BIAL and Hyderabad International Airport Limited (HIAL).

Figure 12 shows the DIAL, a consortium of partners.

Figure 11. Consortium of Partners

The private consortium (GMR, Fraport, ERAMAN, and IDFC)21

holds 74 percent of equity, while

the public/AAI holds the remaining 26 percent [see www.gmrgroup.co.in for more details].

MIAL is a consortium led by the GVK group with Airports Company of South Africa (ACSA) and

Bidvest holding 74 percent equity while AAI holds the remaining 26 percent [see www.gvk.com

for more details].Delhi and Mumbai are the two major gateway airports in the country. Together, they still account

for over 50 percent of total passenger traffic. Under the arrangement of the PPP, both airports

submitted their master plans in December 2006 to AAI for review and acceptance. DIAL’s master

plan foresees the construction of a new integrated passenger terminal (No. 3) that will serve both

domestic and international traffic. Terminal 3, according to the master plan, will be ready before

the Commonwealth Games in Delhi in 2010. In the first phase, the airport will be able to handle

34 million passengers a year [http://www.newdelhiairport.in/new-terminal-building.asp].

Ultimately, the master plan envisages a capacity of 100 million passengers per year. Figure 13

highlights a percentage share of passenger traffic at six major airports.

21GMR Group of India is a private business group focused on developing infrastructure in India; Fraport isthe owner-operator of the Frankfort International Airport; Eraman is a wholly-owned retail subsidiary ofthe Malaysia Airport Holding. Infrastructure Development Finance Corporation is a private equity firm setup following the GOI Infrastructure panel’s recommendation.



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Figure 11. Share of Passenger Traffic at India’s Top Six Airports22

Source: http://www.centreforaviation.com/

The Mumbai airport modernization and expansion program is ongoing with an estimated cost of

$1.96 billion. The airport enhancements include construction of a new integrated Terminal 2 at

Sahar for 24-hour domestic and international operations, a new parallel taxiway with a new Air

Traffic Control (ATC) tower, construction of a modern cargo complex, and construction of

Terminal 1C. When the airport modernization and expansion is complete, the airport will be able

to handle 40 million passengers and one million tons of cargo per year. There will be 66

passenger boarding bridges and 106 aircraft parking spaces.

Under the PPP arrangement, Delhi airport as a whole, and Terminal 3 in particular, will deliverworld-class services. For example, Terminal 3 would have 55 contact stands (i.e., aerobridges)

and 30 remote parking bays for passenger embarkation and disembarkation. It is projected that

over 90 percent of the passenger traffic at Terminal 3 would be handled by aerobridges by 2010.

Furthermore, six of these 55 aerobridges will be Airbus A38023

compatible.

Under the proposed Master Plan, runways would be made A380 compatible as well. In

preparation for the A380, a new runway Code F measuring 4,439 meters is now operational. The

proposed runway will require that two instrument landing systems (ILS) (one CAT IIIB and the

other CAT I) and one Doppler Very High Frequency Omnidirectional Range/Distance Measuring

Equipment (DVOR/DME) are equipped. A new domestic terminal with annual capacity of 10

million passengers would also be operational before the Commonwealth Games of 2010. The

existing international terminal (Terminal 2) is also modernized and upgraded. Finally, cargo

22Indian Sub-Continent Airports – Capital Investment Programmes, Brooks Market Intelligence report, MackBrooks Exhibition Limited, 2009.

23Airbus’ A380 will be the largest wide-body aircraft in history. With seating capacity ranging between 550and 800, the A380 as of October 2007 is now in service.



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operations would remain in its present location until further expansion requires that they move to

a new location

[See http://www.gmrgroup.co.in/airports_news_item_DIAL_PR_6Dec06.html for more details].

While the Delhi airport has considerable advantage of future expansion (with almost 4,500 acres)

and scope for redesigning, Mumbai airport is severely land-constrained with a total of 930 acres.

Additionally, nearby residential neighbors severely encroach upon many areas. Clearly, this

makes Mumbai’s expansion very difficult, calling for innovative ATM solutions for both runways

and airspaces. Given this constraint, MOCA/AAI has recently decided to undertake construction

of a new Greenfield airport outside the city.

In addition to these difficulties, another concern facing Indian airports (Delhi in particular) is the

lack of visibility during the winter months. On average, Delhi has 32-35 days of dense fog that

severely delay air traffic movements. Due to Delhi’s connections to international and domestic

destinations, these delays can affect the entire country. In order to mitigate this persistent

problem, Delhi’s ILS serving runway 28 has been upgraded to CAT IIIB. To facilitate the runway

movements, Advanced-Surface Movement Guidance and Control System (A-SMGCS) Level 2has been procured from the Sensis Corporation and implemented at Delhi. Similarly, ILS at

Kolkata has been upgraded to CAT II level. ILSs at other major airports in the northern region,

including Lucknow and Jaipur, have been proposed for upgrade to CAT II as well. In order to fully

utilize the benefit of ILS runway equipment, particularly in CAT IIIB, pilots are required to be

trained in avionics-compatible aircraft. While many new aircraft are appropriately equipped, many

of the present air carriers have not trained their non-Indian pilots on CAT IIIB equipment due to

cost restrictions.24

In the mid- to long-term, AAI would like to implement Differential Global Positioning Systems

(DGPS) at the stations where ILS is either not convenient or not feasible. Air ground digital

communication will be implemented when technology matures. Surveillance coverage will beenhanced over the northeastern part of the country, one of the priority areas for AAI. As the

Automatic Dependent Surveillance-Broadcast (ADS-B) technology becomes mature in the

country, it will help provide backup en route surveillance aid. Finally, AAI plans to integrate air

traffic services (ATS) and meteorological (MET) information for smooth and efficient ATM

operations.

With gradual implementation of master plan activities, many of these difficulties, particularly those

related to the infrastructure of Delhi airport, may slowly be resolved. The construction of new

terminals, a new runway, and reconfiguration of the existing taxiways (e.g., rapid exit taxiways)

will likely remove many of the operational difficulties faced by the airport terminal, ATC, and the

airlines.

24At the end of 2006, ILS-compliance training cost was estimated to be, on average, US $4,600 for eachpilot. For many Indian air carriers that are running substantial operational losses, this is an expensiveundertaking.



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Salient features of Delhi Airport’s Master Plan include:

State-of-the-art integrated terminal to be ready in 2010,

New domestic terminal,

Third runway, among the longest in Asia, will be capable of handling A380 sized aircraft,

Airport to have an ultimate design capacity of 100 million passengers per annum, and

High-speed metro connectivity with city-center, six-lane access road to airport from

National Highway No. 8 (NH8).

The entire modernization in Phases I and II is estimated to cost around $3.6 billion. Numerous

business opportunities, including terminal services (i.e., site preparation, passenger terminal,

airside and landside works, and boundary wall) will likely open up in the near future.25

Additionally, the following items are likely to be procured at the Delhi airport:

Heating, ventilation, and air conditioning system,

Lighting system,

Building automation,

Hydro services,

Elevators and escalators,

Water treatment plant, and

Baggage handling.

(b) Modernization of Airports at Chennai and Kolkata

After completing PPP arrangements at four metro airports (including Delhi, Mumbai and twogreenfield airports at Bangalore and Hyderabad), AAI plans to undertake similar reforms at

Chennai (formerly Madras) and Kolkata (formerly Calcutta) airports.

The Chennai Airport has been experiencing mostly steady growth over the last nine years. The

airport director expressed confidence that double-digit growth in domestic air transportation is

likely to continue for international passengers at an average growth rate of 8 to 9 percent per

annum over the next five years. With Lufthansa operating a direct service from Frankfurt, the

airport should be poised to attain significant growth.

In addition to Chennai’s role as a base for automobile manufacturing and accessories, it has been

receiving spillover Information Technology (IT) investments from Bangalore. Chennai sits at a

triangle between Bangalore and Hyderabad and holds huge promise in terms of trafficdevelopment. The corridor between Chennai and Madurai is also developing as the new hub for

IT activities, giving Chennai a unique advantage.

25The GMR consortium signed on L&T, India, in February, 2007 to undertake these construction activities.It is important to note here that L&T is a key private sector partner in BIAL as well.



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Planning for new airport and/or reforms and modernization at Chennai has already begun. The

Government of India approved a plan for modernization and expansion in August 2008. The

modernization efforts include construction of the Domestic Terminal, extension of the existing

Anna International Terminal, extension of a secondary runway across Adyar River by 830 meters,

construction of parallel taxi tracks, and ten parking bays. The construction is expected to be

completed by 2010. After completion of the work, Chennai airport will be able to handle 24 million

passengers annually.

The modernization and reform programs at the Chennai airport can be summarized as follows:

Work is in progress for:

– Construction of 10 parking bays,

– Expansion of international terminal and construction of a domestic terminal,

– Construction of warehouse,

– Tenders issued for building integrated cargo complex Phase-II with an estimated cost

of about $26 million, and

– Extension of secondary runway by 830 meters.

Construction is planned for:

– Domestic terminal Phase-II; Competition finalizing international architectural designconsultant has been recently completed,

– Construction of a parallel runway, and

– Next-level development of the integrated cargo complex: Phase-III and IV costing$139.5 million.

Policy discussion involving land acquisition (10 km away from the old airport) at Sriperumbudur

and limited processing has begun with the goal of establishing a new airport. The budget for the

new Chennai airport is $430 million.

The Government of India approved construction of an Integrated Passenger Terminal Building at

Kolkata Airport to handle 20 million passengers annually. The contract for construction was

awarded in October 2008 and the building construction will take about 30 months. In addition, the

Kolkata airport will have an extension of its secondary runway by 400 meters and construction of

associated taxi tracks, apron, parking bays, and two rapid exit taxiways. This work is in progress

and expected to be completed by 2010.

Work is in progress for:

– Construction of 21 additional bays, and

– Extension of domestic security-hold area with three aerobridges costing $23.3 million.

Construction is planned for:

– Development of a modern integrated cargo complex with state-of-the-art technology,

– An international terminal with aprons for 10 aircraft,

– A third runway, and



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– A new maintenance hangar.

An International architectural design competition was held for international departure building,and terminal design has been selected. The tentative cost of Phase-I is $52.3 million.

An international architectural design competition for domestic terminal building is also planned;

the short-listing of consultants for this purpose has been completed.

The sponsors for the modernization of Chennai and Kolkata airports are AAI and the state

governments of Tamil Nadu (for Chennai) and West Bengal (for Kolkata).

Source: India Ministry of Civil Aviation Annual Report 2008 – 2009

http://civilaviation.nic.in/reports/Annual%20Report%2009%20English.pdf

(c) Modernization Programs at 35 Non-Metro Airports

Under the directives from MOCA, AAI plans to modernize and develop 35 second-tier, non-metro

airports. A list of these airports is given in Table 3.

Table 3. Non-Metro Airport Development

Selected 10 Non-Metro Airports 25 Non-Metro Airports

Ahmedabad

Amritsar

Guwahati

Jaipur

Udaipur

Thiruvananthapuram

Lucknow

Goa

Madurai

Mangalore

Agati; Aurangabad; Khajuraho; Rajkot;Vadodara; Bhopal; Indore; Nagpur;

Vishakapattanam; Tiruchi; Bhubaneswar;Coimbatore; Patna; Port Blair; Varanasi;

Agartala; Dehradun; Imphal; Ranchi; Raipur;Agra; Chandigarh; Dimapur; Jammu; Pune.

Source: AAI

Out of these top 35 airports, 10 have been selected to focus on first, with the remaining 25

chosen in five packages of five airports for modernization and perhaps reforms, possibly through

PPP.26

Procedures for developing the airport projects usually involve preparing justification and

feasibility reports. AAI was supposed to select a global technical assistance (TA) consultant to

undertake the technical feasibility of development of the top 10 non-metro airports. The outcome

of the TA-prepared feasibility analysis will prepare the Scope of Work (SOW) documents, which

26AAI has developed a strategy to attract private investment for non-metro airport modernization program.MOCA has indicated that it may offer PPP instrument in packages of 5 non-metro airports rather thanallowing PPP in individual non-metro airports.



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will include the technical requirements (i.e., engineering, IT, system integration).27

Companies

who are interested in participating in these projects are encouraged to receive a copy of the

feasibility analysis.

In addition, new terminal building construction is in progress or planned at the following airports:

Agatti, Ahmedabad, Aurangabad, Jaipur, Mangalore, Raipur, Trivandrum, Udaipur, and

Visakhapatnam. Expansion of terminal buildings is under way at Amritsar and Nagpur. Parking

stands and taxiways are being constructed at Agartala, Bhubaneswar, Coimbatore, Guwahati,

Jaipur, Khajuraho, Madurai, Mangalore, Trichy, Udaipur, and Visakhapatnam. Finally, expansion

of apron and runways has been undertaken at Bhubaneswar, Dehradun, Madurai, Raipur, Trichy,

and Visakhapatnam.

The development of these airports will cost US$1.6 billion. The AAI will sponsor development with

participation from the respective state Governments where the airports are located as well as the

PPP.

(d) Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN)

The Indian government has formed a Maharashtra Airport Development Company (MADC) for

the development of MIHAN at a cost of about $90 million. The airport master plan includes:

Extending runway by 400 meters,

Provision for an additional runway of 4,000x60 meters,

Airport terminal building,

50 aircraft parking spaces,

Maintenance, Repair and Overhaul (MRO) provision and

Exclusive cargo complex.

These airport upgrades will be able to support 14 million passengers and 0.87 million tons of

cargo annually.

27AAI has opted for putting most of these works under global tender. These and numerous otherprocurements are done routinely through the global tendering; information is available at thewww.aai.aero.



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(e) Completion of Greenfield Airports at Bangalore and Hyderabad

Under the PPP arrangement, the completion and operation of Greenfield airports at Hyderabad

(located at Shamsabad) and Bangalore (located at Devanhalli) is most notable. For both BIAL

and HIAL:

Joint Venture Companies (JVCs) have been set up with an equity distribution of 74

percent with private partners and 26 percent with AAI and state governments (Karnataka

for BIAL and Andhra Pradesh for HIAL).

JVCs are responsible for overall development and management of airport infrastructure

at these airports, and ATS will be provided by AAI. These airports are already in

operation.

In addition to these two relatively large projects, three more Greenfield airports are being planned

in the northeast region of the country:

Pakyong Airport – Gangtok, Sikkim (to accommodate Avions de Transport Regional

(ATR)72 Aircraft):

– A detailed project report (DPR) has been prepared and forwarded to the PlanningCommission for further deliberations. Estimated cost is Rs. 340 Crores (US $79.07million including land cost). The work for Pakyoung Airport has been awarded.

28

Cheithu Airport – Kohima, Nagaland (to accommodate ATR 72 aircraft):

– A consultant has been appointed for a techno-economic feasibility study. Survey is inprogress.

Itanagar Airport – Meghalaya (to accommodate ATR 72 aircraft):

– The Banderdeva site appears to be technically feasible. At present, consultants arebeing appointed for a techno-economic feasibility study.

The development of these three airports from the Northeast region is at an early stage. Therefore,

procurement opportunities at different stages should be available to U.S. businesses.

Proposals for development of some Greenfield airports have been received from state

governments and are at various stages of examination:

Mopa

– Goa

Navi Mumbai

– State of Maharashtra

Chakan/Rajguru Nagar, Pune

– State of Maharashtra

28http://civilaviation.nic.in/reports/Annual%20Report%2009%20English.pdf.



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Kannur

– State of Kerala

Hassan and Gulbarga

– State of Karnataka

Halwara

– State of Punjab

According to federal policy, state governments are the primary promoters of the greenfield

airports. In order to promote such developments, they may consider joint ventures with private

investors through the existing PPP vehicle using transparent tender and a competitive bidding

process. FDI is permitted at 100 percent under the automatic route for Greenfield projects

consideration.

2. Procurement of Materials for Airside and Landside Modernization

AAI is required to procure equipment and systems to facilitate airside and landside modernization

at different airports at a cost of US$0.7 billion. Some of these include:

Procurement of landing lighting systems at all airports and visual docking guidance

systems.

Procurement and installation of conveyor belts for smooth cargo handling at all major

airports.

Procurement of technical services ensuring integrated Flight Data Processing System

(FDPS). FDPS has been developed internally by Electronics Corporation of India Limited

with the sponsorship of AAI. The essential architecture of FDPS consists of:

– Links of time server via a Global Positioning System (GPS).

– Societe Internationale de Telecommunication Aeronautiques (SITA) modem;Aeronautical Mobile Support System (AMSS).

– Aeronautical Fixed Telecommunication Network (AFTN).

– Position stations.

– A monitoring system.

At present, FDPS is operational at Chennai and works in a modular format in which data

is fed through AFTN and radar. AAI would like to integrate FDPS with radar (R-FDPS)

and Automatic Dependent Surveillance-Contract (ADS-C)29

data.

29Ground- to- air communication is performed via CPDLC with SITA providing FANS-compatibility.Although there appears to be a great deal of enthusiasm among AAI professionals regarding ADS-C, andoverall ADS-B implementation (through FAA’s sharing trial data), India faces the same challenge as in theU.S. and Europe: namely too few aircraft (around 20 percent) presently are equipped with ADS-B.



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Developing Standard Instrument Departures/Standard Terminal Arrival R Routes

(SID/STAR), Required Navigation Performance/Required Area Navigation (RNP/RNAV)

procedures to increase efficiencies at terminals.

The airport and other ground support equipment segment offered market opportunities worth

$359 million in 2008 and are expected to exceed $400 million in 2009.



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Section 4B. Air Transportation Management: Selected Opportunities

India’s complex airspace provides considerable challenges. Accommodating growing traffic

demand requires efficient airspace usage. Efficient allocation of resources, including airspace,

requires better planning and management. These may provide opportunities for U.S. firmsspecializing in these services. Given the priorities of AAI and its favorable fiscal condition, many

of these opportunities—given their capacity-enhancing impact, especially on airspaces closer to

terminals—are expected to be undertaken soon

1. Opportunities for CNS/ATM Modernization

(a) Future Indian Air Navigation System (FIANS) Master Plan

Based on the forecasted growth in traffic, India has developed an ATM master plan (FIANS) to

meet future aviation industry demand consistent with the ICAO Global harmonization approach,

guiding principles, and strategic vision. In order to achieve seamless use of airspace for

worldwide operations, the Plan supports meeting the interoperability requirements and standards,as well as performance based operations. The CNS/ATM enhancements include:

Communication: Satellite-based digital communication transitioning from voice data with

voice as back up.

Navigation: Satellite-based navigation supplemented by GPS Aided Geo Augmented

Navigation (GAGAN).

Surveillance: Secondary surveillance radars (SSR) in high density airspace and terminal

areas, and ADS-B as well as wide area multilateration elsewhere.

ATM Automation: Networking of radars and consolidation of 11 Area Control Centers

(ACCs) into four Centers initially and two Centers in the long term.

Meteorological Facilities: New integrated weather information system for current and

forecasted weather data, real time satellite weather picture and turbulence warnings.

(b) Current Airspace and Operations

The Indian airspace consists of almost three million square meters, of which one-third is over land

and the rest is over oceanic control.30

Currently, the entire continental airspace is covered fairly

well under radar at higher airspaces. Some 14 monopulse secondary surveillance radars

(MSSRs) (10 MSSR co-located with Primary Surveillance Radars [PSRs]) provide en route

coverage at Delhi (2), Mumbai (2), Kolkata, Chennai, Hyderabad, Ahmedabad, Trivandrum,

Mangalore, Varanasi, Nagpur, Guwahati, and Berhampur airports. There are eight Terminal Area

Radars (TARs), which are located at Mumbai, Delhi, Chennai, Kolkata, Guwahati, Ahmedabad,

Hyderabad, and Trivandrum airports for approach control service. There are 11 ACCs, which are

30Source: “CNS/ATM-Current Status and Future Plans,” Presentation by Mr. Srikrishan, Executive Director,ATM, at the Aerodrome India Conference, New Delhi, December 2006.



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established to service airports at Mumbai, Delhi, Chennai, Kolkata, Hyderabad, Ahmedabad,

Nagpur, Mangalore, Thiruvananthapuram, Guwahati, and Varanasi. These are equipped with en

route radar for provision of area control services. There have been discussions regarding

consolidation of these 11 centers into two by splitting the country’s ACCs into Northwest and

Southwest centers.

The entire airspace is divided into five flight information regions (FIRs): Mumbai, Kolkata, Delhi,

Chennai, and Guwahati (a sub-FIR). There are 12 neighboring FIRs that share common Indian

FIRs: Pakistan, Oman, Yemen, Mogadishu, Seychelles, Mauritius, Male, Sri Lanka, Malaysia,

Myanmar, Bangladesh, and Nepal.

There are 79 international and 99 domestic ATS routes in and out of the country. Most of the

international routes are aligned in East-West direction.

At present, vertical separation of the airspace (common in other parts of the world) does not exist

in India. Terminal, approach control, and en route airspaces can be segmented into lower,

middle, upper, and super-high sectors in the airspace for efficient management and safe

operations that are practiced in the U.S. and Europe [see Figure 14 for an example]. These

segmentations do not currently exist in India.

Figure 12. Vertical Segmentation of Typical Airspace: An Example

In terms of airspace infrastructure, AAI has implemented the Europe, Middle-East, Asia Route

Structure of Himalayas (EMARSH), which was commissioned on November 12, 2002, together

with twelve Bay of Bengal routes. Reduced vertical separation minimum (RVSM)—which

increased airspace capacity by reducing vertical separation between aircraft to 1,000 feet from

2,000 feet above certain altitudes—was introduced on November 27, 2003.



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AAI was able to relieve delays at major airports by implementing RNP/RNAV at busy airports,

particularly in Mumbai, Delhi, Ahmabadad, and Chennai. Further refinement of airspace

management would prepare India for the necessary handling capacity. Given that almost 35

percent of the total Indian airspace is classified as reserved for military activities, civil-military

airspace coordination and operations (i.e., flexible use of airspace) is also critical for growing civil

flight operations.

Airspace redesigning and sectorization will be undertaken as part of the Master Plan.

(c) CNS/ATM Master Plan Update

Currently, the CNS infrastructure can be described as such [Srikrishan (2006)]:

Very High Frequency (VHF) at all the airports.

Radio Controlled Augmentation (RCAG) stations at seven places.

High frequency at Delhi, Mumbai, Kolkata, and Chennai airports.

ILS at 38 airports.

VHF Omnidirectional Range (VOR)/DME at 78 stations and Non-directional Beacon

(NDB) at 82 places.

ADS-C/Controller Pilot Data Link Communications (CPDLC) compatible with the ICAO

Future Air Navigation System (FANS available at Delhi airport for surveillance in the

mountainous terrain in North India and at Mumbai, Kolkata and Chennai airports for

surveillance over the Arabian Sea and Bay of Bengal.

Radar coverage (around 80 percent of the country is covered):

– MSSR – 14

– PSR S Band – 8

– PSR L Band – 2

An Advanced Surface Movement Guidance and Control System has been installed at

Indira Gandhi International Airport in Delhi, supplied by Sensis Corporation of the U.S.

This system provides support for CAT IIIB ILS operations.

A comprehensive master plan, integrating aviation infrastructure modernization with operations

benefits, is essential. Without such a plan, CNS infrastructure improvement might not produce

the optimum operational benefits that India needs. India faces challenges due to its immediate

traffic growth projection and its immediate infrastructure needs. World aviation is experiencing a

technology revolution led by the U.S. NextGen programs and Europe’s Single European Sky ATM

Research (SESAR) programs. These NextGen and SESAR programs will significantly change

aviation operations and infrastructure requirements. During the fall of 2008, a U.S. company, ISI,

was awarded a USTDA contract to update the earlier version of the CNS/ATM master plan, which

also was developed by ISI before India’s significant traffic growth. In early 2008, the Indian

Government developed the FIANS Master Plan under the leadership of the Ajay Prasad

Committee. This master plan provided recommendations to the Minister of Civil Aviation in the



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areas of Airport Infrastructure, ICAO Global Plan Initiatives in CNS/ATM, and Global

Harmonization.

(d) CNS Upgrades

On the CNS side, AAI plans to extend VHF coverage over the entire Indian landmass with twelve

additional RCAG stations. AAI also plans to replace NDBs with six additional DVOR/four Very

High Frequency Omnidirectional Range (VOR). The six additional DMEs will be collocated with

DVORs. There are 43 ILS already installed at 37 airports, out of which Delhi has CAT IIIB.

Kolkata as well as Lucknow have CAT II ILS. AAI plans to install seven CAT I ILS, three CAT II

ILS, and two CAT III ILS at Amritsar, Jaipur, Jammu airports, and at the new runway in Delhi.

An enhancement of surveillance coverage is planned, including nine MSSRs for complete radar

coverage over terrestrial airspace and two PSR-S bands for coverage over the terminal areas. In

addition, there is a plan for three new primary and seven secondary surveillance radars.

In summary, the following is a list of planned procurement in near term:

Nine additional MSSR Radars and two PSR-S Band Radars.

Twelve additional RCAG (communications systems).

Ten additional DVOR/VOR systems.

Six additional DME systems.

Four additional ILS systems.

Replace NDBs (Currently AAI has 82 NDBs).

DGPS landing system.

India has conducted ADS-B trials. However, since only 10 percent of aircraft that use India’sairspace are equipped with ADS-B transponders, wide-ranging benefits from an ADS-B

deployment will not be realized until the aircraft equipage rate increases.

Initially, ADS-B and wide area multilateration systems will augment radars for surveillance in low

density airspace, but they will be extended into all airspace as the ADS-B equipage grows.

AAI is reviewing various business models of ADS-B implementation. ADS-B augmented by

multilateration would provide a solid infrastructure for Indian airspace management to handle

growing traffic.

(e) GAGAN Certification and Implementation

India is developing a GAGAN system [see Figure 15 for a broad overview], which is a SatelliteBased Augmentation System (SBAS). AAI developed this technology together with the Indian

Space Research Organization (ISRO) and Raytheon Corporation. GAGAN’s mission control

center and ground uplink station will be located in Bangalore.

The current INRES centers are in Delhi, Ahmedabad, Bangalore, Thiruvananthapuram, Kolkata,

Guwahati, Port Blair, and Jammu. The future INRES centers will be in Indore, Bhuj, Amritsar,

Chennai, Nagpur, and Lucknow. GAGAN is in a trial phase now, and AAI is in the process of



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establishing TA with the FAA for its validation, verification, and eventual certification. In

November 2006 during the visit of Ms. Marion Blakey (the FAA Administrator at that time), the

Administrator and the Indian Minister of Civil Aviation agreed to pursue the option of technical

assistance in this field. Implementation of GAGAN is planned in two phases:

For the first phase, GAGAN Technology Demonstration System (TDS) has successfully

demonstrated the proof of concept of SBAS and is completed.

GAGAN Final Operational Phase (FOP) has the following implementation schedule:

– GAGAN ground segment installation and integration – August 2010

– GAGAN System Integration with both Geostationary Earth Orbiting Satellite SystemsGEOs – January 2012

– GAGAN navigation performance demonstration – June 2012

– GAGAN system certification – July 2013



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Figure 13. GAGAN Network in India

Source: AAI

Beyond GAGAN, the ISRO is implementing an Indian Navigation Regional Satellite System

(INRSS), an independent, seven satellite constellation built and operated by India. These satellite

systems will maintain interoperability between other regional augmentations to GPS for global

navigation.

(f) ATM Enhancements

AAI will need to develop functional capabilities for ATS in order to provide conflict prediction,

detection, and resolution. AAI has started to develop Air Traffic Flow Management (AFTM)

functionality with support from the FAA.

2. Weather System Enhancements

The Indian Meteorological Department (IMD), under the Ministry of Earth Sciences, is

modernizing aviation meteorological services at airports. Integrated Automatic Aviation

Meteorological Systems (IAAMS), for automatic acquisition, processing, dissemination, and

display of meteorological information in real time. The IAAMS have been installed at Delhi,Mumbai and Hyderabad airports. These systems are also being installed at 20 non-metro

airports. The IMD plans to provide IAAMS at all 50 airports where the ILS have been planned by

AAI. The IMD also plans to install Terminal Doppler Weather Radar (TDWR), wind profilers, and

anemometer arrays for wind shear detection and alerting at a few selected airports.



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3. Opportunities for Commercial Aircraft MRO

As noted earlier, Indian civil aviation will almost triple in fleet size over the next five to seven

years. The commercial aircraft base for scheduled operations now stands at 287. Over the next

five to seven years, this will increase by 458 new aircraft (i.e., a 2.6 fold increase), a breakdown

of which is given in Figure 16.

Figure 14. Airline Order Book in India (End of 2006)

A majority of these orders are generated by LCCs. If one accounts for only the full-service airlines

(i.e., NACIL and Jet Airways), orders stand to increase around 26 percent (or 121) of the order

book. With Kingfisher Airlines added to that group (increasingly, the operational model of

Kingfisher is closer to that of a full service operator), the order book stands to increase to 153, or

33 percent. Much of the development is indeed generated by the LCCs in India.

The MRO opportunities primarily lie in the purchase arrangements of the flag carriers with Boeing

and Airbus. Air India entered into the purchase agreement for 68 aircraft with Boeing (with a loan

guarantee from the U.S. Export-Import Bank), while Indian Airlines signed with Airbus for its order

of 43 aircraft. Under these agreements, Airbus and Boeing are expected to invest approximately30 percent of the sales revenue (i.e., termed as Offset Arrangement) in India.

31Thus, Boeing will

31After acquiring aircraft orders that are worth around US $20 billion from India, Boeing announced onFebruary 7 (during the Aero India conference) that it would invest almost US $185 million to developaviation related projects and facilities. Indicating that Boeing was committed to invest a total of US $1.7



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invest around $2 billion under this offset arrangement. The aircraft engines will come from

General Electric (GE). Under the respective offset arrangement, GE is also required to invest a

certain percentage of sales proceeds in India. The Indian MRO market is growing at a rate of

about 15 percent annually as airlines develop their own MRO facilities. The Asia-Pacific aircraft

and engine MRO market is expected to reach about $23 billion by 2011. India has the potential to

become a major MRO hub in the Asia-Pacific region.

Similar arrangements are expected from military purchases by the Indian defense sector. This

may lead to additional MRO facilities, most likely in the Special Economic Zone near Bangalore.

GE is also considering investment (estimated to be $330 million) in engine manufacturing and/or

an MRO facility (with GOI as a partner closer to Delhi). Recently, Raytheon Aircraft Company, an

aircraft manufacturer based in the U.S., announced that it is considering a strategic partnership to

set up a fixed base operator (FBO) unit in India. The process has already begun, and Raytheon is

identifying possible partners. The FBO unit will be a standalone mini-terminal that sells aircraft

fuel, in addition to providing a catering facility. It will also have an aircraft sales and charter

department. Raytheon will set up the facility either at an existing airport or at a Greenfield airportin India. There are also discussions regarding investment potential from European Aeronautic

Defense and Space Company (parent company of Airbus), Delta Airlines, and other U.S. firms.

4. Opportunities for Training

Indian civil aviation training facilities consist of four institutes and colleges: (a) Civil Aviation

Training College in Allahabad; (b) National Institute for Aviation Management and Research; (c)

Fire Services Training College at Kolkata and Chennai; and (d) Flight Training School. As a joint

venture partnership of AAI with CAE Canada, the Government has established the National

Flying Training Pvt. Ltd. and the National Institute of Aviation Technology and Management at

Gondia, Maharashtra for basic courses in aircraft maintenance, flight dispatches, and

operations/maintenance of ground equipment.

AAI set up a state-of-the-art facility primarily for training controllers in Allahabad at a cost of $69.7

million (Rs. 300 Crores). ATC training appears to be another bottleneck that the sector may face

in the near future. Although AAI has almost 22,000 professionals,32

technicians, safety inspectors,

and engineers, there are only several hundred ATC controllers. The Delhi tower, the second-

busiest in the nation, has only 200 full time controllers. Over two-thirds of the controllers (135) are

close to retirement age (58 years). At present, ATC controllers complete one year of training at

billion under the offset arrangement, Senior Vice President of Sales Dinesh Keskar said at the

Conference that the firm would invest up to US $100 million for an MRO facility in Nagpur, and up to US$75 million for a flight crew training center and U.S. $10 million for initial pilot training. Mr. Keskar alsonoted that there was a tremendous opportunity for Boeing and Indian companies to work together on amultitude of projects and business initiatives and issues, especially the shortage of pilots, airport capacitymanagement, and creation of a large skilled maintenance workforce and MRO facilities.

32With the PPP of Mumbai and Delhi, almost 5,000 of AAI staff have been transferred under the contractterms. After three years, they will have the option of staying with these airports under their direct payrollor moving over to AAI.



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AAI’s training college in Allahabad and, depending on the demand, spend six months doing on-

the-job training.

AAI proposes to recruit 100 controllers a year for the next three years, followed by a requirements

review. In addition to increasing both the number of controllers in training and the total training

hours, the Civil Aviation Training College may use a modern and internationally acclaimed

curriculum, faculty, and hands-on technical training (e.g., using simulators in realistic settings)

targeted to improve the training of its controllers. The college also trains CNS maintenance

engineers.

At the National Institute for Aviation Management and Research, AAI trains all of its managers

and supervisors. Other training courses are offered as well, including airport design, Safety

Management System training, and contract management, which are very similar (other than

contract management) to courses offered by the American Association of Airport Executives

(AAAE). This may be a good place for AAAE, or similar firms, to promote training and to

collaborate. Indira Gandhi Udan Academi is a new facility that was launched to train Indian pilots.

Another training academy will be opening soon in Gondia, located in the central part of thecountry.

Since the training facilities do not yet meet the standards of the international facilities, AAI would

like to upgrade (i.e., curriculum improvement, faculty exchange, formal course offerings, and

modernization) all of its training colleges. The ultimate goal for the agency is to upgrade its

human resources with state-of-the-art knowledge and training to make it comparable and

competitive with the Singapore Academy, the predominant training facility in Asia. Improvement

goals include:

Market courses to foreign airports,

Sponsor international conferences to share Indian experience,

Establish International Air Transport Association (IATA)-approved cargo courses (and run

mandatory programs,

Undertake performance benchmarking (i.e., post training evaluation of trainees),

Conduct more national conferences on national aviation issues,

Create alliances with reputable universities (Concordia University of Canada has a

pending proposal),

Acquire International Organization for Standardization (ISO) certificate for the Institute,

and

Transform the National Institute for Aviation Management and Research into a full-scaleaviation university,



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BACKGROUND

This aviation sector report was developed by updating an earlier report developed in 2007. The

earlier report was developed by collecting information from different sources, including news

reports and secondary information from meetings and interviews with a wide variety of public andprivate sector entities, including:

Ministry of Civil Aviation (MOCA)

Airport Authority of India (AAI)

– Chairman’s Office

– Member (Operations) of the Board

– Air Traffic Management (ATM) Office

– Communications, Navigation, and Surveillance (CNS) (Planning) Office

– Airport Development Cell

– National Institute of Aviation Management & Research

– Indira Gandhi International Airport Tower

– Chennai Airport and Air Traffic Control (ATC) Tower

Directorate General of Civil Aviation (DGCA)

Bureau of Civil Aviation Security (BCAS)

Delhi International Airport Limited (DIAL)

Federal Aviation Administration (FAA) South Asia Regional Office at the United States

(U.S.) Embassy in New Delhi

Commercial Counselor, American Embassy in New Delhi

This report has been updated based on publicly available information from websites and with

secondary information collected from conference presentations and desk research. Validation of

both the original report and the updated information was outside the scope of the work.

Nonetheless, MITRE/CAASD remains solely responsible for any and all remaining errors.



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ADDITIONAL REFERENCES

Government of India and Other Useful Information:

Ministry of Civil Aviation, Government of India: http://civilaviation.nic.in/

Airport Authority of India: http://www.AAI.Aero

Indian bilateral aviation treaties:

– Indian Federal Ministries and Departments:http://ibef.org/artdisplay.aspx?art_id=1217&cat_id=101

Indian Embassy in the U.S.: www.indianembassy.org/

Federation of Indian Chambers of Commerce and Industry: http://www.ficci.com/

Investment Commission of India:

http://www.investmentcommission.in/civil_aviation_&_airports.htm

Some other useful websites:

– http://www.indiainbusiness.nic.in/

– http://www.india.gov.in

– http://www.indiaimage.nic.in

– http://www.ibef.org

– http://dipp.gov.in

– http://finmin.nic.in

Indian Sub-Continent Airports 2009: http://www.brooksreports.com/reports.php?ID=10

GVK Group (MIAL): http://www.gvk.com/about-gvk.html

GMR Group (DIAL): http://www.gmrgroup.com

Maharashtra Airport Development Company (MADC): http://www.madcindia.org/

World Bank’s (2007) India at a Glance Development Indicators:

http://siteresources.worldbank.org/INDIAEXTN/Resources/cas-report/annexa1.pdf

Williams, Ashley (2006). “Assessing the Competitive Environment of the Air Navigation

Service Provider Industry”, MP 06W060189, The MITRE Corporation, September, 2006



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U.S. GOVERNMENT RESOURCES

U.S. Embassy in India: http://newdelhi.usembassy.gov/

U.S. Commercial Services: Buy USA.Gov: http://www.buyusa.gov/home/

Library of Congress Country Studies: India. http://lcweb2.loc.gov/frd/cs/intoc.html

U.S. Trade and Development Agency: Middle East, North Africa, South and Southeast

Asia Regional Program. http://www.ustda.gov

The Federal Aviation Administration: http://www.faa.gov/

Aviation Cooperation Program (ACP): http://www.acp-india.com/

The Export-Import Bank of the United States: http://www.exim.gov/



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KEY POINTS OF CONTACTS

Organization Name Title Organization Address Country Phone Fax Mobile Email Website

U.S. Trade andDevelopment Agency (TDA)

BalaKalyanaraman

Country Representative U.S. Trade andDevelopmentAgency

10021, IndiaNew Delhi - 1

India (91)11-2419-8854 (91)11-2419-0017 [email protected] www.ustda.gov

Jacob

Flewelling

Country Manager South

Asia

U.S. Trade and

DevelopmentAgency

1000 Wilson Blvd.

Suite 1600Arlington, VA 22209-3901

U.S. (703) 875-4357 (703) 875-4009 jflewelling©ustda.gov

Jason Nagy Country Manager U.S. Trade andDevelopmentAgency

1000 Wilson Blvd.Suite 1600Arlington, VA 22209-3901

U.S. (703) 875-4357 (703) 875-4009 [email protected]

Henry Steingass Regional Director for South and SoutheastAsia

U.S. Trade andDevelopmentAgency

1000 Wilson Blvd.Suite 1600Arlington, VA 22209-3901


AviationCooperationProgram (ACP)

Arjun Singh Program Director Aviation CooperationProgram

Inter-Agency Air CartographicCommittee(IACC)

Phd House, 4th Floor 4/2, Siri Institutional AreaNew Delhi 110016

India (91)11-2660-2302 (D),26518201

26531874 (91)9810789132 [email protected]; www.acp-india.com

Larry Coughlin Co-Chair, BoeingManaging Director,Commercial Airplanes

Boeing New Delhi India (91)11- 4656-6077 (91)98 7337 2000 [email protected]

Aaron E. Wilkins Co-Chair ACP, Senior Representative SouthAsia, Attaché

Federal Aviation New Delhi 110021 India (91)11-2419-8403 (91)11-2419-0019 (91) 99-1140-1666 [email protected]

Federal Aviation Administration(FAA)

Aaron E. Wilkins Senior RepresentativeSouth Asia, Attaché

Federal Aviation New Delhi 110021 India (91)11-2419-8403 (91)11-2419-0019 (91) 99-1140-1666 [email protected]

Ajay Kumar Civil Aviation Specialist

South Asia

American

EmbassyShantipath,Chanakyapuri

New Delhi 110021 India (91)11-2419-8299 (91)11-2419-0019 (91) 98180-95425 [email protected] [email protected]



2nd


December 7 - 11, 2009

Prepared by:



Dan Hanlon South AsiaRepresentative

FAA U.S. Embassy27 Napier RoadSingapore 258508

Singapore (65)6543-1952 (65)6542-1466 [email protected]

ThomasNaskoviak

India Desk Officer FAA FAA HQ800 Independence Ave.Washington, DC

U.S. (202) 385-8895 [email protected]

Mary Walsh Director for Asia Pacific FAA U.S. Embassy27 Napier RoadSingapore 258508

Singapore (65)6543-1952 (65)6542-1466 [email protected]

Dorothy

Reimold

Assistant Administrator,

International Aviation(Acting)

FAA FAA HQ

800 Independence Ave.Washington, DC


Department of Commerce(DOC)

CarmineD'Aloisio

Minister Counselor for Commercial Affairs

DOC The American Center 24 Kasturba Gandhi MargNew Delhi 110001

India (91)11-2347-2000 (91)11-2331-5172 [email protected]

Yash Kansal DOC The American Center 24, Kasturba Gandhi Marg

New Delhi 110001

India (91)11-2347-2000 (91)11-2331-5172 [email protected] www.buyusa.gov/Ind

Lola Gulomova Commercial Officer DOC The American Center 24 Kasturba Gandhi MargNew Delhi 110001

India (91)11-2347-2274 (91)11-2331-5172 [email protected] www.buyusa.gou/Ind

Airport Authorityof India (AAI)

V.P. Agrawal Chairman AAI Corporate HQRajiv Gandhi BhawanSafdarjung AirportNew Delhi 110003

India (91)11-2463-2930 (91)11-2464-1088

P. Seth Member Operations AAI Corporate HQRajiv Gandhi BhawanSafdarjung AirportNew Delhi 110003

India (91)11-2463-1969 (91)11-2462-9567



2nd


December 7 - 11, 2009

Prepared by:



Satish Chhatwal Member Finance AAI Corporate HQRajiv Gandhi BhawanSafdarjung AirportNew Delhi 110003

India (91)11-2461-0845 (91)11-2461-0841

V.K. Yadava Executive Director, ATM AAI Corporate HQRajiv Gandhi BhawanSafdarjung Airport

New Delhi 110003

India (91)11-2463-1684 (91)11-2461-1078

V.Somasundaram

Executive Director, ATM AAI Corporate HQRajiv Gandhi BhawanSafdarjung AirportNew Delhi 110003

India (91)11-2465-2648 (91)11-2461-1078

S.K. Kakar Executive Director, CNSPlanning

AAI Corporate HQRajiv Gandhi Bhawan

Safdarjung AirportNew Delhi 110003

India (91)11-2461-8279 (91)11-2461-1134

V.K. Chaudhary Executive Director, CNSOperations andMaintenance (O&M)

AAI Corporate HQRajiv Gandhi BhawanSafdarjung AirportNew Delhi 110003

India (91)11-2465-2075 (91)11-2465-4142

U.N. Singh Executive Director,Integrated Planning

AAI Corporate HQRajiv Gandhi Bhawan

Safdarjung AirportNew Delhi 110003

India (91)11-2462-2810 (91)11-2465-1400

R.C. Chitkara Executive Director,Aerodrome Planning


India (91)11-2465-4084 (91)11-2465-2079

B. Singh Executive Director,Aviation Safety


India (91)11-2465-3016 (91)11-2462-1504



2nd


December 7 - 11, 2009

Prepared by:



DGCA Dr. S.N.A. Zaidi Director General DGCA Corporate HQRajiv Gandhi BhawanSafdarjung AirportNew Delhi 110003

India (91)11-2462-0784 (91)11-2465-2760



2nd


December 7 - 11, 2009

APPENDIX: AIRPORTS IN INDIA AND INSTITUTIONAL ARRANGEMENTS

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