Overview

The history of civil aviation in India began in December 1912. This was with the
opening of the first domestic air route between Karachi and Delhi by the Indian
state Air services in collaboration with the imperial Airways, UK, though it was a
mere extension of London-Karachi flight of the latter airline. Three years later, the
first Indian airline, Tata Sons Ltd., started a regular airmail service between Karachi
and Madras without any patronage from the government.

At the time of independence, the number of air transport companies, which were
operating within and beyond the frontiers of the company, carrying both air cargo
and passengers, was nine. It was reduced to eight, with Orient Airways shifting to
Pakistan. These airlines were: Tata Airlines, Indian National Airways, Air service of
India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways.

In early 1948, a joint sector company, Air India International Ltd., was established
by the Government of India and Air India (earlier Tata Airline) with a capital of Rs 2
crore and a fleet of three Lockheed constellation aircraft. Its first flight took off on
June 8, 1948 on the Mumbai (Bombay)-London air route. At the time of its
nationalization in 1953, it was operating four weekly services between Mumbai-
London and two weekly services between Mumbai and Nairobi. The joint venture
was headed by J.R.D. Tata, a visionary who had founded the first India airline in
1932 and had himself piloted its inaugural flight.

Significance of Air Transport

Air transport is the most modern, the quickest and the latest addition to the modes
of transport. Because of speed with which aeroplanes can fly, travel by air is
becoming increasingly popular. As far as the world trade is concerned it is still
dominated by sea transport because air transport is very expensive and is also
unsuitable for carrying heavy, bulky goods. However, transportation of high value
light goods and perishable goods is increasingly being done by air transport

Nationalization of Airlines
The soaring prices of aviation fuel, mounting salary bills and disproportionately
large fleets took a heavy toll of the then airlines. The financial health of companies
declined despite liberal Government patronage, particularly from 1949, and an
upward trend in air cargo and passenger traffic. The trend, however, was not in
keeping with the expectations of these airlines which had gone on an expansion
spree during the post-World War II period, acquiring aircraft ad spares.

The Government set up the Air Traffic Enquiry Committee in 1950 to look into the
problems of the airline. Though the Committee found no justification for
nationalization of airlines, it favored their voluntary merger. Such a merger,
however, was not welcomed by the airlines.

Foreign Airlines

Foreign airlines carrying international passenger traffic to and from India existed
long before Independence. Their operations are governed by bilateral agreements
signed from time to time between the Government of India and the governments of
respective countries. In 1980-81, the number of such airlines was 35. It rose to 49 in
1996-97.

The share of foreign airlines in India's scheduled international traffic has increased.
In 1971, their share was 55.58 per cent which went up to 65 per cent and declined
to 58 per cent during 1972-75. It fell to 55.72 per cent in 1976 and further to 55.02
per cent in 1977. Between 1978 and 1990 it gradually increased and rose to 75.93
per cent. In 1996, the share was nearly 72 per cent.

Open-Sky Policy

The Open-sky policy came in April 1990. The policy allowed air taxi- operators to
operate flights from any airport, both on a charter and a non charter basis and to
decide their own flight schedules, cargo and passenger fares. The operators were,
however, required to use aircraft with a minimum of 15 seats and conform to the
prescribed rules. In 1990, the private air taxi-operators carried 15,000 passengers.
This number increased to 4.1 lakh in 1992, 29.2 lakh in 1993, 36 lakh in 1994 and
48.9 lakh in 1995.

The 1996, private air taxi operators carried 49.08 lakh passengers which amounted
to a 41.14 per cent share in the domestic air passenger traffic. Seven operators viz
NEPC Airlines, Skyline NEPC, Jet Air, Archana Airways, Sahara India Airlines, Modiluft
and East West Airlines have since acquired the status of scheduled airlines. Besides
this there were 22 nonscheduled private operators and 34 private operators holding
no-objection certificate in 1996. The number of plus 120 category aircraft in the
private sector was 34 and the total fleet strength was 75 in June, 1996. Two out of
seven scheduled air taxi operators suspended their operations in 1996 because of
the non-availability of aircraft.

Infrastructure and Related Facilities

Airport Authority of India:

set up on April 1,1995 by amalgamating the international Airport Authority of India

and the National Airport Authority of India, the Airport Authority of India was to
handle all matters relating to infrastructure for civil air traffic and transport at the
international and the domestic airports and enclaves in the country.

Indira Gandhi Rashtriya Uran Akademi:

It was set up at Fursatganj to standardize and improve the flying training facilities in
the country. Till January 1997 it had trained 289 pilots on fixed wing aircraft and 20
pilots on rotary wing aircraft.

Flying/gliding training clubs:

On December 31,1996, besides the above Akademi, 41 flying clubs/institutes and

their branches including nine private institutes were imparting flying training. Five
gliding clubs, seven gliding wings of flying clubs and a government Gliding Centre,
Pune, were imparting training in gliding.

Development of Civil Aviation

The repeal of the Air Corporation Act from 1 March 1994 enabled private operators
to provide air transport services.

Six operators were given the status of scheduled operators on 1 February 1995.
Currently there are five international airports and 87 domestic airport in the country
with 28 civilian enclaves for defence purposes.

The Airport Authority of India plans to invest Rs 35,000 million for the construction
and up gradation of airports.

Budgetary support of Rs 485.50 million was allocated to AAI in 1996-97.

In august 1996, in a major policy decision, the government allowed the private
sector to set up air cargo complexes in a bid to ensure smooth movement of export
cargo.

Domestic and foreign investors including NRIs have been invited to participate in
the development of infrastructure support at select airports.

With a market share of 43% Indian airlines is the biggest player in aviation.

Rs 24,710 million have been marked for development of the civil aviation sector in
the annual plan for 1997-98.

The Indian Air cargo Market

The growth of air cargo in India has also been manifold though it might not have
kept pace with the progress made all over the world. Table 1 shows how both
international and domestic air cargo traffic has increased, reflecting an overall year
on year growth.

Table 1: Trends in cargo traffic at five international airports in India.

(Figures in '000 tonnes)

(Source - Transport India 2000)

Future Outlook Of The Industry

Future projections reflect that the air cargo industry both in the domestic sector and
the international sector will continue in its upward trend of growth. Fig.1 reflects
that the domestic air cargo will continue at a somewhat steady rate of growth
whereas the international air cargo movement as illustrated in Fig.2 shows a
steeper rate of growth indicating that international air cargo trade will flourish at a
higher rate of growth.

(Source - Transport India 2000)