The aviation sector in India has seen great traction in the last couple of years. Indian companies had placed orders worth more than $31 billion till last year and additional orders worth more than $3 billion were placed at the 45th Farnborough International Air-show in Farnborough, UK.

The recently concluded sixth Aero India 2007 (See: Aeroshows / Exhibitions : Aero India 2007 attracts record foreign participation) air-show, Asia's premier biennial air show held in Bangalore at the Yelahanka Air Force Base highlighted the growing significance of the Indian Aviation market to global aviation companies and suppliers.

While the Aviation sector order book indicates the growing demand for air-travel in the country, the $322 million purchase of Air Sahara by Jet Airways, India's largest private sector airline, signifies the start of consolidation in the sector that's expected to grow 20 per cent over the next five years. India will need as many as 852 additional aircrafts over the next two decades worth more than $72 billion to meet the growing demand for air travel.

The merger will increase Jet's market share by 8 per cent for a total of 33 per cent. Jet will have a combined fleet of more than 80 aircraft and garner more landing rights and secure many sought-after international routes.

The Jet-Sahara deal, the largest so far in the Indian aviation sector, reminds of Air France-KLM that was created by the merger between French airline Air France and Netherlands-based KLM in May 2004. The merger created the largest airline company in the world in terms of total operating revenues, and the third largest in the world (the largest in Europe) in terms of passenger-kilometres.

Creating a large entity is one thing but making the venture profitable is another proposition altogether. Air France-KLM is one of the most profitable companies in Europe, in sharp contrast with American Airlines, the largest airline in the United States, which had difficulty in managing the merger of Trans World Airlines (TWA) with itself in April 2001.

Other deals in the Indian aviation sector in the making include the much awaited merger of the two state owned Indian and Indian Airlines operating domestic and international services respectively apart from the proposed stake purchase by Kingfisher Airlines, owned by India's liquor baron Vijay Mallya in the largest low cost airline in the country, Air Deccan.

Some of the purchases by Indian carriers of aircrafts or engines during the year are listed in Table.

Chicago-based Boeing Co., the world's largest aerospace company, has confirmed orders valued at around $19 billion for 106 aircrafts of various configuration, including smaller and large wide-bodied planes, to be executed by 2011. The Boeing Company will invest $280 million in India for setting up an airplane maintenance facility and a pilot training centre.

GoAir, a startup Indian airline owned by Mumbai-based diversified Wadia Group, signed a purchase agreement with the European aircraft manufacturer Airbus at the Farnborough International Airshow to buy ten A320 planes for $670 million, with an option to buy further ten planes, taking the total order size to 20 planes for $1.3 billion.

Kingfisher a rapidly growing carrier in Indian civil aviation already flies 10 Airbus A320s and three Airbus A319s on domestic routes and will receive 30 more single aisle aircraft from Airbus in the near future.

Earlier, Kingfisher placed firm orders for five Airbus A380s, five A330s and five A350s for use on long-range international and regional services. So far, Kingfisher's Airbus Family fleet will grow to more than 60 aircraft.

Kingfisher Airlines had awarded a $24-million contract to Thales UK., the British unit of Thales SA, a leading electronic systems and industrial electronics company in defence, aerospace, airlines security and safety, for two A320 and one ATR full flight simulators during the air show.

Air Deccan, the first low-cost airline in India, signed a $17.5 million contract with Canada`s CAE Inc., simulation and modeling technologies provider for civil aviation, to purchase an A320 full-flight simulator and a CAE Simfinity A320 Integrated Procedures Trainer.

This has happened as a result of the growing demand for air travel, falling prices of air-tickets and the emerging segment of low-cost airlines in India. During the financial year 2005 - 06, India's civil aviation industry achieved the biggest ever growth in aircraft movement and passenger traffic. Passenger traffic in the domestic airports increased by 22.3 per cent to 59.54 million, while aircraft movement increased by 14.2 per cent to 730 000.

While Indian aviation industry is emerging as a big buyer for the global vendors, the Indian IT industry is looking for a bigger share in the pie of aerospace technology outsourcing. HCL Technologies, the fifth largest IT services company of India, made their debut at Farnborough air-show this year. NASSCOM, the industry body representing about 900 Indian IT companies, estimates the market size of the aerospace technology outsourcing market in India to be about $150 million, and predicts $1 billion in the next four years.

India's air defence allocations
India is not just an emerging commercial market, but also a big military market for the aerospace industry. It is expected to invite proposals for procuring and co-producing 126 multirole combat aircrafts. It is expected to include U.S. bids for F-18, F-16F aircraft in addition to traditional suppliers from Russia, France and the U.K. The deal size is estimated to be more than $11-billion, the biggest in more than a decade for fighter jet makers.

Fort Worth, Texas-based Bell Helicopter Textron, Inc is competing with the world's largest civil and military helicopter manufacturer Eurocopter to sell about 200 helicopters to the Indian army. Eurocopter, the wholly owned subsidiary of European aerospace company EADS (European Aeronautic Defence and Space Company), is also bidding for 260 single-engine high-altitude light reconnaissance helicopters for the Indian Army, and has plans to invest more than US$1 billion in India over the next two years.