The Civil Aviation sector has undergone dramatic expansion during the Tenth Five Year Plan period. The rapid growth of the economy especially during the last four years has been accompanied by a sharp increase in the volume of air traffic. The number of domestic and international air passengers (combined) has almost doubled between 2004 and 2007. Cargo traffic has increased by more than 45 per cent between 2003- 04 and 2006-07. As per the provisional figures available, international and domestic passengers recorded growth of 15.6 per cent and 32.51 per cent, respectively, during 2007. During April-October 2007, international and domestic cargo recorded growth of 13 per cent and 9.8 per cent, respectively.

As of now, there are 14 scheduled airline operators having 334 aircraft. During 2007, the scheduled operators have been given permission for import of 72 aircraft. The Ministry of Civil Aviation has given “in-principle” approval for import of 496 aircraft and, in the next five years, more than 250 aircraft are likely to be acquired by the scheduled operators. There are also 65 non-scheduled airlines operators who have 201 aircraft in their inventory. The explosive growth in air traffic has made it imperative to rapidly expand the air infrastructure to ensure safe and efficient handling of air traffic.

The Government decided to open up the India-Gulf route to eligible private schedule carriers from January 1, 2008, and under this decision Jet Airways has been permitted to operate international services in certain India-Gulf sectors. The Government has adopted a liberal approach in the matter of grant of traffic rights under bilateral agreements with various foreign countries. The Indo-U.S. aviation market has registered a significant growth under the new revised Air Services Agreement signed between the two countries in 2005. Similarly traffic rights were enhanced with other countries to enable greater connectivity to/from India. These countries include Australia, U.K., Germany, China, France, the Netherlands, Belgium, Canada, Singapore, Mauritius, New Zealand, UAE, Thailand, Italy, Russia, Taiwan, Finland, Maldives, Tanzania, Japan, Sri Lanka, UAE (Sharjah, Dubai & Abu Dhabi), Kuwait, Italy, Japan, Spain, Oman, the Scandinavian countries, Egypt, Qatar, Jordan, Uzbekistan, Malaysia and Hong Kong. This would not only lead to more flights and better connectivity from these countries to India but also provide more commercial opportunities to all operating carriers.

The Government of India decided on March 1, 2007, to merge the two national carriers, i.e. Indian Airlines Limited (IAL) and Air India Limited (AIL), into a new 100 per cent Government of India-owned company. This move was aimed at building a strong and sustainable business entity. Under this arrangement, the National Aviation Company of India Limited (NACIL) was incorporated under the Companies Act, 1956, on March 30, 2007. After registration of the order

dated August 22, 2007, with the Registrar of Companies on August 27, 2007, the legal process of merger was completed. The Board of Directors of NACIL has since been reconstituted.

The Airports Authority of India (AAI) has undertaken an ambitious project of modernization of 35 non-metro airports. Airside works, including construction of terminal buildings, would be undertaken by AAI. Work on most of these airports has been taken up. The work at Agra airport (Civil Enclave) has been completed and major works at 7 other airports viz. Agatti, Ahmedabad (Domestic), Amritsar, Jaipur, Nagpur, Tiruchirappalli and Udaipur are scheduled to be completed within the current financial year. It is expected that terminal buildings and associated airside works in respect of 24 airports will be completed by end-March 2009, whereas the remaining 11 airports would be completed by March 2010. Separately, city side development of 24 select non-metro airports would be taken up through PPP. The city side development includes commercial exploitation and maintenance of terminal buildings.