1.LITERATURE REVIEW 2.1 Aviation Industry in India The first commercial flight in India was made on February 18, 1911, when a French pilot. Monseigneur Piguet flew airmails from Allahabad to Naini, covering a distance of about 10 km in as many minutes$Tata %er!ices became Tata Airlines and then Air&India and spread its wings as Air&IndiaInternational$ The domestic a!iation scene, howe!er, was chaotic$ 'hen the American TenthAir Force in India disposed of its planes at throwaway prices, 11 domestic airlines sprang up,scrambling for traffic that could sustain only two or three$ In 19(), the go!ernmentnationali*ed the airlines, merged them, and created Indian Airlines$ For the ne+t ( years -./Tata remained the chairman of Air&India and a director on the board of Indian Airlines$ After-./ left, !oracious unions mushroomed, spawned on the por# barrel 0obs created by politicians$ In 1999, A&I had "" employees per plane2 today it has 33 whereas other airlinesha!e )("$- . / Tata the first Indian ci!ilian to fly a 0et, -une 1938 4In 19)" a gentleman from India, PurshottamMegh0i5abali , too# deli!ery of %partan 6T&AAT7cn )1, with the intention of flying the aircraft home to India$Mr$ 5abali is belie!ed toha!e been the first Indian pilot and subse:uently went on to fly for ;Air %er!ices of Indiae namedthe aircraft ;Feather of the /awn; and a religious ceremony was carried out at =roydonAirport before departure . For many years in India air tra!el was percei!ed to be an elitist acti!ity$ This !iew arosefrom the ?Mahara0ah@ syndrome where, due to the prohibiti!e cost of air tra!el, the only people who could afford it were the rich and powerful$ In recent years, howe!er, this image of =i!il A!iation has undergone a change and a!iation isnow !iewed in a different light & as an essential lin# not only for international tra!el and trade but also for pro!iding connecti!ity to different parts of the country$ A!iation is, by its !erynature, a critical part of the infrastructure of the country and has important ramifications for
the de!elopment of tourism and trade, the opening up of inaccessible areas of the country andfor pro!iding stimulus to business acti!ity and economic growth$ ntil less than a decade
ago, all aspects of a!iation were firmly controlled by theBo!ernment$ In the early fifties, all airlines operating in the country were merged into eitherIndian Airlines or Air India and, by ! irtue of the Air =orporations Act, 19()2 this monopolywas perpetuated for the ne+t forty years$ The /irectorate Beneral of =i!il A!iation controllede!ery aspect of flying including granting flying licenses, pilots, certifying aircrafts for flightand issuing all rules and procedures go!erning Indian airports and airspace$ Finally, theAirports Authority of India was entrusted with the responsibility of managing all national andinternational air ports and administering e!ery aspect of air transport operation through theAir Traffic =ontrol$ 'ith the opening up of the Indian economy in the early ineties, a!iationsaw some important changes$ Most importantly, the Air =orporation Act $A!iation Industry in India is one of the fastest growing a!iation industries in the world$ 'iththe liberali*ation of the Indian a!iation sector, a!iation industry in India has undergone arapid transformation$ From being primarily a go!ernment&owned industry, the Indian a!iationindustry is now dominated by pri!ately owned full ser!ice airlines and low cost carriers$Pri!ate airlines account for around (C share of the domestic a!iation mar#et$ Darlier airtra!el was a pri!ilege only a few could afford, but today air tra!el has become much cheaperand can be afforded by a large number of people$The origin of Indian ci!il a!iation industry can be traced bac# to 191, when the first airflight between 5arachi and /elhi was started by the Indian %tate Air %er!ices incollabouration with the 5 based Imperial Airways$ It was an e+tension of
nationali*ed nine airline companies !ide the Air =orporations Act, 19()$ Accordingly itestablished the Indian Airlines =orporation 7IA= to cater to domestic air tra!el passengersand Air India International 7AI for international air tra!el passengers$ The assets of thee+isting airline companies were transferred to these two corporations$ This Act ensured
thatIA= and AI had a monopoly o!er the Indian s#ies$ A third go!ernment&owned airline,6ayudoot, which pro!ided feeder ser!ices between smaller cities, was merged with IA= in1993$ These go!ernment&owned airlines dominated Indian a!iation industry till the mid&199"s$In April 199", the Bo!ernment adopted open&s#y policy and allowed air ta+i& operators tooperate flights from any airport, both on a charter and a non charter basis and to decide theirown flight schedules, cargo and passenger fares$ In 1993, the Indian Bo!ernment, as part of its open sky policy, ended the monopoly of IA and AI in the air transport ser!ices by repealing the Air =corporations Act of 19() and replacing it with the Air =orporations7Transfer of nderta#ing and .epeal Act, 1993$ Pri!ate operators were allowed to pro!ideair transport ser!ices$ Foreign direct in!estment 7F/I of up to 39 percent e:uity sta#e and .I 7on .esident Indian in!estment of up to 1"" percent e:uity sta#e were permittedthrough the automatic F/I route in the domestic air transport ser!ices sector$ >owe! er, noforeign airline could directly or indirectly hold e:uity in a domestic airline company$Ey 199(, se!eral pri!ate airlines had !entured into the a!iation business and accounted formore than 1" percent of the domestic air traffic$ These included -et Airways %ahara, DP=Airlines, Dast 'est Airlines, Modi
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