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20 February 2025

Aviation Newsletter January 2025

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In this January 2025 edition of our newsletter, we bring you a concise analysis of the rapid growth in India's civil aviation sector, now the world's third-largest domestic market.
Worldwide Transport

In this January 2025 edition of our newsletter, we bring you a concise analysis of the rapid growth in India's civil aviation sector, now the world's third-largest domestic market. As the industry evolves to improve connectivity, enhance operational efficiency, and embrace sustainability, we highlight key regulatory changes, major infrastructure approvals, and recent legal precedents that are shaping the future of aviation in India and globally.

We hope this issue offers valuable insights as we continue to track the latest developments and opportunities in this dynamic sector.

A. Key Updates – India

(a) Garuda Aerospace announces INR 100 Crore investment for drone city in Andhra Pradesh

January 30, 2025 – Garuda Aerospace has committed to INR 100 crore investment for the development of a "Drone City" in Orvakal village, Kurnool district, Andhra Pradesh. The facility aims to serve as a hub for drone innovation while fostering research and attracting talent with a broader vision to position India as a leader in global drone technology.

This investment comes as part of Garuda Aerospace's ongoing efforts to expand its footprint with plans to continue its contributions to both technological advancements and socio-economic development through initiatives like 'Namo Drone Didi' which focuses on empowering rural women with drone technology.

Garuda Aerospace has already secured six approvals from the Directorate General of Civil Aviation, including Type Certification and Remote Pilot certifications, further solidifying its leadership in the Indian drone sector.

Source: Garuda Aerospace

(b) Air India-Kenya Airways codeshare partnership enhances connectivity

January 30, 2025 – Air India and Kenya Airways have expanded their collaboration with a new codeshare partnership, complementing their existing interline agreement. Under this new arrangement, Air India will place its 'AI' code on Kenya Airways' twice-daily Nairobi-Mumbai flights, providing passengers access to connecting Air India-operated flights to destinations such as Bangkok, Colombo, Dhaka, Malé, Melbourne, and Singapore. Additionally, Kenya Airways will place its 'KQ' code on Air India's Delhi-Nairobi service.

This partnership facilitates seamless one-stop connectivity for passengers traveling between Kenya and Southeast Asia or Australia via Mumbai, and vice versa. The airlines also offer a unified baggage policy and convenient booking options across their networks.

Source- Air India

(c) SpiceJet re-inducts first grounded Boeing 737 MAX Aircraft

January 28, 2025 – SpiceJet has re-inducted its first grounded Boeing 737 MAX aircraft into service, marking a key milestone in its fleet restoration efforts. This aircraft's return is part of a broader plan that includes the addition of ten aircraft, including four Boeing 737 MAX planes, by mid-April 2025. To support this, the airline has entered into service agreements with StandardAero Inc. and CFM International which will aid in the aircraft's maintenance and operational readiness.

The re-induction of the 737 MAX will allow SpiceJet to operate high-demand routes such as Jeddah and Riyadh without restrictions. SpiceJet aims to optimize its operations with the MAX's fuel efficiency, lower maintenance costs, and increased aircraft utilization. The airline has also added ten aircraft to its fleet since October 2024, resulting in over 60 new flight additions and expanded connectivity.

Source: SpiceJet website

(d) Star Air plans to enter aircraft Maintenance, Repair, and Overhaul ("MRO") business and expand fleet

January 27, 2025 – Regional carrier Star Air has announced its intention to enter the aircraft Maintenance, Repair, and Overhaul business through a joint venture, focusing on major maintenance services for regional and business jet fleets. The Bangalore-based airline, which celebrated six years of operations this month, also aims to expand its fleet to 14 aircraft by March 2025 and increase its network to over 100 flights.

Star Air currently operates a fleet of nine Embraer aircraft, offering 44 daily flights to 23 domestic destinations. The proposed MRO facility, which is under development, will operate under a subsidiary engineering company and cater specifically to regional aircraft and business jets. The airline has already flown over 1.5 million passengers and operates more than 90% of its routes under the government's Udan scheme, connecting Tier-II and Tier-III cities across India.

Source: Star Air website

(e) India's domestic air traffic sees 6% growth in 2024

January 22, 2025 – According to the latest official data from the Directorate General of Civil Aviation DGCA, India's domestic air traffic rose by 6% to 16.13 crore passengers in 2024. Airlines carried over 1.49 crore passengers in December 2024, marking an 8.19% increase compared to December 2023. This growth reflects the rising demand for air travel in one of the fastest-growing aviation markets globally.

In December, IndiGo led the market with a 64.4% share, followed by Air India at 26.4%. Akasa Air and SpiceJet held 4.6% and 3.3% of the market, respectively. However, the On-Time Performance ("OTP") in December saw a decline across airlines with IndiGo having the highest OTP at 73.4%, followed by Air India at 67.6%. The overall flight cancellation rate for scheduled domestic carriers was 1.07%, affecting over 67,000 passengers with airlines spending Rs 1.26 crore on compensation.

Source: DGCA website

(f) Directorate General of Civil Aviation ("DGCA") collaborates with International Civil Aviation Organization ("ICAO") to integrate advanced air mobility technologies

January 21, 2025 – DGCA is actively collaborating with ICAO and other aviation authorities to study and integrate advanced air mobility ("AAM") technologies with a particular focus on electric Vertical Take Off and Landing ("eVTOL") aircraft. DGCA Chief Faiz Ahmed Kidwai emphasized that safety will remain a priority as new regulatory frameworks, infrastructure needs, and other challenges are addressed to ensure smooth integration of AAM technologies into both national and international airspace.

The DGCA has formed six working groups to develop guidance and requirements for AAM along with reports on vertiports and eVTOL certification which have been already published in September 2024. The remaining groups are focused on crew licensing, airport operator permits, air navigation and traffic management, and maintenance, repair, and overhaul. Kidwai noted that the collaboration with national and international stakeholders is crucial to harmonizing regulatory frameworks for the integration of these technologies across borders.

Source: DGCA

(g) Union Cabinet approves Bill to ratify Cape Town Convention for aircraft leasing

January 21, 2025 – The Union Cabinet has approved a bill to ratify the Cape Town Convention, which aims to support aircraft leasing and manufacturing in India. The bill will provide legal backing for aircraft leasing, benefitting the country's growing aviation market. While the bill has been approved by the Cabinet, it is yet to be presented before both Houses of Parliament for final approval. Once ratified, the Convention is expected to enhance the leasing and acquisition of aircraft in India which will further boost the aviation sector.

Source: Economic Times

(h) GMR promoter group reduces share pledge with debt consolidation

January 8, 2025 – GMR Infra Enterprises Private Limited, a promoter group company of GMR, has successfully consolidated its debt by issuing Optionally Convertible Debentures ("OCDs") worth INR 63 billion to the Platinum Stone A 2014 Trust with The Abu Dhabi Investment Authority as the sole beneficiary. This transaction, executed on January 7, 2025, follows an agreement made on October 22, 2024. The funds raised have been used to refinance all "Loan Against Shares" of the GMR Promoter Group, consolidating multiple lenders into a single source of long-term capital. As a result, this move has significantly reduced the pledge on the GMR Promoter Group's shareholding in GMR Airports Limited and mitigated both refinancing and settlement risks.

Source: Economic Times

B. Key International Updates

(a) Lufthansa announces deal to acquire 10% interest in Latvia's national carrier airBaltic

January 30, 2025- In a significant move for the European aviation sector, Lufthansa has announced a deal to acquire a 10% stake in Latvia's national carrier, airBaltic. This acquisition is part of Lufthansa's broader strategy to expand its presence in Europe and resolve existing supply bottlenecks by acquiring more aircraft. The transaction, valued at approximately Euro 14 million, is expected to close in the second quarter of 2025, pending antitrust approval. This investment not only supports airBaltic's expansion efforts but also reflects the ongoing consolidation trend in the European airline industry as major carriers seek to enhance their competitiveness in a challenging market.

Source: Lufthansa Group, Media Report

(b) Moscow strengthens ties with India to boost tourism and MICE engagement

January 28, 2025- The Moscow City Tourist Committee has ramped up efforts to strengthen its partnership with India's outbound tourism sector, focusing specifically on the Meetings, Incentives, Conferences, and Exhibitions market. This strategic focus aims to solidify Moscow's position as a top destination for both leisure and business travel with India emerging as a key partner in this growth.

Source: The Digital Travellers

(c) International conferences in the Aviation Sector

January 29, 2025- Several key international conferences took place in January 2025, including the UAA Aviation Policy Seminar, the Airline Economics Growth Frontiers Global, the Military Aviation and Air Dominance Summit, and the Sustainable Aviation Summit 2025. One of the most notable events was the World Cargo Summit 2025, held in Ostend-Bruges, Belgium, from January 27-29, 2025. The summit focused on air freight economics, industry strategies and developments and discussed how organizations might adapt their business models to remain competitive.

Source: Air Cargo week

C. Significant developments

(a) Kempegowda International Airport achieves Level 1 ACI accessibility accreditation

January 23, 2025 – Kempegowda International Airport has become the first airport in India to receive the Level 1 Accreditation under the Airports Council International Accessibility Enhancement Accreditation Program ("AEA"). The AEA Program assesses airports on their efforts to improve accessibility and inclusion. At Kempegowda International Airport, initiatives like the "B-Included" program, the Assistive Device Policy and the Sunflower Lanyard scheme has ensured a seamless journey for all passengers.

Source: Airports Council International website

(b) Bharatiya Vayuyan Adhiniyam 2024 set to come into effect from January 1, 2025

January 3, 2025 – The Bharatiya Vayuyan Adhiniyam 2024, a key piece of aviation reform legislation, was passed by the Lok Sabha on August 9, 2024, and by the Rajya Sabha on December 5, 2024. Following the President's assent, the Central Government has announced that the provisions of the Act will come into force on January 1, 2025. This new legislation modernizes India's aviation sector by re-enacting the Aircraft Act of 1934 to align with contemporary global standards and the Prime Minister's vision to remove colonial-era influences.

The Bharatiya Vayuyan Adhiniyam aims to simplify regulatory processes, enhance efficiency, and promote indigenous manufacturing in line with the Make in India and Atmanirbhar Bharat initiatives. It aligns with international conventions like the Chicago Convention and ICAO, while also streamlining processes such as license issuance. The Act will foster innovation, improve safety, and support India's growth in the global aviation industry.

Source: Press Information Bureau

D. Key Judicial Precedents

(a) National Company Law Tribunal ("NCLT") orders liquidation of Go First Airlines after 20-month insolvency process

January 24, 2025 – NCLT has ordered the liquidation of Go First Airlines after a 20-month-long insolvency process. The decision follows the failure to find a viable resolution plan with the Committee of Creditors ("CoC") approving the liquidation with a unanimous 100% vote. The Tribunal upheld the CoC's decision, stating that the Commercial Wisdom of the CoC should not be interfered with.

The insolvency resolution process for Go Airlines began on May 10, 2023, when the NCLT initiated the Corporate Insolvency Resolution Process. Despite receiving multiple resolution plans, none were deemed commercially acceptable, leading the CoC to opt for liquidation in July 2024. The Tribunal appointed Mr. Dinkar T. Venkatasubramanian as the Liquidator and directed the payment of liquidation costs, estimated at Rs. 21.6 crores which is funded by the CoC members.

Source- Live Law

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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