Faced with the stiff challenges posed to the aviation industry by rising fuel costs, Euro debt crisis and infrastructure bottlenecks, the Union Civil Aviation Ministry has embarked upon several initiatives for propelling the aviation sector.

The Ministry is working out on an economic policy framework for future airports to attract investments as well as ensure their viability. This is in addition to allowing 100 per cent foreign direct investments in the Greenfield airports under the automatic route and formulation of an Air Cargo Promotion Policy which will soon be brought out for consultations, Union Minister for Civil Aviation Minister Ajit Singh said here on Wednesday.

Mr. Singh formally launched the India Aviation 2012, the third edition of the country’s premier aviation exhibition and conference, here on Wednesday. The event, according to FICCI civil aviation committee chairman Dinesh Keskar, has seen 20 per cent increase in participation compared to the previous edition with more than 200 companies including the leading aircraft manufacturers taking part in it.

Mr. Singh said the Ministry was working upon a framework to modernise regulatory work for aerospace sector including its promotion. Coupled with this was the bilateral aviation safety agreement with the FAA of the US that was expected to boost export of aeronautic products.

The Minister admitted that the aviation sector that felt the tremors of the slowdown witnessed contraction of cargo markets worldwide by 0.7 per cent. Growth in demand lagged behind the increase in capacity for passenger and cargo segments, putting downward pressure on loan factors and yield.

“The skies are not expected to clear anytime soon and 2012 could prove to be equally challenging with European airlines likely to be hit the hardest in 2012,” he warned. The Asia Pacific region was expected to provide the “boost that is badly required’’ and this would be led by the expanding Indian and Chinese markets.

The trend would continue over the next few years, shifting the aviation’s centre of gravity eastward and by 2015, the APAC region was likely to account for 37 per cent of the passenger traffic compared to traffic associated with Europe and North America that was expected to fall to 29 per cent. Global aircraft fleet was expected to be doubled by 2030 of which APAC would account for about a third of all new aircraft deliveries.

In the Indian context, he said the country would continue to register domestic passenger growth at 9 to 10 per cent and it was expected to be among the first three markets with about 420 million passengers as against the 140 million handled in 2010. Indian airspace would see nearly 3.2 million aircraft movements including over-flying.

Union Petroleum and Natural Gas Minister S. Jaipal Reddy said special attention was needed to promote aviation sector in view of the robust growth in the economy since the past few years. Concentration towards this end should be on middle class as it was seen as one way to come out of the current slowdown. The Government was committed to promote the aviation sector in spite of its priorities by addressing the challenges it was facing.

Chief Minister N. Kiran Kumar Reddy, DGAC France head of international operation Elisabeth Dallo, and Peter Burleigh, Charge d Affaires, US Mission in India, also spoke.