The transport system provides the essential infrastructure for the development of a country. The demand for expansion of transport generally drives from the need of other sectors of the economy like agriculture trade industry and tourism etc. The transport requirements of any country determined by three basic components the population, the consumer needs, and the agricultural and industrial production. Out of these three components the first one is, size of population which itself determine the size of the other two factors. Transport sector has shown a massive increase during last three decades and also indicates an alarming growth potential during next twenty years. Transport development requires adequate resources and efficient management. The sector needs long range and heavy investment. Transport sector is generally considered as an infrastructure sector. It provides the basic engine of growth to an economy. The development of transport sector also enhance the production process in a country like India. Infrastructure needs long and heavy investment. Private firms do not find infrastructure provision as profitable. Beside this, these projects has very low internal rate of return and low pay back periods.

Air transport is a fastest mode of transport. It plays an extremely important role in time of emergency like war, floods and epidemics. It is also helpful in trade of luxurious and perishable goods. It is also time saving mode of transport. But presently Indian air transport facilities and air services infrastructure is constantly under pressure. Services provided by different airlines are quite inadequate to meet the traffic requirement on many crowded routes. Air transport sector is facing many problems like higher operational cost, rising aviation turbine fuel prices, terminal related problems, maintenance, repair and overhaul facilities at airports. In present scenario, air transport sector is in financial crunch. There is urgent need to allow foreign direct investment to meet the financial challenges by the air transport sector in India. This paper will discuss about Problem and Prospects of Civil Aviation in India. 
 
KEYWORDS:  Civil Aviation, Industry, Profitability.

Introduction The first air service in India started in 1912. A passenger flight operated between Karachi and Delhi started the era of civil aviation in India. The flight was started by the Indian State Air Services in collaboration with the UK based Imperial Airways. JRD Tata founded the first Indian airline -Tata Airline in 1932. Nine air transport companies were carrying both air cargo and passengers at the time of independence namely Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. Orient Airways shifted to Pakistan after partition. In early 1948, Government of India established a joint sector company, Air India International Ltd in association with Air India (earlier Tata Airline) with a capital of Rs 2 crore. According to Air Corporations Act, 1953 the Government nationalized nine airline companies.  Indian Airlines Corporation (IAC) was established to cater to domestic air travel passengers and Air India International (AI) for