India's aviation industry -Airborne with 22 per cent growth!
India's aviation sector is airborne with domestic traffic in double digits of 22%.What more in midst of ironical circumstances like spike in crude oil prices, rupee depreciation and congested airports, domestic traffic in the first half of 2018 grew by a whopping 22 per cent, against a world average of 7-8 per cent.
India ranked around 2010 but has jumped six places since then and may be in the top three by the end of 2018 along with the US and China. The Indian aviation industry aspires to become the top aviation market by 2030.
Immense potential
With a 350-million-strong middle class barely 1 percent of Indians fly. Only if each of them takes a return flight just once a year, India has 700 million trips, bringing India very close to China. Add to this the foreign tourist which is compared to quite low than China, Malaysia and Thailand. The potential for growth is immense.
India plans to construct 100 new airports with an investment of close to USD 60 billion (about Rs 4.2 lakh crore) in the next 10-15 years.
Currently, the Airports Authority of India (AAI) is managing more than 120 aerodromes.
The government is also working on a cargo policy. The government plans to have a predetermined tariff structure linked to inflation for greenfield airports.
The IATA has projected that by 2037, there would be almost 520 million passengers flying to, from and within India each year. In 2010, 79 million people travelled to/ from/ or within India. By 2017 that doubled to 158 million. That number is expected to treble to 520 million by 2037 according to a report.
The country is also expected to overtake Germany, Japan, Spain and the UK within the next ten years to become the world's third largest air passenger market.
Government Initiatives.
In 2016, India released its first-ever National Civil Aviation Policy (NCAP). Until then, barely 75 of its airports had commercial traffic. NCAP brought out a regional connectivity scheme called Udan, allowing passengers to fly to unserved airports for as little as $36 for a one-hour flight. The scheme has been a great success with airlines bidding to connect 56 new airports and 31 new heliports.
The government is now working on a new version of Udan for specific tourist locations and international routes.
The Nabh Nirman initiative aims to expand airport capacity by more than five times to handle a billion trips a year. New airports at Delhi, Mumbai, Mopa, Vizag, Pune and Patna are likely to come up in the next three-to-four years. About 20 major cities are likely to go in for a second airport a la Delhi and Mumbai. Existing airports are undergoing capacity augmentation.
Airport projects in India require an investment of more than $30 billion. The government is working on a new Model Concession Agreement that will help airport investors earn good returns while providing efficient infrastructure at optimal costs.
After the liberalisation of foreign investment rules, global investors are free to have a 49 per cent share in Indian carriers and 100 per cent stake in Indian airports. This opens up interesting opportunities for International carriers, airport companies and investment funds.
India has launched a satellite-based navigation system, called the GPS-Aided Geo-Augmented Navigation (Gagan). Only three others — the US, EU and Japan — have this capability. All new aircraft being registered in India from January 1, 2019 shall be Gagan-compliant. Gagan will enhance India's air-traffic capacity, flight safety and cost-efficiency.
Challenges ahead
However, India faces great challenges like:
1) Land acquisition for airports is a complicated process.
2) India's potential in air cargo, maintenance, repair and overhaul (MRO), helicopters, seaplanes and general aviation remains untapped.
3) Availability of skilled manpower is inadequate.
4) Reforms such as the formation of an independent civil aviation authority, corporatisation of Air Navigation Services and public listing of Airports Authority of India are still pending.
Indian aviation is currently in a strong position. It has the potential to become the third-largest market by the end of 2018 thanks to a growing economy, strong middle class, rising tourist traffic and a supportive policy environment.
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01-2026
