One of the major highlights in 2015 for the global aviation sector will be the aviation reforms in India. This has been revealed by OAG, the Official Airline Guide, one of the market leaders in aviation intelligence, information and analytical services. The aviation sector is one of the fast growing sectors of Indian economy. Tony Tyler, Director-General and CEO of International Air Transport Association (IATA) has stated that the global world is focussing on Indian aviation, starting from manufacturers, businessmen, airlines, global businesses, tourism boards to individual travellers and shippers. According to him, if there is a common goal among all stakeholders in the aviation sector of India, a bright future can be expected.
Let us analyse the trends in the aviation sector and see what is the emerging scenario like.
It has been reported that the air traffic in India has increased over the last five years both in terms of aircraft movement and passenger traffic. The compound annual growth rate (CAGR) of total aircraft movements was 3.3 per cent and of passengers 5.6 per cent during FY11 to FY14. In the next five years too, in terms of aircraft movement, passengers and freight, the aviation sector is expected to grow, according to the Airports Authority of India (AAI). The job market in this sector is also expected to improve in 2015 with a number of new airlines coming up. Globally, it stands ninth in the civil aviation market. It ranks fourth in domestic passenger volume. It has been reported that by 2020 the civil aviation market in the country will become the world’s third-largest and is expected to be the largest by 2030. This sounds really good.
Factors contributing to the growth of the aviation sector
From an over-regulated and under-managed sector, the aviation industry in India has now changed to a more open, liberal and investment-friendly sector, especially after 2004. The civil aviation sector in India has moved into a new era of expansion. Some major factors contributing to this are:
• Higher household incomes
• Strong economic growth
• Entry of low cost carriers (LCC)
• Increased FDI inflows in domestic airlines
• Increased tourist inflow
• Surging cargo movement
• Cutting edge information technology (IT) interventions
• Focus on regional connectivity
• Modern airports
• Sustained business growth
• Supportive Government policies
Opportunities Indian aviation space offers promising opportunities in the areas of
• Trained manpower
• Aircraft manufacturing
• Airport infrastructure
• Airport and ground support equipment
• Maintenance Repair Operations (MRO) facilities
• Ground handling services
• Air cargo and fuel hedging etc.
Some major threats
• A global economic slowdown negatively impacts leisure, optional and business travel.
• The continuous rise in the price of fuel is a major threat.
• A terrorist attack anywhere in the world can negatively impact air travel.
• Government intervention can lead to new costly rules.
• Operation of many airlines
Problems facing the aviation sector
• High operational costs
• High cost of aviation turbine fuel
• High service tax and other charges
• Shortage of maintenance facilities
• High foreign exchange rate
• Competition from foreign airlines
• Congestion at airports
• Lack of qualified pilots, cabin crew and technical manpower etc.
Six new airlines to start operations in 2015
Civil aviation minister Ashok Gajapathi Raju said that in 2015, six airlines would start operations. There is no threat in launching of new airlines even if most of the airlines are reported to have incurred losses and a few are struggling to stay afloat. Even while, the state of the existing domestic airlines is not impressive in the sense that a few of them remain in debt, aviation professionals and investors are not hesitating in launching new airlines on regional and pan-India routes. The eight major airlines that India has at present are Air India, IndiGo, Jet Airways, SpiceJet, GoAir, Air Costa, AirAsia India and now Vistara, in which around 60 million domestic passengers travel annually.
In 2014, we saw the launch of AirAsia India. AirAsia is the first foreign airline to set up a subsidiary in India and is an Indo-Malaysian low cost carrier. In 2015, the first new airline to take off was Vistara, based in New Delhi. It commenced operations on January 9, 2015. This Indian airline, a joint venture between Tata Sons and Singapore Airlines, operates 14 daily flights with three Airbus A320 aircraft. Among other start-ups preparing for launch are Air Pegasus, Air One, Flyeasy, Premier Airways. Air Pegasus is promoted by Bangalore-based ground handling firm Deccor Aviation, Air One runs charter services, Flyeasy will be a regional airline with Bangalore as its base, and Premier Airways will be headed by NRI engineer Umapathy Pinaghapani and slated to launch in mid-2015.
What lies ahead?
The launching of the new airlines can be an aviation boom in the country as it will lead to an increase in the number of flights, lower prices, create more demand for trained crew and ground staff, including a rise in finance and leasing activities. However, the real challenge of the Indian aviation industry is to manage the unprecedented growth of air traffic with safety. The increase in air traffic has raised the demand for aircrafts. But at the same time, it has also posed a problem of modernising the airport and air navigation infrastructure so that safe, efficient and orderly operations are ensured. There is an urgent need to study the causes of the issues and address them so as not to obstruct the growth path of the aviation sector. And we should remember that even today, access to aviation is still a distant dream for the poor and the lower middle class sections of India's vast population. So there is a large untapped potential for growth in the industry as well. It is necessary for the stakeholders to engage and collaborate with the policy-makers to implement efficient and rational decisions that will shape the future of the aviation industry. With the right policies and a continued focus on cost, quality and passenger interests, India would definitely be able to realise its vision of becoming the third largest aviation market by 2020
Contributed by Rumani Saikia Phukan