AeroSoft Corp: Indian Aviation sector

Monday, 6 April 2020

Indian Aviation sector

Case study:

Over the past 30 years the Airline Industry has seen a number of changes, such as the increased market share of low-cost carriers (LCCs) as well as facing its fair share of challenges, from volcanoes erupting to infectious disease outbreaks. The next 30 years are likely to be more turbulent, as a new wave of technological change and innovation unfurls. Some see this wave sweeping the airline industry away, citing as precedents the taxi industry before Uber arrived, the music industry before internet downloads, and the printing industry before computer design software.

Mobility and its pillars of transport (air, inland and maritime) are at the very centre of our socio-economic fabric. They underpin social connections and facilitate access to goods and services, including trade, jobs, health care and education. In today’s world, mobility by air, road and water is all about efficiencies, speed, interconnectivity and accessibility by all. However, this raises the issue about sustainability. The UN predicts that by 2050 two thirds of the world population will live in cities.

The Air transport industry is expanding and The future of Aviation is a Bright one.

In 2017, airlines worldwide carried around 4.1 billion passengers. They transported 56 million tonnes of freight on 37 million commercial flights. Every day, airplanes transport over 10 million passengers and around USD 18 billion worth of goods.

This indicates the significant economic impact of aviation on the world economy, which is also demonstrated by the fact that aviation represents 3.5 per cent of the gross domestic product (GDP) worldwide (2.7 trillion US dollars) and has created 65 million jobs globally.

Aviation provides the only rapid worldwide transportation network, generating economic growth, creating jobs, and facilitating international trade and tourism.

Aviation has become the enabler of global business and is now also being recognized by the international community as an essential enabler to achieving the UN Sustainable Development Goals.

The aviation the sector is growing fast and will continue to grow. The most recent estimates suggest that the demand for air transport will increase by an average of 4.3% per annum over the next 20 years.

Indian Aviation sector:

Indian Aviation sector is both poised to take off as far as the future is concerned and is soaring high as far as the present is concerned.The Aviation sector in India has come a long way from the humble beginnings in the pre-independence era where the legendary JRD Tata, pioneered the industry and introduced a small turboprop plane as the first connection to the outside world by air.

Having said that, there are a few bottlenecks or chokepoints that have stymied the development and the growth of the Indian Aviation Sector. Prominent among these is the capacity addition in the airports across India where the present infrastructure is unable to support the ambitious expansion plans of the various airlines.

Indeed, even after building gleaming and glittering airports in all the Metros under the PPP or the Public Private Partnership model, airlines are routinely denied landing rights and parking bays for want of capacity.

Further, the fact that the blistering pace of growth in the sector means that despite adding capacity in a quick manner, Airports are unable to handle the ever-increasing load of footfalls in terms of arrivals and departures.

Though the Indian Government has put in place policies such as the UDAAN Scheme, the Regional Connectivity Scheme, and various others aimed at persuading and incentivizing airlines to connect to remote locations, the pathetic state of the infrastructure in such areas means that such schemes would take time to fructify.

Of course, the massive push to develop Tier 2 and Tier 3 airports is clearly a right step in the direction of broadening the base of the infrastructure pyramid so that flyers from rural areas can benefit as well.

However, this push is succeeding in states where the state governments are actively encouraging such developments whereas in other regions, the initiative is lagging the former.

Road Ahead

India’s Aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for majority of the country’s population, of which nearly 40 per cent is the upwardly mobile middle class.

The industry stakeholders should engage and collaborate with policymakers to implement efficient and rational decisions that would boost India’s civil aviation industry. With the right policies and relentless focus on quality, cost and passenger interest, India would be well placed to achieve its vision of becoming the third-largest aviation market by 2020. The expenditure of Indian travelers is expected to grow up to Rs 9.5 lakh crore (US$ 136 billion) by 2021. Due to rise in demand in air travel, India will need 2,380 new commercial Airplanes by 2038.