Indian aviation industry soaring to new heights

Tribune Web Desk

Vibha Sharma

Chandigarh, February 17

Indian aviation is witnessing action as never before, developments that many experts believe may prove to be a turning point for the industry—airlines, crew, passengers, allied services and also the country as a sunshine market for the sector.

Seeking to expand fleet and operations, India’s flag carrier Air India recently announced the acquisition of 470 passenger aircraft from global giants French Airbus and American Boeing. The order comprising 210 A320/321 Neo/XLR and 40 A350-900/1000 and 190 737-Max, 20 787s and 10 777s is being called as one of the largest orders placed by any airline in the global aviation history.

The airline in fact has ordered as many as 840 planes from Airbus and Boeing including 370 optional buys. The Tata-owned entity appears to be aiming for the top place in the Indian aviation market share.

Interestingly, though Air India, Airbus and Boeing are all private companies, the importance of the deal can be judged by the conversation that Prime Minister Narendra Modi had with French President Emmanuel Macron and US President Joseph Biden after the announcement.

British Prime Minister Rishi Sunak has also praised the deal given that a significant portion of manufacturing will also be taking place in the UK, according to reports.

India is the world’s third-largest air passenger market, after China and the United States and a highly competitive one. Experts believe other domestic carriers may make similar announcements to keep up with the competition. Indian airlines are expected to boost capacity by at least 25%, becoming the fastest growing aviation market with 7% annual growth by 2040, they say.

The Air India deal is certainly creating ripples in the industry.

IndiGo and other Indian airlines are also planning to order around 1,200 aircraft in two years, according to a report by the Centre for Asia Pacific Aviation India (CAPA India).

Changes in aviation industry

With Air India aiming for a larger share of the pie, experts have been sensing dynamic changes in the industry just recovering from the pandemic.

Due to pandemic and subsequent rise in the price of ATF, finances of airlines have been in disarray, reporting losses. Besides, almost 35-50% of Indian airlines operating expenses are affected by the movement of US dollar vis-à-vis the Rupee.

Currently Indigo has the highest market share.

According to reports, the block deal worth Rs 3,221 crore involving sale of around 4.4 % stake in the India’s largest airline firm InterGlobe Aviation Limited has led to a major turbulence in the shares with shares of the parent of IndiGo falling for the second consecutive day on February 17.

Indigo reported consolidated net profit for the December quarter on the back of higher yields, higher air traffic, higher passenger load factor and lower cost.

Meanwhile, Spicejet shares too experienced turbulence after the Supreme Court directed it to encash bank guarantee and pay Rs 270 crore to former promoter Kalanithi Maran.

Bonanza for pilots, cabin crew

The good news for the industry reporting losses and debts is that the deployment of higher capacities may turn out to be a bonanza for airlines, cabin crew, in fact all allied services amid the need to generate jobs and employment opportunities.

According to agency reports, Air India will need more than 6,500 pilots to operate 470 aircraft it is acquiring.

Vistara too has decided to hike the salaries of pilots and cabin crew by up to 8 percent from April after around 30 pilots put in their papers for greener pastures in Gulf.

Currently, Air India, Air India Express, Vistara and AirAsia India have around 3,000 pilots for the combined fleet of 220 aircraft. Air India has around 1,600 pilots for 113 aircraft and there have been reports of ultra-long haul flights getting cancelled or delayed due to shortage of crew, they add.

Aviation boom

According to the Directorate General of Civil Aviation, air passenger traffic in India increased by 47% to 123.2 million passengers in 2022—a positive recovery from Covid meltdown in 2020 and 2021.

According to the MoCA, India witnessed double-digit Compound Annual Growth Rate (CAGR) of 14.5% in terms of domestic passenger traffic during the period 2014-15 to 2019-20.

During 2020-21 and 2021-22, there was a dip in domestic air traffic due to the impact of Covid-19 pandemic. The domestic air traffic has again picked up pace during the current financial year i.e. 2022-23 and is expected to reach around 97% of the pre-covid level.

“The Government is proactively supporting the aviation sector by providing a stable policy environment and incentivising competition led growth.In 2016, the Government released the National Civil Aviation Policy (NCAP 2016), which laid out the vision, mission and key objectives for the sector,” it says.

To cater to increasing air traffic, the government is making efforts to increase the number of operational airports to around 220 by 2030.

India, world’s third largest air passenger market

India is the world’s third-largest air passenger market, after China and the US. Experts say the sector will continue to experience robust growth due to the rise in demand. Economies are opening up and people are travelling, making the future of the industry in India more favourable.

Apart from domestic traffic, India operates a wide ranging network of international flights and currently has Air Services Agreements with 116 countries.

India presently provides direct connectivity to more than 40 countries, whereas, connecting more than 100 countries through indirect routes.

Around 15 low-cost, charter, and cargo airlines are currently operational in India.

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