Sunday, June 23, 2024

Air India’s Ambitious Expansion Plans Propel Domestic Aviation Industry Upgrade

By Staff Correspondent

India’s civil aviation sector is on the brink of a significant transformation as the government takes bold steps towards privatising Air India and upgrading six major metro airports into global hubs. With Air India’s recent mega order of 470 aircraft, including 70 wide-body planes, the country’s aviation ambitions are gaining momentum, propelling it to become one of the world’s fastest-growing and third-largest aviation markets.

The Government of India, under the strategic vision of Civil Aviation Secretary Rajiv Bansal, see a “huge opportunity” for Indian airlines in the medium to ultra-long-haul international segments, typically served by wide-body aircraft with flying times ranging from eight to nine to 14 to 15 hours. Although Air India and Vistara have some presence in these segments, domestic airlines have faced challenges competing with foreign network carriers. However, with the government’s push to bolster wide-body operations, Indian carriers are now eyeing opportunities to establish dominance in international passenger traffic.

India’s bilateral air traffic rights stance also aligns with its strategic vision. While Dubai-based Emirates has been urging India to increase the number of seats under the India-Dubai bilateral air services agreement, New Delhi has been hesitant to comply. Instead, India wants its carriers to expand wide-body operations to transport passengers to Europe and beyond through its large aviation hubs. Increasing seats under bilateral pacts do not align with India’s aviation ambitions, as it aims to create a conducive environment for its carriers to thrive.

Data from the Directorate General of Civil Aviation (DGCA) reveals that the cumulative market share of foreign airlines by passengers on international flights to and from India was 56.5% in the last quarter of the year. In contrast, Indian airlines held a collective market share of 43.5%, with a significant portion coming from short-haul international passengers. Foreign network carriers dominated the longer-route segments, with Emirates having the largest market share among foreign airlines at 9.5%.

At the recent CAPA summit, Emirates executives advocated an increase of 50,000 weekly seats under the air services agreement. However, India’s Civil Aviation Secretary, Rajiv Bansal, reiterated that there would be no change in India’s stance. He emphasised India’s ambition to develop large aviation hubs and stated that the Ministry of Civil Aviation (MoCA) would support and encourage domestic carriers to expand wide-body operations. In line with this vision, the government aims to transform airports in six key metros – Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Hyderabad – into international hubs.

As India’s civil aviation sector gears up for transformation, the government’s strategic vision of privatisation, wide-body operations, and international hub upgrades is set to propel India’s aviation industry to new heights. With a focus on creating an environment conducive for Indian carriers to compete globally, India is positioning itself as a critical player in international aviation.

As highlighted earlier, India’s aviation sector is undergoing significant changes as the government implements policy tweaks to spur growth and tap into the country’s potential as a major aviation hub. One such policy change is the extension of the wet-leasing of wide-body planes from a previous upper limit of six months to now up to one year. Additionally, Indian carriers have been allowed to induct foreign pilots for Boeing 777 aircraft to address the rising demand but limited supply of pilots.

According to officials and industry insiders, India’s strategic geographic location presents ample opportunities for it to establish itself as a prominent aviation hub, specifically for facilitating passenger transit between Europe and Africa to East Asia, Southeast Asia, and Australia. Arun Bansal, the CEO of Adani Airports, which oversees seven airports and is involved in the development of the upcoming Navi Mumbai airport, highlighted the significance of India’s central position on the world map, stating, “We are expanding capacity, as are the airlines. To establish a hub, we need to focus on infrastructure and regulations to facilitate the sector, and collaborate with MoCA and Airports Authority of India (AAI) to implement appropriate processes.”

The Indian government’s policy of not expanding traffic via bilateral agreements could present hurdles for certain stakeholders within the country’s aviation industry, including emerging players like Akasa Air and airport operators undertaking capacity expansion or constructing new airports. Industry experts propose an alternative approach that prioritises support for the growth of smaller airlines in the international market in the short and medium term, thereby optimizing the utilization of newly added airport capacities.

Leading aviation sector analysts told IADB that India’s carriers may take considerable time to achieve the scale desired by the government, as Air India remains the sole airline with a significant order for wide-body aircraft, which also faces delays in induction. To better utilise the newly added airport capacities, the analyst suggests that the government should explore strategies that facilitate the growth of smaller airlines in the international market in the near and medium term.

As India’s aviation industry undergoes these policy tweaks, it is poised for growth and has the potential to become a major aviation hub in the region. With the proper infrastructure, regulations, and government support, India’s aviation industry could significantly develop and contribute to the country’s economic growth in the coming years.

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