By Chaitali Bag
Aviation Secretary Vumlunmang Vualnam recently delivered a keynote address at the CAPA India Aviation Summit 2024, expressing the Indian government’s steadfast support for the ongoing development of airport infrastructure in the country. In his address, Vualnam shed light on the government’s ambitious plans to enhance 453 potential airstrips, underscoring a dedicated approach towards fortifying the aviation landscape across India.
The Summit was held at Hotel Andaz in New Delhi from the 5th to the 7th of April. The discourse around the augmentation of 453 potential airstrips signifies a pivotal juncture in India’s aviation sector, highlighting a strategic shift towards fostering greater connectivity and accessibility. As the nation continues to witness a burgeoning demand for air travel, the imperative to expand and modernize airport infrastructure has assumed paramount importance. With travel and tourism playing a vital role in the country’s economic growth, the enhancement of airstrips stands as a testament to the government’s proactive stance in propelling the aviation industry forward.
The commitment to developing airport infrastructure not only reflects a vision for a more robust aviation ecosystem but also underscores the government’s recognition of the pivotal role that aviation plays in stimulating economic growth, fostering regional development, and enhancing connectivity. By bolstering the aviation landscape, the government aims to facilitate greater ease of travel, promote tourism, and attract investments, thereby catalyzing overall socio-economic progress.
Moreover, the endeavour to revamp 453 potential airstrips underscores a multi-dimensional approach toward infrastructure development, encompassing aspects such as upgrading facilities, enhancing operational efficiency, and embracing technological advancements. This holistic strategy is poised to not only elevate the standard of aviation infrastructure but also contribute to elevating India’s standing as a regional aviation hub.
In light of the ever-evolving dynamics of the aviation industry and the increasing emphasis on sustainability and innovation, the government’s unwavering commitment to airport infrastructure development sets a promising trajectory for the future of aviation in India. By laying the groundwork for a more resilient and efficient aviation network, India is poised to not only meet the burgeoning demands of air travel but also carve a distinctive niche in the global aviation landscape.
Secretary Vumlunmang Vualnam’s articulation of the government’s fervent support for the enhancement of 453 potential airstrips exemplifies a progressive vision toward fortifying India’s aviation infrastructure. As the country strides towards a more interconnected and prosperous future, the proactive strides in airport infrastructure development stand as a testament to India’s unwavering commitment to fostering a conducive environment for growth and progress in the aviation sector.
In essence, the government’s resolute confidence in the continued development of airport infrastructure heralds a new era of possibilities and opportunities in India’s aviation landscape, signalling a promising chapter in the nation’s journey toward achieving greater heights in the realm of air transportation.
The aviation sector in India is currently poised for significant growth and development in the coming years. According to Kapil Kaul, Chief Executive Officer and Director at CAPA India, optimistic projections are indicating a substantial increase in India’s aircraft fleet over the next five years. This bodes well for the industry and reflects a positive trajectory for the aviation market in the country.
Furthermore, the Airports Authority of India has earmarked around $4 billion for the expansion of airport infrastructure in non-metro cities. This investment is a clear indicator of the government’s commitment to modernizing and enhancing the country’s aviation capabilities. Additionally, plans to privatize 25 more airports in the upcoming financial year are set to further stimulate growth and efficiency within the sector.
In line with global sustainability efforts, there is a concerted push towards the adoption of Sustainable Aviation Fuel (SAF) in India. This environmentally friendly fuel alternative aligns with the industry’s commitment to reducing carbon emissions and ensuring a more sustainable future for aviation. The government’s pledge to promote the use of SAF underscores its dedication to fostering a greener aviation ecosystem in the country.
In his impressive presentation Kapil Kaul mentioned that looking ahead to the fiscal year 2024-25, CAPA India forecasts a notable increase in both domestic and international air traffic. Domestic air traffic is expected to grow by 6-8 percent, reaching 161-164 million passengers, while international traffic is projected to rise by 9-11 percent to 75-78 million passengers. These projections highlight the continued expansion and vitality of the Indian aviation market, signalling promising opportunities for stakeholders in the industry.
In conclusion, the aviation sector in India is experiencing a phase of rapid evolution and growth, driven by strategic investments, infrastructure enhancements, and a commitment to sustainability. With promising projections for the future, the industry is poised to witness significant developments and opportunities in the years to come, solidifying its position as a key player in the global aviation landscape.
At the CAPA India Aviation Summit 2024, Wilson delivered a significant announcement regarding Air India’s ambitious fleet upgrade initiative. By mid-2026, the airline is set to complete the installation of new seats across its aircraft, marking a pivotal milestone in Air India’s overarching transformation strategy. With a commitment to elevating the onboard experience for passengers, this retrofit program underscores the airline’s dedication to offering a more refined and comfortable journey.
The investment of $400 million in the refurbishment of Air India’s Boeing 777 and 787 widebody aircraft, along with the A320neo planes, highlights the scale and scope of this comprehensive overhaul project. The strategic focus lies in equipping these aircraft with state-of-the-art features such as new seats, modern inflight entertainment systems, updated upholstery, and potentially integrating premium-class seating options. These enhancements are poised to redefine the passenger experience and reinforce Air India’s position as a leading player in the aviation industry.
In line with its transformation efforts, Air India also intends to establish hubs in key cities such as Delhi, Mumbai, and Bengaluru. While these hubs are pivotal for streamlining operations and enhancing connectivity, challenges such as limited digital visa processing capabilities and airport connectivity constraints remain areas of concern that demand attention and resolution.
Moreover, Wilson’s observation regarding airfares sheds light on the airline industry’s pricing dynamics. Highlighting that average ticket prices have not kept pace with the average inflation rate, it underscores the complex interplay of market forces, operational costs, and competitive pressures that airlines navigate in setting fares. This insight into pricing trends offers valuable context for understanding the economic landscape within which Air India operates.
Air India’s commitment to fleet modernization, onboard enhancements, hub expansions, and addressing industry challenges underscores a strategic vision aimed at enhancing the overall passenger experience and strengthening its competitive standing. The airline’s proactive steps towards innovation and service excellence are poised to shape a new chapter in its evolution, setting the stage for continued growth and success in the dynamic aviation sector.
The recent forecast by the aviation consultancy firm CAPA suggests a significant increase in profits for Indian airports is indicative of the robust demand and overall growth trajectory within the industry. As stated by CAPA India’s Vice President Paramprit Singh Bakshi at the CAPA India Aviation Summit in Delhi, the airport sector’s pre-tax profit is anticipated to soar to INR 10,370 crore, reflecting a notable 35% upsurge from the previous fiscal year’s figures.
A dominant player in the Indian aviation landscape, low-cost carrier IndiGo commands a substantial 60% market share, while the Air India group, encompassing two budget carriers and two full-service airlines in Air India and Vistara, accounts for roughly 30% of the market share. This market dynamic sets the stage for a competitive yet thriving industry ecosystem.
To address the capacity constraints and enhance operational capabilities, the industry is set to witness the addition of 84 aircraft within the current year, thereby expanding the airlines’ combined fleet to 812 from 728 as reported by CAPA India CEO Kapil Kaul during the summit, as covered in the Hindustan Times.
The growing profits and opportunities in the Indian airport sector have been further supported by strategic investments driven by the government to develop new terminals and revamp existing infrastructure. This concerted effort is expected to result in a 14.8% growth in operator revenue for the current year, bolstered by the consistent rise in domestic passenger traffic and the resurgence of international travel.
Looking ahead, the airport industry is poised for substantial expansion, with a projection to have 350 airports in operation by 2030, marking a significant increase from the 144 airports recorded in 2019, according to an earlier estimate by CAPA India and government data. This ambitious target underscores the strategic vision and concerted efforts aimed at transforming and scaling up the aviation infrastructure in India.
The promising prospects and exponential growth forecasted for the Indian airport industry underscore a landscape ripe with opportunities and potential. With a favorable market outlook, proactive government support, and a dynamic competitive environment, the sector is primed for sustained expansion and continued success in the years to come.
The Saudia Group, a prominent aviation conglomerate based in Saudi Arabia, is strategically positioning its upcoming mega Maintenance, Repair, and Overhaul (MRO) facility to cater to Indian carriers. This ambitious initiative has already garnered interest from Tata group carrier Air India, with discussions underway to explore potential collaborations. Furthermore, the Saudia Group is slated to engage with India’s largest airline, IndiGo, in the near future to delve into MRO-related opportunities.
At the recent CAPA India Aviation Summit in Delhi, Abdullah M. Alshahrani, spokesperson for the Saudia Group, emphasized the group’s proactive approach towards engaging with the Indian aviation market. Acknowledging that many Indian airlines currently rely on European MRO services, the Saudia Group aims to establish its MRO Village as a preferred destination for maintenance activities among Indian carriers.
Scheduled to be fully operational next year, Saudia Technic’s MRO Village is poised to become the largest MRO facility in the Middle East and North Africa (MENA) region. Encompassing an impressive expanse of 1 million square meters, the facility will feature state-of-the-art hangars, engine shops, and component facilities to cater to diverse maintenance requirements.
India holds a pivotal position in the Saudia Group’s expansion strategy, not only in terms of MRO services but also as a crucial market for its flagship airlines—Saudia and Riyadh Air. While Saudia has established itself as a legacy carrier, the upcoming Riyadh Air is gearing up to commence operations next year, further enhancing the group’s presence in the region.
Director General Ibrahim Al-Omar’s remarks at the CAPA India summit underscore the Saudia Group’s commitment to strengthening air connectivity between Saudi Arabia and India. With plans to increase direct flights between the two countries, the group envisions a more robust network that facilitates seamless travel for passengers. Currently operating 54 weekly flights from Saudi Arabia to seven Indian destinations, Saudia aims to bolster its routes with the impending launch of Riyadh Air, which is also poised to serve key Indian cities.
The Saudia Group’s ambitious endeavours in the Indian aviation market signify a strategic alignment with the country’s burgeoning air travel sector. By leveraging its cutting-edge MRO capabilities and expanding flight operations, the group is poised to forge enduring partnerships with Indian carriers and elevate the standard of aviation services in the region. As the Saudia Group embarks on this journey of collaboration and growth, it paves the way for enhanced connectivity and enhanced air travel experiences between Saudi Arabia and India.
In a strategic effort to restore financial stability and boost operational capacity, Indian airline SpiceJet has unveiled plans to raise $250 million in a new funding round over the next two months. Chairman Ajay Singh disclosed this development at the CAPA India Aviation Summit, emphasizing the airline’s pressing need for capital to address outstanding dues and replenish its fleet to optimal levels. This imminent fundraising endeavour comes on the heels of a series of financial initiatives undertaken by SpiceJet in 2023, culminating in an infusion of approximately Rs 744 crore ($89.2 million). These funds played a pivotal role in facilitating the management of financial obligations and satisfying demands from leasing entities, notably AerCap, the world’s largest aircraft lessor, with which SpiceJet has recently resolved outstanding issues. “We remain steadfast in our commitment to revitalizing SpiceJet’s operational prowess and fulfilling all financial obligations,” declared Singh during the summit. The airline’s fundraising initiatives form a vital component of its overarching strategy to successfully navigate the turbulent waters of the aviation industry.
In addition to detailing SpiceJet’s funding roadmap, Singh seized the occasion to shed light on a critical concern impacting the aviation sector: the taxation of aviation turbine fuel (ATF). He advocated for the inclusion of ATF within the Goods and Services Tax (GST) ambit, asserting that the current taxation framework under the Central Excise Act exorbitantly escalates operational overheads for airlines. The plea to integrate ATF into GST has garnered support from numerous industry experts who posit that such a measure could substantially alleviate the financial burden on airlines, fostering enhanced operational efficiency. Presently, only five states in India have refrained from reducing the Value Added Tax (VAT) on jet fuel, preserving a notable cost impediment for carriers operating within these jurisdictions.
Kapil Kaul, the CEO of CAPA India, conveyed a sense of optimism regarding the prospective alignment of tax policies by the remaining states in the ensuing financial years. “We anticipate that states currently withholding tax concessions on jet fuel will rationalize their taxation practices by the fiscal years 2025 or 2026,” Kaul remarked, hinting at a potential moderation in operational expenditures for airlines in the near term.
The confluence of SpiceJet’s fundraising agenda and the industry-wide discussions surrounding tax reforms underscores the multifaceted challenges facing the aviation sector in India. By diligently pursuing avenues to enhance financial resilience and operational efficacy, SpiceJet aims to position itself for sustained success amidst the dynamic landscape of the airline industry.
The CAPA India Aviation Summit, organized by the region’s prominent aviation advisory and research practice, stands as a beacon of excellence in the aviation, aerospace, and travel industries. With a steadfast mission to deliver transformative solutions that drive significant strategic and financial outcomes for its clientele, CAPA India has accumulated a rich tapestry of experience over the past two decades. Boasting a portfolio of over 700 consulting projects and numerous research and analysis assignments spanning the aviation value chain, CAPA India has established itself as a trustworthy and innovative partner in the sector.
Since its inception in 2004, the CAPA India Aviation Summit has emerged as a cornerstone event for companies operating within the realm of Indian aviation. Each year, industry insiders and global leaders converge at this prestigious summit to participate in knowledge-sharing sessions and engage in invaluable networking opportunities. In 2024, the CAPA India Aviation Summit continued its tradition of excellence by bringing together a diverse array of Indian and international industry luminaries for a forum that aimed to foster collaboration, drive innovation, and chart the course for the future of aviation in the region.
Through its commitment to excellence, thought leadership, and industry expertise, the CAPA India Aviation Summit has solidified its reputation as a pivotal event on the aviation calendar. By providing a platform for industry stakeholders to exchange ideas, forge partnerships, and navigate the complexities of the aviation landscape, CAPA India continues to uphold its mission of driving positive change and innovation in the aviation sector.