The privatisation of Air India leading to the transfer of its ownership by the government to Tata Sons in 2022 and the ensuing transformation plan being undertaken at the airline has triggered a strategic transformation in the country’s airline sector
Last year, Air India placed an order for a record 470 aircraft, with the option to add another 370 aircraft.
The group has added 40 aircraft last year and is expecting to take delivery of five aircraft a month for the near to the medium term
Meanwhile, India’s largest airline IndiGo, which has a fleet of about 370 aircraft with more than 980 on order, continues to grow rapidly, despite supply-chain challenges that have fettered growth plans of airlines globally.
This means the country’s airline fleet of almost 700 aircraft could double by the financial year 2030
India have a solid and aggressive airline system with the size, scale, aircraft orders and strategic intent to emerge as world-class operators.
Air India’s investment of $6.5 billion in its business plan is a reflection of this.
IndiGo reported record profitability of approximately $1 billion in FY2024
To support the appetite for travel as well as airline fleet expansion plans, the country also needs a solid airport infrastructure which, for the first time, is ahead of demand and there is an investment pipeline of $11 billion at various stages of implementation.
In the National Capital Region, we will have a world-class airport infrastructure in a dual airport system where Delhi International Airport Limited which will be complemented by the greenfield Noida International Airport which is likely to open by April 2025
The Mumbai Metropolitan Region will similarly have a dual airport system within almost 12 months
The Adani Group is also significantly expanding capacity at its six PPP non-metro airports of Lucknow, Jaipur, Ahmedabad, Guwahati, Thiruvananthapuram and Mangaluru
And the Airports Authority of India is investing $4 billion to significantly enhance non-metro capacity.
Greenfield airports are also planned in Chennai and Pune
Challenges
As far as policy impetus is concerned, given the rate of growth of the aviation industry in the country skill shortages could arise across the ecosystem, but particularly with respect to technical staff such as pilots and maintenance engineers and technicians.
The shortage of pilots is a serious issue and is likely to become more acute, especially in light of the new duty and rest norms laid down by the DGCA for them, which could increase the number of pilots required by about 15%
Similarly, air-traffic controllers as well as security and safety personnel are inadequate relative to requirements
Way forward
The Budget must provide fiscal incentives for investment in skilling, training and education
Central govt. could also look at rationalising direct and indirect taxes, which today account for almost 20% of an airline’s quarterly revenue such as through levies by States on aviation turbine fuel
The government must fast track the privatisation of 25 airports planned under the national monetisation plan.
COMMENTS