..:: India Strategic ::.. Indian civil aviation needs US $30 billion investment

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Editorial

Indian civil aviation needs US $30 billion investment

By Sangeeta Saxena

Published: May 2011

New Delhi. Until barely two decades ago, what was considered an elite form of transport that could be owned and run by the Government and its agencies, civil aviation in India has come to a state where there are more than 130 airports, a steep rise in the number of passengers, more than 20 private airlines and some industryrun airports. Civil aviation in India seems to be maturing fast.

The exponential growth of the Indian civil aviation sector needs investments worth over US $30 billion in the next 15 years and the Civil Aviation Ministry has worked out a road-map to facilitate this, according to Secretary Civil Aviation Dr Nasim Zaidi.

Inaugurating the Centenary conference of Indian Civil Aviation, organized by ASSOCHAM (the Associated Chambers of Commerce and Industry), he outlined three keyinitiatives that the Ministry was taking during the year – creation of a National registry of Airports; Formation of a Civil Aviation Authority; and an independent Investigation Board.

Twelve greenfield airports are currently being developed as the country’s unique geographical position offers an opportunity to become a global hub for airlines, he informed. On a positive note with a total of 142 million passengers checked in and out of airports across the country during 2010-11, marking a growth of 15 per cent over the previous year, civil aviation seems to be a galloping industry in India after a hundred years.

Out of the 130 airports, 124 are owned and operated by the staterun Airports Authority of India (AAI), which includes 12 International Airports, 81 Domestic Airports, 8 Customs Declared Airports and 23 Civil Enclaves. The passenger growth has been phenomenal at 23 per cent in 2010-11, up from 19 per cent the previous period. Only two per cent and 0.5 per cent Indians fly domestic and international respectively. Though, Indians are way behind, there is a huge potential. but the growth of the sector is critically dependent on infrastructure, safety, liberalization, human resources and environment, Dr Zaidi said.

The Director General of Association of Asia Pacific Airlines (AAPA), Andrew Herdman, said while the Asia-Pacific region was doing well commercially in the aviation sector, on the regulatory front the dominance of the US and Europe continued. Aviation as a business faces significant regulatory constraints and there was a need to revisit the issues for global standardization. The outlook for the sector was quite dampening as crude oil prices were touching $120 a barrel. Oil price volatility impacts the aviation sector, more so in India due to the high taxation regime.

He pegged the Asia Pacific aviation industry’s annual volume at 158 billion dollars with 4,712 aircraft, 684 million passengers and 18 million tonnes of cargo. The region contributed to half of 16 billion dollar profit earned by all airlines around the world.

The conference deliberated on three issues – ‘Airports: constraints and growth drivers’; ‘Airlines industry: challenges and opportunities’; and ‘Training and capacity building’ with a host of experts giving their perspectives. India being a highly under-serviced market, they were optimistic about the opportunities, but the challenges were many – infrastructural issues; high taxation; undue regulation; human resource requirements etc.

M K Narayana Rao, Chairman of ASSOCHAM’s civil aviation committee, said Indian aviation has seen a tremendous growth in the past 10 years due to government’s open skies policy, arrival of low-cost airlines and air travel becoming more affordable for middle-income people. According to conservative estimates, passenger traffic is likely to be around 540 million by 2025 as the fleet size of scheduled airlines increases to 1,500 from 430 now. At the same time, cargo traffic is expected to touch nine million tonnes from 2.33 million tonnes in the last financial year.

Amber Dubey, Director at KPMG (India), said the industry and the government must tackle policy and regulatory challenges.

He said airport charges must come down and ground handling operations need to be streamlined so that passengers can experience world-class services. State aviation secretaries will soon meet to provide inputs for toning up the infrastructure. The industry also needs to set up training institutes in various areas, especially to train air traffic controllers.

D S Rawat, Secretary General ASSOCHAM , said the Indian civil aviation industry is at an inflexion point and set to enter the next phase of growth with even greater momentum.

Jet Airways was given the award for being the best Indian global carrier, ‘Deccan 360’ the best cargo airline, Delhi International Airport Limited, the best managed airport and Franklinn, the best training institute.