News Detail

• INDIAN AVIATION industry plays a very important role in shaping the Indian economy. With a compound annual growth rate of 18%, today the Indian aviation industry ranks ninth in the global civil aviation market.

• The Indian aviation industry has emerged as a huge market with a massive passenger movement in both domestic and international sectors. However, looking at the scenario in 2011, the Indian aviation industry was faced by some of the prominent challenges that hinder its projected growth.

• The rising operating cost has completely jeopardised the economies of some airlines today. This high operating cost combined with a highly competitive market condition has added to the continued strain and draining of the limited financial resources of the airlines. It has been estimated that airlines in India are battling with a debt of more than US$ 15 billion today, which is threatening their existence and sustainability today.

• Therefore, we certainly hope that the government will look at easing the inclusion of foreign direct investment in the aviation sector, as the current 49% and no investment in the Indian carriers has limited the resources and led to an investment gap.Therefore the government needs to allow international airlines to participate in the foreign direct investment.

• We also hope that the recent decision to allow airlines to directly import ATF will be approved for implementation by the cabinet.This will further help in reduction of sales tax, which is required to be paid by the airlines. Further, the Indian airspace infrastructure is already constrained at India’s current levels of traffic.With the passenger traffic estimated to grow at the rate of 8-10% for the next decade, managing the same will require rapid upgradation of airport infrastructure.

• Regional connectivity needs to be aggressively promoted as there is a considerable opportunity existing in connecting Tier-II and Tier-III cities with smaller aircraft. With huge growth prospects, the Indian Aviation Industry has immense potential to become the maintenance, repair, and operations hub of the future. Airlines need line maintenance for their aircraft, engines and component repair and overhaul facilities. Currently most airlines tend to send their aircraft either to the US, Europe or Gulf destinations for maintenance, as there is only one third-party aircraft maintenance, repair, and operations facility in India.

• Therefore there has been a gap in India for maintenance, repair, and operations facilities, which needs to be bridged. A new outlook for the route dispersal guidelines is also pivotal in order to augment the sector’s growth. Therefore cross-subsidisation of routes, establishment of a dedicated non-lapsable Essential Air Services Fund (EASF), airlines should be encouraged to invest in smaller aircrafts, geographical spread of sectors under respective categories - I, II & III need to change and percentage stipulation under each category should also be changed.

Govt needs to allow foreign airlines to participate in FDI

• Environment Issues with significant cost saving potential – Revamp current Air routes and allow direct routings to save fuel burn (cost benefits) and reduce emission (Green Initiative). For the healthy functioning of the sector, the government needs to monitor predatory pricing; a co-relation needs to be established between airport charges and airport performance towards airlines and a viable solution needs to be worked out in consultation with Reserve Bank of India for those Airlines in need of financial restructuring.

• Most importantly, the airline industry should be granted infrastructure status. Thus it will take earnest efforts from both government and private entities to bring down the high aviation cost and strengthen the image of Indian aviation industry as a more approachable mode of transportation for the Indian passenger.The opinions expressed are the author’s own . Ankur Bhatia is Executive Director, Bird Group Chairman of CII’s Core Committee on ‘Growth potential of Civil Aviation & Airports’

Source