Indian Aviation Sector: Status, Opportunities, and Initiatives

Context: 

This editorial is based on the news “Union Minister for Civil Aviation Shri Jyotiraditya M Scindia inaugurates Asia’s largest Aviation Expo-Wings India 2024” which was published in the PIB. According to the Union Civil Aviation Minister, the government is working to make India the third largest aviation sector in the world in the next three years from the fifth position currently.

Status of Indian Aviation Sector

• Passengers Status: Domestic Passengers- It will grow to 300 mn by 2030. 
  • International Passengers: They have increased from 43 mn to 64 mn. 
• Rise in the Number of Aircrafts: Around 400 in 2014 to 723 in 2023.
• Airports: Currently, India has around 148 operational airports. 
• Aviation Capacity: India wants to raise it to 2000 aircraft by 2030 from the current 700 plus. 

Potential Opportunities in the Indian Aviation Sector

• Indian Aviation Sector is Becoming Profitable: According to IATA, the airline industry’s operating profit is expected to touch USD 49.3 billion in 2024 from $ 40.7 billion this year.
• Growing Infrastructure: To develop 100 airports by 2024 (74 airports having been developed). 
• Boosting Maintenance, Repair & Overhaul (MRO) Services: To grow to $4.33 Bn by 2025. 
• Growing Unmanned Aerial Vehicles (UAV): To have a total turnover of up to US$ 1.8 Bn by 2026. 

Indian Aviation Sector and Associated Challenges

• Infrastructure: India’s airports face insufficient runway capacity, an outdated air traffic management system and lack of night parking stands.
• Regulation: The complex regulatory framework, involving agencies like the Ministry of Civil Aviation, DGCA, AAI, etc. leads to unclear policies and delays in obtaining permits.
• Skilled Workforce: There is a shortage of skilled professionals and high training costs and outdated training facilities in India contribute to a skills mismatch. 
• Dollar Dependency: Fluctuations in the dollar rate against the Indian Rupee can severely impact profits since major expenditures like aircraft acquisition & maintenance are dollar-denominated.
• Cutthroat Pricing: To attract passengers, airlines in India often resort to drastically reducing ticket prices, making it challenging to balance the cost. 
• Supply Chain Issues: According to Centre for Aviation (CAPA) India, more than 100 planes of various Indian carriers are on the ground due to supply chain and non-supply chain issues. 
• Comparatively Low Penetration: Despite the rapid growth witnessed in the passenger traffic, its per capita penetration is still significantly low versus global average. 
• High Fuel Costs: The cost of Aircraft Turbine Fuel is nearly 50-70% of operational expenses. 
• Mock Drill Frequency: The frequency in India is every three years, while in Japan, the carrier’s crew members are trained every year to evacuate passengers within 90 seconds.

Government Policies to Support Indian Aviation Sector

• Increasing Foreign Direct Investment (FDI): Up to 100% FDI under the automatic route in non-scheduled air transport services, MRO for maintenance and repair organizations, etc.
• National Civil Aviation Policy 2016 (NCAP): To promote ease of doing business, deregulation, simplified procedures, and e-governance. 
• Regional Connectivity Scheme or UDAN (‘Ude Desh ka Aam Nagrik’): To enhance connectivity to India’s unserved and under-served airports and envisages to make air travel affordable. 
• Digi Yatra Policy: For providing passengers seamless and hassle-free experience at airports without the need for verification of ticket and ID at multiple touch points.
• Monetising Assets: Airport Authority of India (AAI) has formed joint ventures and awarded a few under public–private partnership (PPP) for a period of 50 years. 
• National Air Sport Policy (NASP) 2022: For making India as one of the top sports nations by 2030 by providing a safe, affordable, accessible, enjoyable, and sustainable air sports ecosystem. 
• Proliferation of Drones: Government has approved the PLI scheme for drones and drone components as a follow-through of the liberalized Drone Rules, 2021. 
• Disinvestment of Air India: The process of strategic disinvestment of 100% stake of Government of India in Air India (AI) along with equity shareholding of Air India in Air India Express (AIXL).

Way Forward to the Indian Aviation Sector

• Technological Impetus & Opportunities: To maximise operational effectiveness and cut costs. 
• New Passenger-Handling Manual for Delayed Flights: By modifying rules and conduct of operations to avoid problems caused by long delays.
• Ensuring Crew and Passenger Safety: By ensuring the crew is well trained and holding regular drills to ensure safety and by simplifying the whole process.
• Efficient Regulatory System: By enhancing transparency, accountability, faster reform, and increased engagement with industry stakeholders for the industry’s growth and development.
• Upskilling Workforce: By enhancing coordination between the industry and educational institutions and by aligning training programs with industry requirements. 

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