India’s civil aviation sector is all set to witness a major boost considering the growing penchant for travel by the country’s burgeoning middle class, however constricted it may be for now because of the comparatively poor fleet availability with the country’s major carriers.
It is not surprising, therefore, to see airlines like Air India and Indigo, placing orders for Airbus and Boeing, the size of which has been nothing short of mind-boggling.
While Air India has placed orders for over 450 aircraft with Airbus and Boeing, Indigo, on its own, has struck a deal with Airbus for supply of 500 new aircrafts.
Evidence of the country’s growing domestic aviation’s market, coupled with an increase in international travel, is available from Boeing’s recent commercial market outlook. It said that India would account for 90 per cent of the 2700 new planes that South Asian civil aviation market, in general, would add to its fleet in the coming years.
India’s growing domestic aviation’s market, coupled with an increase in international travel by Indians, is being eyed carefully by leading aircraft manufacturers
Not surprisingly, as the Confederation of Indian Industry (CII) adds, Indian civil aviation sector is all set to become one of the top three markets in the world by 2041; even quadrupling its fleet size, post Covid pandemic. Predictably, this would lead to a staggering demand for 37,000 pilots in addition to 38,000 mechanics in the region, largely led by India.
Then there is the IATA’s projection, which claims that across the world, “some 47 billion people are keen to travel in 2024, exceeding the pre-pandemic level of 4.5 billion in 2019.” It added further that the airline industry is expected to record a net profit of $25.7 billion in 2024 alone, despite the aggressive competition in the market.
For good measure a Reuter’s report, quoted a forecast made by Boeing, indicating a strong rebound in India, the world’s fastest growing civil aviation market. Over the next 20 years, Indian passenger traffic, the US airline said, was expected to grow by 7 per cent annually, requiring 2,210 new planes.
In this context, the recent delivery of Airbus A-350 to Air India, the first of the 20 such aircraft, is expected to be completed soon, which assumes importance, highlighting the eagerness with which India’s airlines are preparing to meet the intense competition for both the domestic and international tourist traffic.
It is also evident from recent news reports that Indian carriers, in general, would add over 150 aircraft to their fleet in the current year to meet the increasing traffic, with the main suppliers of the aircraft, predictably, being Airbus and Boeing, both of which have bagged orders worth over $ 120 billion from Air India and Indigo.
Considering the intense competition for the market, for Air India, in particular, the arrival of Airbus A-350 in December last, may prove to be a boon for the carrier and travellers, as it is 20 per cent more fuel-efficient.
Orders for 470 aircraft by Air India and 500 by Indigo assume increasing importance, as these orders from India will have a multiplier effect on the economies of the countries where Boeing and Airbus are based
This also explains the logic behind Indigo and Air India’s decision to place the huge orders with Boeing and Airbus. The two carriers, apart from eyeing a bigger chunk of the domestic market, are keen to capitalise on the available opportunities for ferrying Indian passengers, non-stop on longer flights.
The Indian long haul flyers, particularly to Europe and the USA, have shown a marked preference to the carriers from the Gulf; something that might change in the immediate future. This is because the two main Indian carriers will now be forced to take a harder look at the available international traffic, using the new aircraft and the accompanying facilities like wider space, more business suites and premium and general economy seats, accompanied with increased service standards.
In other words, this would mean that foreign carriers like Emirates, Jazeera and Turkish Airlines, may now get a run for their money from the two main Indian carriers. Till recently, because of constrains related to limited fleet size, Indian carriers could not fly non-stop on long routes.
The Gulf carriers, on their part, have been seeking a higher quota now from India under the bilateral air services agreements. Earlier, before going back to the Tata’s, Air India, for one, was run by the government and predictably faced huge losses. Besides it did not have the aircraft to deploy for long haul flights, as often as it would have liked.
Today, however, the situation is better and the government, it appears, does not appear to be entertaining the proposal for granting additional quotas to the airlines from the Gulf. Largely, because the two Indian carriers are gearing up to meet the available traffic, even offering direct flights to the US and Europe. It is learnt that almost about 30 to 40 per cent of Indian flyers to the UAE, prefer to take flights to the US and Europe, from there onwards.
It is in this context that the orders for 470 aircraft by Air India and 500 by Indigo assume increasing importance. Of equal significance, though, is the geopolitics involved, as the US, France and the UK, have acknowledged the multiplier effect that the orders from India’s main carriers will have on their economies, which at present, are not doing as well as they would want.
Most foreign carriers may now get a run for their money from the two main Indian carriers, as they’ll be able to fly non-stop on long routes besides offering better services to the Indian passengers with better fleet
Witness, therefore, US president, Joe Biden’s excitement when he declared that the “landmark deal for 200 Boeings by Air India would create over one lakh jobs across 44 American states.”
Likewise, the orders for Airbus by Air India and Indigo, will help the economies of France and the UK in terms of job creation at their manufacturing hubs. Not surprisingly, the orders by India’s carriers has led some economists to term the deals as ‘reverse globalisation’.
This also underlines the importance of Boeing’s plans to invest $24 million on a logistics centre in India for civilian aircraft. The idea being to ease the availability of spare parts to India’s domestic airlines.
Similarly, Air India and Airbus are looking at setting-up a joint venture in India for pilot training facility with the investment hovering around Rs 3,500 crores.
As the civil aviation minister, Jyotiraditya Scindia, put it succinctly “now is the time for the civil aviation ecosystem to have a very firm footprint in India as the sector worked on economies of scale and market size.” In this regard, he also made special mention of the MRO that the French aerospace giant, Safran, has planned in the country for aero-engines.
– The writer is a retired senior journalist with more than four decades of experience working with the Economic Times and The Statesman and covering sports, politics and business stories.
