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Indian Aviation: Bracing to Ride out Headwinds

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Indian aviation: Bracing to ride out headwinds Indian Aviation | Bracing to ride out headwinds “Establish an integrated eco-system which will lead to significant growth of civil aviation sector, which in turn would promote tourism, increase employment and lead to a balanced regional growth.” National Civil Aviation Policy 03 Indian Aviation | Bracing to ride out headwinds 04 Indian Aviation | Bracing to ride out headwinds Contents Flying high 10 UDAN – Small-town India takes wings 16 Shoring up air traffic growth 20 Giving aviation the extra push 22 1. Promoting tourism and community initiatives 22 2. Promoting airport-centered urban development 25 3. Promoting general aviation 27 Air cargo opportunity 28 Growth prescription – Skills and Infrastructure 32 A) Skills and training in Indian Civil Aviation 32 B) Investment in airport infrastructure 36 Way forward 38 About FICCI 39 About the event – Wings India 2018 40 05 Indian Aviation | Bracing to ride out headwinds Foreword – HMCA India’s strength is its numbers. The Sikkim would also find connectivity with growing middle class and the consequent the rest of the country as a whole. The demand for air travel have helped place benefits are not just incremental! Indian aviation among the markets that have grown the most in the last few Improved air connectivity will further years. boost spending on travel and tourism. With enhanced regional air connectivity, A number of triggers have helped boost the next spurt of growth could come this unprecedented demand–low- from air cargo. The idea of hub airports Shri Suresh P Prabhu cost carriers, increased competition, in every state holds great promise in Honourable Minister of Civil Aviation liberalized and friendlier operating this regard. While there are challenges climate, technology, and above all, a for undertaking freighter operations regional market, which is off to a good immediately, sizeable volumes can start. UDAN is on its way to expanding move as belly cargo. Emerging multi-skill the overall aviation network, benefiting development centres like the one set up passengers with enhanced air services at Chandigarh airport would help boost and affordable flying across the country. further employment opportunities in the sector. The second phase of UDAN seeks to go further and address the problem of WINGS India 2018, Ministry of Civil air connectivity in even more difficult, Aviation (MoCA)’s plenary event for Indian or ‘priority’ areas through helicopter aviation, was centred on the theme of services in the North-East, J&K, positioning India as a global aviation hub. Uttarakhand, and Himachal. Air travel is As this knowledge paper suggests, the now a necessity rather than a product of industry should focus on being robust elite consumption. enough to withstand any headwinds that might slow it down from becoming When Pakyong in Sikkim commissioned a global hub. I congratulate MoCA, FICCI, its new airport, in June this year, it was and Deloitte for publishing the report, important not just, because a state “Indian Aviation: Bracing to ride out without an air link was being connected headwinds”, a post-event knowledge to the nearest major airport at Kolkata paper, for WINGS India, 2018. – otherwise hours-long ride by road. It was equally significant because, in the I look forward to the positive process, the people and industries of developments these insights will trigger. 06 Indian Aviation | Bracing to ride out headwinds 07 Indian Aviation | Bracing to ride out headwinds Foreword – Deloitte Transportation is a crucial element for operations was the recurring thread. the growth of a developing economy. The paper through discussions with Air transportation truly delivers when MoCA and FICCI, presents a view on how it becomes the choice of travel for the best Indian aviation can stay on course multitudes. For that reason –and more to high growth and attempts to address importantly to unlock the economic issues such as: How can the Government potential of India’s cities–, it is important facilitate sustaining traffic on regional to tap into the country’s huge latent routes? How can the community demand for air travel in every region, innovate? How can cargo movements Peeyush Naidu howsoever remote and inaccessible. enhance viability of RCS airports? What Partner strategies can be used for speeding Deloitte Touche Tohmatsu India LLP It gives me pleasure to see the skilling requirements? These, and some growing significance of a preliminary other, are questions that we should start study undertaken by Deloitte in 2013 thinking about. that identified the potential for air connectivity in remote areas. Today, the Airport-centred urban development, Ministry of Civil Aviation is implementing general aviation and tourism are some the Regional Connectivity Scheme (RCS) ways to hedge potential risks to the and UDAN is spreading its WINGS across sector when demand may begin to the country, changing the way India slow down due to some reason. Cargo travels. operations is another big opportunity in the non-passenger business yet to be The knowledge paper Indian Aviation: adequately exploited. However, all this Bracing to Ride out Headwinds is the groundwork would mean little without result of WINGS India 2018, the flagship appropriate investment in human capital aviation industry event organized jointly and infrastructure. by the Ministry of Civil Aviation (MoCA) and the Airports Authority of India in It was our privilege to support the association with the Federation of Indian Ministry of Civil Aviation and FICCI as the Chambers of Commerce and Industry. knowledge partner for the second edition The theme of the four-day biennial event of WINGS India. We hope that this paper was 'India-Global Aviation Hub' – with leads to a discourse among policymakers focused roundtables on the themes and industry players on best practices to General Aviation, Skill development, enhance the sector’s contribution to the Tourism, and Air cargo. The potential for economic growth of the country. integrating these areas with regional air 08 Indian Aviation | Bracing to ride out headwinds Foreword – FICCI I am happy to share with you the FICCI- well as the government to discuss and Deloitte report on ‘Indian Aviation: deliberate upon the enormous potential Bracing to Ride out Headwinds’ based of the sector. upon detailed research and analysis along with capturing key discussion As a knowledge partner for WINGS 2018, points from WINGS INDIA 2018, which Deloitte has prepared a report, which was organized by Federation of Indian highlights how the Indian civil aviation Chambers of Commerce and Industry sector can prepare for future challenges along with the Ministry of Civil Aviation by capitalizing on the opportunities Mr. Pratyush Kumar (MoCA) and Airports Authority of presented by four crucial segments of the Chairman, FICCI Civil Aviation India (AAI). sector- tourism, general aviation, cargo Committee and skills. Vice President, Boeing International & The Indian aviation sector is poised President - Boeing India for a faster and secular growth. FICCI has been working actively with The opportunities are limitless but all the stakeholders of the civil aviation implementation is the key. To develop a sector by promoting the cause and thriving aviation sector, the Government interests of the sector in order to bring has taken several initiatives in areas it on the global map as a cost-effective, of modernization and up-gradation competitive and efficient sector of of airports, enhancement of regional Indian economy. air connectivity, development of MRO, cargo and ground handling services I hope you will find this report useful. As among others. always, your suggestions and feedback are welcome. The four days WINGS India program had received an overwhelming response from India and abroad as it provided a unique platform to the civil aviation industry as 09 Indian Aviation | Bracing to ride out headwinds Flying High India’s aviation numbers make it the envy Not surprisingly, domestic passenger of the world. Over the last four years, on load factors are at record highs today, the back of a strong domestic demand, having touched an all-time high (~91%) in policy push by the Ministry of Civil February 20184. As fuel prices remained Aviation, and private sector investment subdued, airlines have tried to cash in on and participation, the industry has the opportunity with more fuel-efficient grown consistently in double digits, aircrafts. Additionally, airlines have been expanding the industry size almost twice trying to leverage use of hard and soft over1. In 2016-17, Directorate General infrastructure, economies of scale, and of Civil Aviation (DGCA) data shows that technology to manage their cost and an estimated 158 million2 passengers capacity better, in turn driving down travelled by air in the country and operational costs. overseas, an increase of 17.3 percent year-on-year, putting India among the Investments have been pouring into markets that grew the fastest. the industry, especially for aircraft acquisition, and it is estimated that If this pace of growth continues, the over the next decade Indian airlines industry has the potential to outgrow are expected to induct more than 900 more mature markets. The International aircrafts5. One of India’s most profitable Air Transport Association (IATA) forecasts carrier began the induction of 50 new India to become the third-largest aviation turbo-props in its fleet in November last market in terms of passengers by 20253 year. Even the latest Full Service Carrier after China and the United States, (FSC) in the country is seeking to buy surpassing countries such as UK, Japan, about 50 narrow body jets and up to 10 Spain, and Germany. wide-bodies. Another strong player in India’s largest regional market too has Importantly, aviation is changing like placed one of the biggest orders, for $22 never before. In addition to a robust billion for up to 205 aircrafts6. GDP growth driving increased spend on air travel, low fares have led to a rise in Increased capacity by airlines and demand in smaller-towns of India.
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