Why Indian aviation is set to soar
India has the talent needed to achieve a growing future, while policy measures by the government support future success
This year will be an exciting one for Indian aviation. June will be a highlight when Delhi will turn into the global aviation capital as industry leaders from around the world gather for the 81st International Air Transport Association (IATA) Annual General Meeting and World Air Transport Summit, hosted by Indigo.
India’s place in global aviation has changed dramatically over the last decade. With record aircraft orders, impressive growth, and world-class infrastructure developments, India is firmly established as the fourth-largest market (domestic and international) for aviation in the world. And within this decade, IATA’s own projections point to India rising to be the third largest.
The country’s rapidly modernising and expanding aviation sector employs 369,700 people directly and generates $5.6 billion of economic output. When you include the additional benefits, such as tourism, these numbers rise to 7.7 million jobs in India and $53.6 billion in economic contribution. That is 1.5% of India’s Gross Domestic Product (GDP).
The potential that everybody could see for decades is finally being realised. I have never been more excited about India’s aviation prospects.
Part of the excitement is due to the remake of India’s airline sector. Air India’s rebirth with new ownership is placing renewed focus on its service with exciting developments in its fleet and product offering. And IndiGo has built up a very impressive footprint across India and regionally. With a world-leading market capitalisation, there is enormous confidence in its prospects.
India’s consumers have never been so well-served by its domestic carriers — with a rapidly expanding network, additional frequencies and connections, and growing competition. And with gateway airport capacity expansions in Delhi, Mumbai, Bangalore and Hyderabad, along with the imminent commissioning of second airports in Delhi and Mumbai — before IATA’s AGM in June — the potential for further aviation development is well-laid.
Critically, India has the talent needed to achieve a growing future. With the highest proportion of female commercial pilots in service, India clearly demonstrates that aviation is a solid career choice regardless of gender. And more great jobs will be created as India recognises the opportunity for greater investment in maintenance, repair and overhaul facilities.
Clarity was established about the rights of aircraft lessors in the context of India’s bankruptcy laws — and an impending Bill ratifying and aligning India’s stance with international conventions will help with predictability and consistency. This will make the environment even more conducive to the growth of the aviation sector.
Policy measures by the government support future success. There are several examples. Airline objections against overreach by India’s Goods and Services Tax (GST) investigation agencies were addressed. The government exempted the import of services into India between airline HQs and their local branches, respecting international conventions.
The Airports Economic Regulatory Authority of India (AERA) is establishing a track record of countering the natural monopolistic behaviour of airports and protecting consumer interest. While we can truly celebrate these achievements, we must not take for granted the continued success of India’s aviation future. There is more work to be done. In particular, I would highlight three areas: Costs, airspace and sustainability.
Costs: Aviation is not a high margin industry. At the global level, the net profit margin is just 3.6%. So, every cost, charge, and tax matters. India would do well to look at rationalising fuel (ATF) costs; easing out some of the complex compliance and regulatory burdens for the industry; and continued oversight on airport user charges and their linkage to service and performance standards.
Airspace: The amazing developments in India’s airport infrastructure need to be matched with developments in India’s airspace. With thousands of aircraft due to join India’s fleet in the coming years, investments to further modernize airspace management are critical — in particular for oceanic and continental airspace. India must not follow the underinvestment example of Europe which results in widespread inefficiency.
Sustainability: Airlines’ global commitment to achieve net zero by 2050 is determined and firm. We expect the bulk of aviation’s decarbonisation to be achieved with sustainable aviation fuel (SAF), which is a real opportunity for India. India is the third largest ethanol producer and consumer in the world. This is proof of the potential for it to become a key SAF producer utilising the Alcohol-to-Jet (AtJ) pathway. This would contribute to India’s energy security. propel the aviation sector’s growth and enhance India’s hub status in the region—delivering enormous social and economic benefits for India’s development.
Hosting the IATA AGM and World Air Transport Summit is an opportunity for India to cement its rise in global aviation by continuing to put in a policy and economic environment that will realise, and most likely exceed, the potential that we all see for aviation in India.
Willie Walsh is the director general of IATA. The views expressed are personal
