Photo used for representation purpose only.
| Photo Credit: Reuters

The privatisation of Air India leading to the transfer of its ownership by the government to Tata Sons in 2022 and the ensuing transformation plan being undertaken at the airline has triggered a strategic transformation in the country’s airline sector.
This was a remarkable milestone and the boldest reform since the second wave of liberalisation that commenced in financial year 2004. At the time of Air India’s acquisition, CAPA India had anticipated this would be a critical inflection point that would stabilise the airline system which, in turn, would have a positive impact on the entire value chain, possibly even beyond the borders of India. 

Key developments in the sector

Let’s look at the key developments in the sector since 2022. Last year, Air India placed an order for a record 470 aircraft, with the option to add another 370 aircraft. The group has added 40 aircraft last year  and is expecting to take delivery of five aircraft per month for the near to medium term.
Meanwhile, India’s largest airline IndiGo, which has a fleet of about 370 aircraft with more than 980 on order, continues to grow rapidly, despite supply-chain challenges that have fettered growth plans for airlines globally.
This means that the country’s airline fleet of almost 700 aircraft could double by the financial year 2030. It took the Indian industry about 90 years from the time of the first commercial flight to reach a fleet size of 700 aircraft. But the rate of growth is so strong that carriers could add a further 600-700 aircraft in just the next 5-7 years. But, do we have the ecosystem to support this rapid expansion?

 We have a solid and aggressive airline system with the size, scale, aircraft orders and strategic intent to emerge as world-class operators. Air India’s investment of $6.5 billion in its business plan is a reflection of this. IndiGo reported record profitability of approximately $1 billion in FY2024, with another year of unprecedented results expected in FY2025.

Despite there being about 150 aircraft on the ground last year, domestic traffic grew by about 13% in FY2024 and international by 22%.

To support the appetite for travel as well as airline fleet expansion plans, the country also needs a solid airport infrastructure, which for the first time is ahead of demand and there is an investment pipeline of $11 billion at various stages of implementation. In the National Capital Region, we will have a world class airport infrastructure in a dual airport system where Delhi International Airport Limited will grow its capacity from 100 million and reach 130-140 million passengers per annum (PPA), which will be complemented by the greenfield Noida International Airport which is likely to open by April 2025, with eventual capacity for 70 million PPA.  The Mumbai Metropolitan Region will similarly have a dual airport system within almost 12 months, which will eventually be able to handle about 145 million annual passengers. The Adani Group is also significantly expanding capacity at its six PPP non-metro airports of Lucknow, Jaipur Ahmedabad, Guwahati, Thiruvananthapuram and Mangaluru and the Airports Authority of India is investing $4 billion to significantly enhance non-metro capacity. Greenfield airports are also planned in Chennai and Pune. 

Policy impetus

As far as policy impetus is concerned, given the rate of growth of the aviation industry in the country skills shortages could arise across the ecosystem, but particularly with respect to technical staff such as pilots and maintenance engineers and technicians. The shortage of pilots is a serious issue and is likely to become more acute, especially in light of the new duty and rest norms laid down by the DGCA for them, which could increase the number of pilots required by about 15%. Similarly, air-traffic controllers as well as security and safety personnel are inadequate relative to requirements. Therefore, the Budget must provide fiscal incentives for investment in skilling, training and education.

Beyond the Budget, the restructuring of Directorate General of Civil Aviation and the Bureau of Civil Aviation Security will be needed to address challenges emerging from disruption in technology and digitisation as well as environmental issues. Air Navigation Services should also be hived off from the AAI to enable corporatisation of air traffic control allowing for improved access to capital to invest in systems to cope with growing air traffic.

The Budget could also look at rationalising direct and indirect taxes, which today account for nearly 20% of an airline’s quarterly revenue such as through levies by States on aviation turbine fuel. The benefits of airport privatisation have been well demonstrated in the country through access to modern and efficient infrastructure as well as the economic development unleashed for the wider geographical region, and therefore the government must fast track the privatisation of 25 airports planned under the national monetisation plan.

(The writer is Chief Executive Officer and Director at CAPA India)

An Air India plane. File
| Photo Credit: VIJAY SONEJI

Passengers of a San Francisco-bound Air India flight had a tough time at the Delhi airport on May 30 evening as the departure was delayed for more than six hours due to a technical issue with the aircraft.

The flight AI 183, which was to be operated with a Boeing 777 aircraft and take off at around 1530 hours on Thursday, has been rescheduled and will now take off at 1500 hours on Friday, according to an airline official.

Some passengers of the flight took to social media complaining about the delay and one of them said that there was no air conditioning in the plane.

The airline official said the aircraft had developed a technical issue and engineering checks were carried out.

Due to the delay, the crew had crossed the Flight Duty Time Limitation (FDTL) and also if the flight had taken off, it would have reached San Francisco when there are night landing restrictions there, the official added.

The flight is now scheduled to take off at 1500 hours on Friday, the official said and added that passengers were offered the options of full refund, complimentary rescheduling and hotel accommodation.

Rise in number of flight delays

In March, the aviation security watchdog Bureau of Civil Aviation Security (BCAS) issued new guidelines that will allow the exit of passengers from an aircraft through an airport departure gate in case there is a long delay in operating the flight after boarding.

The directive from the BCAS had come against the backdrop of rising instances of congestion and flight delays, resulting in passengers getting stuck in aircraft after boarding for long hours.

BCAS Director General Zulfiquar Hasan, on April 1, said the guidelines will help in ensuring “less harassment” for passengers and they would not have to keep sitting inside an aircraft for long hours after boarding.

In case of long flight delays and other emergencies after boarding, passengers will be permitted to exit through the departure gate of the airport concerned.

“Airport operators have to make arrangements for the infrastructure, including for screening, for implementing the guidelines,” he said and added that a decision on deboarding the passengers will be taken by airlines and security agencies concerned.

It could not be immediately ascertained whether Air India opted to follow these guidelines.

Meanwhile, an Air India flight from Mumbai to San Francisco, which was originally scheduled to take off at 1600 hours on May 24, was rescheduled and finally departed at around 1730 hours on May 25. The inordinate delay was due to multiple reasons, including a technical glitch.

On May 24, passengers had to wait inside the aircraft for more than five hours before the flight was rescheduled for May 25.