Why aviation important for India to achieve higher growth

Air India’s record order of 470 aircraft is touted as the largest order in international civil aviation history. However, this record order has sparked off a debate on market access as foreign carriers, mostly from the Middle East, have been seeking additional capacity to serve more routes in India. Many carriers fear that Air India’s 470 jets may capture most of the market

The aviation sector is growing fast and it will continue to soar higher. The most recent estimates suggest that demand for air transport will increase by an average of 4.3% per annum over the next 20 years. Airbus forecasts significant growth in air transport demand worldwide, generating a need for 39,000 new commercial aircraft and freighters.

This is well on track to the pre-pandemic levels projected by Airbus, reaching a cumulative value of around US$ 4.8 trillion over the next 20 years. We have lost two years of growth during the Covid-19 period, but despite the difficulties passenger traffic has proved resilient and is poised to reconnect at an annual growth of 3.9% per year, driven by expanding economies and trade worldwide, including tourism.

The middle class, more likely to fly, will grow over the next few years by two billion people to 63% of the world’s population.

We also see that the aviation is becoming more accessible to the global population. This figure shows about each country’s percentage of population living within 100 km of an airport. Across the world, 51% of the population lives within 100 km of an international airport and 74% live within 100 km of an airport.

The Indian ministry of civil aviation has set a long-term goal of reaching one billion air passengers by 2040, as stated in their 2019 “Vision 2040 for the Civil Aviation Industry in India” document.

The country recognizes the need to focus on growing infrastructure and hiring manpower to accommodate the growing number of passengers, which is expected to grow six-fold to around 1.1 billion by 2040.

The government also has plans to construct an additional 26 airports under its regional connectivity scheme and invest $11.9 billion to modernize and construct new airports by 2025. Additionally, India is also increasing the number of flying training organizations and facilities for aircraft maintenance, repair and overhaul, said Indian civil aviation experts.

As economic growth, rapid urbanization, rising disposable income and a young population push the aviation sector from 14 million domestic passengers in 2013 to 144 million, India would need a civil aviation infrastructure and capability that would be able to support a $20 trillion economy by 2047. This infrastructure has grown from 74 airports in 2013 to 148 airports, waterdomes and heliports today. India’s six metro cities – Delhi, Mumbai, Chennai, Bengaluru, Kolkata and Hyderabad – have a capacity of close to 192 million passengers. In the next four years these cities will have a capacity of 420 million passengers per year, goes the projection.

India’s fleet is likely to grow from the present 700 to over 2,000 planes in the next five to seven years.

On the other hand, demand in the freight sector, driven by the steady growth of e-commerce, is driven by an expected growth in express transport of 4.7% per annum and a growth in general transport (which accounts for about 75% of the market) of 2.7%. In total, some 2,440 freighters will be needed over the next 20 years, of which 880 will be new builds.

Air India’s record order of 470 aircraft is touted as the largest order in international civil aviation history. However, this record order has sparked off a debate on market access as foreign carriers, mostly from the Middle East, have been seeking additional capacity to serve more routes in India.

Many carriers fear that Air India’s 470 jets may capture most of the market.

Dubai’s Emirates, Turkish Airlines and Kuwaiti carrier Jazeera Airways have all called for sharp increases in air traffic rights to and from India to meet demand. While Dubai has requested an extra 50,000 seats a week from about 65,000 a week on India routes, Kuwait’s Jazeera Airways has called for the current weekly allowance to be taken up from the present 12,000 seats to 28,000 seats. However, India has no plans to increase air traffic rights for the United Arab Emirates.

This expected global growth will dramatically boost the need for more than 600,000 new pilots, 650,000 new maintenance technicians and engineers and over 800,000 as cabin crew to support global commercial fleet needs over the next 20 years.