Aviation Sector

December 6, 2019 India INC

Aviation Sector

Civil aviation industry is yet to write its success story on Indian skyline. But if Government is to be believed, the process has already begun and it’s only a matter of time when sky would be within its reach. The biggest hurdle in its development, as stated by numerous experts, is investment as it involves huge capital for modernisation and upgradation. Speeding up on track, the committee on Infrastructure headed by Prime Minister Dr Manmohan Singh has already approved Rs 40,000-crore expansion and modernization plan for airports across the country and also for setting up of a regulator for the sector. The plan includes the privatization of Delhi and Mumbai airports and greenfield projects in Bangalore and Hyderabad. In fact, the acute necessity for a huge amount of foreign investment in the airport sector has been recognized by the Civil Aviation ministry, which not long back stated, “this is a capital-intensive sector, there is an obvious need for perspective planning with a vision for the next twenty years and to muster the combined resources of the public and private sectors, both domestic and foreign.” It does seem things are falling in place. While recognizing the potential of civil aviation, here are some basic facts. During the next 20 years, there will be a quantum leap in the projected traffic — four times in passenger and six times in cargo traffic. It will, therefore, be necessary to take a host of measures so that the ground infrastructure keeps pace with the growth of traffic. ICAO forecasts predict worldwide growth in air traffic at 5% a year or doubling in the volume of traffic once in 14 years.

According to an AUTC study, it might account for more than 50% of the world air traffic by the year 2010. It is imperative that our procedures improve and facilities grow to match the increase in volume of traffic for which foreign investment is a must. It’s heartening that there has been a marked change in India’s aviation policy, of late. The Centre is liberalising its bilateral air services relations and has also opened the door to the country’s privately-owned airlines, most importantly Jet Airways and Air Sahara, to start flying on long-haul routes in competition with the state-owned flag carrier, including to London, the country’s busiest intercontinental routes. Given the worldwide thrust towards privatization of airports, the need of the hour is a strategy that permits utmost leeway in the patterns of ownership and management of airports in the country. A number of options could be looked into for the management of airports or parts of airports such as Build-Own-Transfer (BOT), Build-Own-Lease-Transfer (BOLT), Build-Own-Operate (BOO), Lease-Develop-Operate (LDO), Joint venture, etc. In order to bridge the yawning gap in resources and also to ensure greater efficiency in management of airports, the participation of private players has always been a logical conclusion. And with private players chipping in and govt providing a supportive role, the civil aviation is sure to take off to greater height and write a glorious chapter on Indian sky.