Home Aviation Smaller cities to fuel next round of growth in aviation
Smaller cities to fuel next round of growth in aviation

Smaller cities to fuel next round of growth in aviation

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Anand E Stanley

India, which is already the third largest domestic civil aviation market in the world after US and China, is all slated to witness a six-fold rise in its total passenger traffic by 2040 and the major driving force will be the growth in regional connectivity.

According to a recent report by FICCI and KPMG, ‘Vision 2040 for the Civil Aviation industry in India’, the total passenger traffic (to, from and within India), which was 187 million in FY 2018, is expected to grow to around 1,124 million in FY 2040.

The government is building the infrastructure with a vision of the aviation market growing to a billion trips in the next decade or two. India allows 100% FDI in airports and associated businesses and a significant minority position in airlines.

The Indian aviation sector, which is seeing double-digit growth for the last four years, is likely to continue growing. With a growing economy, rising incomes, supportive policy environment and intense competition, the best in aviation is yet to come.

With the objective of making air travel increasingly affordable for the common man as envisioned by Prime Minister Narendra Modi, the government launched UDAN (Ude Desh ka Aam Nagrik) Yojana – a regional connectivity scheme to link smaller airports to India’s aviation circuit.

The National Civil Aviation Policy (NCAP 2016) signalled the government’s intent to radically alter the sector’s growth trajectory. Its flagship program UDAN is taking flying to the masses by offering subsidised fares as low as $35 for a one-hour flight.

Currently, there are over 450 airports and airfields in India out of which 101 are operational as in December 2018. The state-run Airports Authority of India (AAI) owns 125 airports. There are six airports being operated under the Public Private Partnership (PPP) model namely Delhi, Mumbai, Bengaluru, Hyderabad, Kochi and Nagpur.

Six more airports at Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvanathapuram and Mangalore are proposed to be handed over to private operators. This will free AAI’s administrative and financial bandwidth to focus on smaller airports in the hinterland where no private capital is likely to come in the initial phase.

Despite global headwinds on crude oil and currency, the Indian aviation market is on a high growth path. Total passenger traffic to, from and within India, during Apr-Nov 2018 grew by around 15% year on year as compared to around 6% globally.

From seventh largest aviation market with 187 million passengers, India is likely to be the third largest by 2022. As per IATA, the number of global departures in 2018 is projected at around 4.3 billion, a growth of 6% over the previous calendar year.

The report suggests that there is a vast hinterland opportunity to be tapped. Air-traffic in India is still concentrated in top 15 airports. In FY 2018, top 15 airports in India contributed to around 83% of total throughput in the country as against comparable figures of 54% and 57% in USA and China, respectively.

As Indian economy matures, economic growth is expected to spill over to its interiors. The future growth in Indian aviation market is therefore expected to be driven by non-metro cities, the Vision 2040 document states.

(The writer is the Chairman, FICCI Civil Aviation Committee and President & MD, Airbus India)