Dubai: India's aviation industry will require 1,043 new aircraft valued at $145 billion (Dh532 billion) between now and 2030 to satisfy surging annual demand, according to Airbus.
Of these, 1,020 will be passenger aircraft while the other 23 will be freighters.
"India's market for new aircraft makes it the world's fourth largest in both number of aircraft and value," Airbus said in its latest report released on Thursday.
India's annual passenger traffic growth rates of 7.2 per cent are well above the regional Asia Pacific average rate of 5.9 per cent and the world average 4.8 per cent.
Meanwhile, the International Air Transport Association (IATA) called on India to develop a common vision for Indian aviation expressed in a National Aviation Policy with a strong implementation plan.
"Indian aviation has tremendous potential to drive economic growth in the sub-continent. But to realise this, India needs a common vision for aviation — expressed in a National Aviation Policy strongly linked to an implementation plan. Such a policy would need to re-build competitiveness by addressing the difficult issues of tax, cost, investment and infrastructure," Tony Tyler, IATA's Director General and CEO said in a keynote address at the India Aviation 2012 conference on Thursday.
Aviation is responsible for 0.5 per cent of India's GDP and supports 1.7 million jobs. And people on average in India make 0.1 trip per year, or one trip by air every 10 years, compared to 1.8 times per year in the US.
"Aviation's contribution to the India economy could be much more. If India's 1.17 billion people travelled at the same frequency as in the US, a market of 2.1 billion travellers would be created. Even one-third of that would be an air travel market of about 700 million, rivalling that of the US," said Tyler.
Of the requirement for 1,020 new passenger aircraft, some 860 will be for growth and 160 would replace the oldest aircraft in the existing fleet of 327, Airbus said.
New aircraft
"By 2030, this means that India's passenger fleet will more than triple to some 1,180 aircraft. The new passenger aircraft include 646 single aisles, 308 twin aisles, and 66 very large aircraft such as the A380," Airbus said.
Saj Ahmad, Chief Aerospace/Airline Analyst at StrategicAero Research, said, "Airbus' projection for just over 1,000 jets in India over the next decade points to not just expected growth the country may see, it's also based on the continued growth in passenger traffic now starting to use air transport as a viable alternative to rail and road transportation as economic expansion and rising incomes mean that travel by air is in the reach of more people."
Today, less than 1 per cent of the Indian population use air travel, so a small percentage increase results in millions of new customers that use airlines for domestic and international flights. There is genuine concern that India may not realise Airbus' forecast for a string of reasons, he said.
"First is that infrastructure development is painfully slow, and even A380 compatible airports like Delhi have been banned by the Government from allowing other A380 operators like Lufthansa from using that big airplane in India for fear of incumbent airlines like Air India losing traffic to international competition.
"Secondly, there is too much capacity in India already — we have seen Kingfisher Airlines had planes repossessed because it teeters on collapse, Jet Airways has deferred deliveries of new jets and recently cancelled orders for two 777-300ERs while Air India is heavily subsidised by the government and is still a loss-making business and it too has deferred delivery of numerous 777s and even wanted to defer its 787s, the first of which they induct just a few weeks from now," Ahmad said.
Growing middle class
Growing urbanisation and population concentrations combined with a growing middle class and dynamic economic growth are driving demand and this trend is expected to continue.
K.V. Kamath, chairman of ICICI Bank, India's largest private sector lender, said the Indian middle class population is fast growing past its current 400 million. "Households with incomes of over $10,000 per annum [are expected] to increase to 82 million by 2018 from [the] current 34 million while 40 million households will move out of the deprived category [household income of less than $4,000 per annum]," he said at a conference in Dubai on Saturday.
Many of the growing middle class population will fly to domestic and international destinations that will help spur demand in future, airline officials say.
Projected growth
Boutros M. Boutros, Emirates Divisional Senior Vice President, Media Relations, Sponsorships and Events, said, "With the projected growth of the Indian economy, five more airlines might not be enough to feed the Indian market."
He said a large number of Emirates' future fleet will be committed to the Indian market. "We currently operate 185 flights a week to India and we are ready to deploy more if the market is opened up."
In this regard, Tony Tyler highlighted the need for capacity expansion in Mumbai. "Mumbai is bursting at the seams. The first phase was meant to open in 2014 but construction has not even begun. Land acquisition is not yet complete. We need a coordinated effort across all government ministries to facilitate success without further delay — as was achieved for the opening of Delhi's new terminal," said Tyler.
Despite near-term challenges, the Indian economy is forecast to continue expanding, helping India's growth in domestic air travel to reach even higher growth rates of nearly 10 per cent annually, making it one of the fastest growing aviation markets in the world.
"By 2030, India's economy is forecast to be the fourth largest in the world, creating exceptional potential for growth in the aviation sector. Through our Indian industrial partnerships we are proud to boast that every A320 today is partly made in India," said Dr Kiran Rao, Airbus Executive Vice-President of Sales and Marketing, and President of Airbus India.
‘Pressures for reform'
"Our engineering and industrial footprint in India supports over 2,000 highly skilled Indian jobs throughout our supply chain, and this figure is growing."
Ahmad sums up: "India faces pressures for reform before it can reach the giddy heights outlined by Airbus' forecast and a far more open market regime is needed to ensure transparency and greater competition. There's no doubt India will become a huge market in its own right. But to assume it will become the next China or USA is still a pipedream."
A peek into the past
The first commercial flight in India was on February 18, 1911, when French pilot Monseigneur Piguet flew airmail from Allahabad to Naini, a distance of about 10 kilometres in as many minutes.
Tata Services became Tata Airlines and then Air-India and spread its wings as Air-India International. The domestic aviation scene, however, was chaotic. When the American Tenth Air Force in India disposed of its planes at throwaway prices, 11 domestic airlines sprang up, scrambling for traffic that could sustain only two or three. In 1953, the government nationalised the airlines, merged them, and created Indian Airlines.
For the next 25 years J.R.D. Tata remained the chairman of Air-India and a director on the board of Indian Airlines. After he left, voracious unions mushroomed, spawned on the pork barrel jobs created by politicians. In 1999, A-I had 700 employees per plane; today it has 474 whereas other airlines have 350.
