Air India’s plan to expand gives wings to aviation upgrade

“I think with the privatisation of Air India, that is one area which is going to grow by leaps and bounds. It is also going to encourage, and if I may say so, inspire and infuse confidence in other Indian carriers to be able to do this,” Bansal said at the recently held CAPA India Aviation Summit.

The Government believes that “all the ingredients (are) in place” for India to emerge as a major aviation hub: high demand in domestic as well as international segments; rapidly growing aviation infrastructure, particularly capacity expansion at key airports and development of greenfield airports, along with ambitious plans of Indian carriers.

This view has been shaping India’s outlook on the issue of bilateral air traffic rights. That’s why while Dubai-based Emirates has been urging India to increase seats under the India-Dubai bilateral air services agreement beyond the limit of around 66,000 per week — as the airline has hit its cap of about 61,000 – New Delhi isn’t willing.

One reason is clear. India wants its own carriers to ramp up wide-body operations – rather than help Gulf-based carriers with deep pockets – so that they can ferry passengers to Europe and beyond via their large hubs. Put simply, increasing seats under bilateral pacts does not sit well with India’s aviation ambitions.

The cumulative market share of foreign airlines by passengers carried on international flights to and from India was 56.5 per cent in October-December, as per The Indian Express analysis of data from the Directorate General of Civil Aviation (DGCA). In case of Indian airlines, a big chunk of their collective market share of 43.5 per cent was short-haul international passengers, while large foreign network carriers dominated the longer-route segments. At 9.5 per cent, Emirates had the largest market share among foreign airlines.

At the CAPA summit, while senior Emirates executives pitched for increasing seats under the air services agreement by 50,000 a week, Bansal was clear there was no change in India’s stance. He said India has ambitions to develop large aviation hubs and the Civil Aviation Ministry would support and encourage Indian carriers to ramp up wide-body operations. To that effect, the government wants airports in the six key metros, Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Hyderabad, to transform into international hubs.

In parallel, there are policy tweaks. The government has allowed wet-leasing of wide-body planes for up to one year, up from an upper limit of six months; it has permitted Indian carriers to induct foreign pilots for Boeing 777 aircraft in view of rising demand but scant supply.

Officials and industry players believe India’s geography works well for it to develop into a major hub, particularly for transporting passengers from Europe and Africa to East Asia, Southeast Asia, and even Australia.

“If you take a world map, you will see India is in the middle between the Far East and Europe. We are building capacity, airlines are building capacity,” said Arun Bansal, Chief Executive Officer at Adani Airports, which operates seven airports and is developing the upcoming Navi Mumbai airport as well. “To create a hub, we need to work on infrastructure, on regulations to facilitate the sector…Then we need to work with MoCA (Ministry of Civil Aviation) and AAI (Airports Authority of India) to put the right processes in place.”

In the interim, however, the government’s stance of not agreeing to expand traffic under bilateral agreements could be a pain point for some Indian stakeholders, particularly new entrants like Akasa Air, and airport operators ramping up capacity or building greenfield airports.

“It will take a long time before India’s carriers reach a scale that the government wants. Air India is the only airline with a significant wide-body aircraft order and those planes will also take years to be inducted. The government should consider an approach that helps new and smaller airlines grow their international operations in the near and medium term. It will also help with better utilisation of the new airport capacities being added,” said a sector analyst, who did not wish to be identified.