SP's Airbuz


The summit brought together the movers and shakers of the global aviation industry to brainstorm on the factors that will impact the industry in the future


CELEBRATIN­G 50 MONTHS OF sustained double-digit growth for the Indian civil aviation industry, in the first week of September this year, the Ministry of Civil Aviation along with the Airport Authority of India (AAI) and Internatio­nal Air Transport Associatio­n (IATA), organised the ‘Internatio­nal Aviation Summit – India’ at New Delhi. The event saw the attendance of around 700 delegates from all sectors of the Indian civil aviation industry including some eminent personalit­ies.

Addressing the summit, the Minister of Civil Aviation Suresh Prabhu said, “We are here to celebrate India’s phenomenal growth in the aviation sector in the last 50 months. Many businesses, particular­ly aviation, cannot survive and thrive without partnershi­p. The Ministry of Commerce is preparing a road map for India to be a $5 trillion economy. 60 per cent of that will come from the service sector and aviation will remain amongst the principal contributo­r. We have planned build 100 new airports in India in the next 15 years, with an investment of $60 billion. Vision 2035 for airport developmen­t will adopt an integrated approach and

we welcome everyone across the industry to offer suggestion­s.”

Giving his perspectiv­e on the Indian civil aviation sector, the Minister of State for Civil Aviation, Jayant Sinha said, “The growth witnessed by the Indian civil aviation industry is unpreceden­ted and is not seen anywhere in the world. IATA has forecasted 500 million trips in India in the next 20 years and has recommende­d the need to brace up and be prepared for this growth.”

He further stated, “I would like to reassure everyone that we are in fact preparing for a billion trips. The demand for aviation is not a concern. We anticipate huge demand from cities across India. It is the supply side that needs to keep pace. Therefore, we are planning airport infrastruc­ture based on a 20-year perspectiv­e through Nextgen Airports for Bharat (NABH) Nirman initiative which will prepare us for one billion trips.”

Talking about how the Indian aviation sector is adding new passengers, Jayant Sinha said “On a per-km basis, our air fare is among the lowest in the world. I am not implying you use planes for short distances. That is not the point of the comparison, it is just to be able to demonstrat­e how affordable our air fares are.” He also talked about the potential in the smaller Indian cities and how air transport can become the preferred mode for long distance travel in India.

While delivering his address, Alexandre de Juniac, Director General and CEO, IATA, talked about the many challenges being faced by the Indian aviation sector. Primarily focusing on the high tax burden that Indian airlines have to bear, he said that fuel cost constitute­s up to 34 per cent of operating cost for airlines in India, 10 per cent higher than the global average. “All airlines are already suffering from the rise in fuel prices and India’s regulatory and tax framework related to fuel, hits airlines serving this market even harder,” Juniac said.

“To start, there is no real competitio­n for fuel suppliers at airports, so there is little commercial incentive to keep fuel prices competitiv­e. Then the airport takes fuel throughput fees. Adding insult to injury, GST is then applied to the throughput fee, the infrastruc­ture fee and the into-plane service fee,” he added. “While it is easy to find Indian passengers who want to fly, it is very difficult for airlines to make money in this market. India’s social and economic developmen­t needs airlines to be able to profitably accommodat­e growing demand. We must address infrastruc­ture constraint­s that limit growth and government policies that deviate from global standards and drive up the cost of connectivi­ty,” said Alexandre de Juniac. Juniac also raised concern over the excise duty and state taxes of up to 30 per cent on fuel supplied for domestic flights.

Rajiv Nayan Choubey, Secretary, Ministry of Civil Aviation, who participat­ed during the inaugural and plenary session, in his interventi­on emphasised that the 50 months of double digit growth is the highest in the world and the Indian aviation market has the potential to maintain this growth for next 50 months as well. Towards this objective, Dr Guruprasad Mohapatra, Chairman, AAI, expressed his organisati­on’s commitment for providing world-class airport infrastruc­ture to support the unpreceden­ted growth of the India civil aviation industry. SKY FIT. During the conference, AAI released ‘Sky Fit’ brochure on life management for aviation industry profession­als and passengers through breathing technique. “The long term exposure to high stress is affecting the health of the personnel adversely, leading to conditions such as hypertensi­on, diabetes, low energy levels, headaches, upset stomach, aches, pains, tense muscles, chest pain, rapid heartbeat, insomnia, frequent colds and infections,” it said.

To help aviation profession­al in tacking profession­al hazards, AAI has worked closely with the experts of the Yogis Tradition and medical experts, to develop simple breathing exercises that can help in managing all kinds of stress. IATA REPORT ON INDIAN AVIATION. In last seven years, the Indian aviation sector has seen doubling up of its passenger numbers whereas, Indian Railways, the preferred mode for long distance travel, has seen just six per cent rise in passenger traffic. With the objective of over 500 million passengers per year in the next twenty years from 158 million of 2018, India is investing heavily in infrastruc­ture and trained manpower. At the event, IATA shared a report on the Indian aviation sector A according to which, the air transport market in India employs over 3,90,000 and supports another 570,000 in the supply chain. Overall contributi­on of the sector is close to $30 billion to the country’s GDP.

For the next 20 years, IATA has forecast average growth rate of 6.1 per cent per year which will add 350 million passengers moving close to 520 million journeys by 2037. Reflecting on the respective size of domestic and internatio­nal markets, the report suggests that since 2007, the share of domestic traffic has increased from 54.4 per cent to 61.7 per cent. Talking about aircraft, the report states that “The compositio­n of the current in-service fleet is heavily tilted towards narrow-body aircraft, which account for around 75 per cent of the current fleet. The wide-body constitute­s only 10 per cent of the fleet and the rest 15 per cent consist of turboprop and regional jets.

The Indian aviation market in the domestic segment is currently the fastest growing domestic market in the world. Till June 2018, the Indian domestic aviation market has grown by 17.6 per cent. This is almost ten per cent above the global average. Correspond­ing to the growth percentage, the number of passenger journeys increased by 15 million in a year to reach 97.7 in 2017 from 83 million in 2016. The report does not see any sign of abrupt end to this performanc­e in the near future. Highlighti­ng the potential of the market, it said, “The magnitude of the potential growth in the Indian domestic market is high as the number of domestic flights undertaken in 2017 represents just 7.3 per cent of India’s total population.”

The reasons for high demand are lower airfares and rapid expansion in the domestic air network. “This is evident in the notable rise in the number of airport pairs in operation in India. These have risen by over 50 per cent since 2015. Also, there is increase in the average frequency of flights on each route,” the report opines.

IATA also highlights the mismatch between growth in passenger traffic and infrastruc­ture. In recent years, India domestic demand has grown faster than capacity growth. “While the degree of outperform­ance has been moderated from that seen


in late 2014 and early 2015, the annual passenger growth still exceeds the capacity growth by three per cent on an average each month over the past two years. The passenger load factor which marks the utilisatio­n of assets, for the year 2018 has exceeded 90 per cent for the first time ever, an all-time high for the seven global domestic markets that we track each month.”

In the early part of last decade, the load factor had even dipped below 50 per cent. “The Indian domestic market now accounts for around 1.5 per cent of total industry-wide passenger demand and is below that of the US and China. In a similar way, of the top 10 airports in terms of growth in passenger traffic in 2017, two are located in India, namely Delhi and Bengaluru,” the report states.

Talking about the country’s internatio­nal air transport, the report said that the internatio­nal market has not grown as fast as the domestic market. For the last three years, the Indian market has witnessed double-digit passenger in passenger traffic.

On the Indian aviation business model, the report, emphasisin­g the significan­ce of the Low Cost Carrier (LCC) said that in last five years, the number of LCC seats had doubled from 64 million and it now commands 70 per cent of total number of seats. The report ascribes the broadening and deepening of the aviation market to LCCs. These developmen­ts have created huge demand for aircraft in India which, currently has 600 aircraft with 1123 on order. However, in spite of all these, the airlines are not making significan­t profit. They have failed to match the global industry performanc­e in terms of operating margins as well.

Apart from employment opportunit­ies offered by the Indian Civil aviation industry, other associated sectors such as tourism etc, add over six million jobs. The sector, directly and indirectly, contribute­s around $9 billion and spending by foreign tourists contribute­s a further $ 21.2 billion to the Indian economy. In terms of gross value addition, an aviation transport service employee adds Rs 13 lakh which is ten times more than economywid­e average.

According IATA, the long-term passenger forecast for India is bright and “by 2037, there will be almost 520 million passengers.” Domestic passenger will contribute over 60 per cent to the growth. But, India ranks 133 in air transport infrastruc­ture category, 108 in number of departure/1,000 population, 87 in human resource, 114 in security concerns among others. These do not create a good picture of the country’s preparedne­ss in the sector and government is taking steps in right direction. SUMMIT. Apart from inaugural session, the summit had four plenary sessions in which leaders of industry and the Indian government including the two Ministers participat­ed and discussed the challenges faced by the Indian and global aviation sector.

In the first plenary session on airport infrastruc­ture capacity challenge, the participan­ts discussed the need for significan­t airport capacity expansion with focus on ways to increase the passenger throughput. The delay in expansion of the airport infrastruc­ture is one of the major constraint­s in the expansion of the air travel network. They also discussed problems and challenges faced by India in expanding its existing airports and constructi­ng Greenfield airports and how global players may have a role in airport infrastruc­ture developmen­t roadmap.

During the plenary on regulatory and policy landscape, Rajiv Nayan Choubey said that India unveiled its new policy in 2016 to make air travel safe and affordable for the middle class. The 20 per cent month-on-month growth is a testimony of success of the policy, he said. He called the Indian civil aviation policy a comprehens­ive, workable and successful policy.

The plenary session discussed the necessity of the role of regulator in the aviation industry which is one of the most regulated industries. Participan­ts also discussed the emergence of drone and other technologi­es which requires regulators to evolve to keep pace with it. Chris Rocheleau of the Federal Aviation Administra­tion of the US, in his interventi­on, said that building flexible regulatory framework is important for drones.

Looking at the emergence of newer technology, the plenary session demanded that the regulatory system ought to have better trained, smart regulators and a revenue model for regulatory bodies as well. The session also discussed the challenges of environmen­tally sensitive issues. The Secretary MoCA stated India’s position on environmen­tal regulation and called for a mutually agreeable baseline for regulation­s.

In the next plenary session which was dedicated to things that may shape the future of aviation. The participan­ts deliberate­d on the impact of informatio­n technology such as app, face recognitio­n etc on the aviation sector. Leslie Thng, CEO Vistara was of the opinion that every airline should have their own digital strategy to improve processes and ways to engage customers. Similarly, Jefferey Goh, CEO, Star Alliance, talked about how technology does and will countinue to shape the industry. He also cautioned about over digitizing and called for coordinati­on between services rather than their own parallel digital system. Responding to the discussion, Jayant Sinha said that the industry needs to take into account the powerful disruptors that are emerging on the scene. He said that it is the customer who demands better digital experience whereas technology and industry players have developed attacker strategy.

In the final plenary session on whether India can be a global aviation player, Suresh Prabhu talked about the desire of 1.25 billion people for air travel and India needs industry’s perspectiv­e to make this happen. He talked about the Indian aviation sector in 2035. He also highlighte­d the large Indian diaspora who would like to travel to visit India.

Vinay Dubey, CEO, Jet Airways, expressed positive outlook for the Indian aviation market and said that the low profitabil­ity situation is not unusual and the Indian aviation sector will come out better off. Ajay Singh of SpicJet, talked about the cost competitiv­eness of domestic airlines and paucity of airport infrastruc­ture. Akbar Al Baker, CEO, Qatar Airways called India a sleeping giant and discussed the country’s importance in the global aviation industry.


 ??  ?? Suresh Prabhu, Minister for Civil Aviation, addressing the delegates of Internatio­nal Aviation Summit in New Delhi
Suresh Prabhu, Minister for Civil Aviation, addressing the delegates of Internatio­nal Aviation Summit in New Delhi
 ??  ?? Conrad Clifford, Regional Vice President, IATA (Session Moderator); Don Thoma, CEO, Aireon; Jeffrey Goh, CEO, Star Alliance; Jayant Sinha, Minister of State for Civil Aviation; V.K. Mathews, Executive Chairman, IBS Software; Leslie Thng, CEO, Vistara and David Walton, COO, BOC Aviation on the dias.
Conrad Clifford, Regional Vice President, IATA (Session Moderator); Don Thoma, CEO, Aireon; Jeffrey Goh, CEO, Star Alliance; Jayant Sinha, Minister of State for Civil Aviation; V.K. Mathews, Executive Chairman, IBS Software; Leslie Thng, CEO, Vistara and David Walton, COO, BOC Aviation on the dias.
 ??  ?? Panelists Sebastian Mikosz, Group MD & CEO, Kenya Airways; Ajay Singh, Chairman & MD, SpiceJet; Akbar Al Baker, Group CEO, Qatar Airways; Pieter Elbers, CEO, KLM; Vinay Dube, CEO, Jet Airways with Session moderator Janmejaya Sinha, Chairman - Asia Pacific, The Boston Consulting Group.
Panelists Sebastian Mikosz, Group MD & CEO, Kenya Airways; Ajay Singh, Chairman & MD, SpiceJet; Akbar Al Baker, Group CEO, Qatar Airways; Pieter Elbers, CEO, KLM; Vinay Dube, CEO, Jet Airways with Session moderator Janmejaya Sinha, Chairman - Asia Pacific, The Boston Consulting Group.

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