An Efficient Economy, Requires a Robust Aviation Sector

The aviation industry not only directly impacts the economy but is also interlinked with other sectors in the economy that generate enough income and employment opportunities

“In case of civil aviation, India has the third-largest domestic civil aviation market in the world. We are looking at a billion passengers per year. In a few years, we will be adding another 100 airports. A major airline ceased operations between December 2018 and April 2019. At that point of time, we had less than 600 civil aircraft, which have today increased to more than 750 aircraft. Does this look like an economic slowdown?” refuted Hardeep Singh Puri, Minister of State for Commerce and Industry while speaking at the first Asia Economic Dialogue organised in Pune by the Ministry of External Affairs along with the think tank Pune International Centre on March 2, 2020.

The economic situation of the country has been in a questionable state for quite some time now and the role of the aviation industry is an underestimated but a significant one in uplifting the economy. This is so because the aviation sector is interlinked with other sectors in the economy that generate enough income and employment opportunities.

Globally as well, aviation has been noted to be instrumental in driving global economic development. More than one-third of all trade by value is transported by air, making aviation a significant element of business all over the world. The aviation industry supports $2.7 trillion (3.6%) of the world’s gross domestic product (GDP), according to data shared by ‘Aviation: Benefits Beyond Borders’, a website by the commercial aviation industry body, the Air Transport Action Group (ATAG).

When it comes to India, aviation can have a similar impact only if it is rightly harnessed. The Government seems to be recognising and channelising this industry’s potential now but more still needs to be done. To fulfill its aspirations and potential of sitting on the high table of global economies, India requires a booming and healthy civil as well as the business aviation sector.

The business and general aviation sector consists of aircraft owners, pilots, engineers, technicians, operations staff, and also the regulator, who contribute directly and indirectly to the GDP in a significant manner. Direct impact mostly refers to the economic impact directly related to business aviation activities, covering operational revenues in terms of fuel, airport usage, insurance, direct employment, MROs, maintenance, and testing facilities among others. The indirect impact is the economic impact from the spurt in other activities that get a boost due to business aviation. This contribution has a much larger and important impact on the economy by way of providing disaster management, medical emergencies, connectivity to remote areas, tourism, survey & exploration, internal security, agriculture, sports, and policing among other aspects.

79 million people traveled to/from/ or within India in the year 2010. By 2017 that doubled to 158 million and by 2037, that number is expected to treble hence air transport is and will be a significant economic contributor to India.

To measure air transport’s impact on an economy, there are various factors that can be considered like the jobs and spending generated by airlines and their supply chain, the flows of trade, tourism and investment from users of all airlines serving the country, and the city pair connections that make these flows possible. All of these give a different perspective on the importance of air transport. Some of the major ways in which the aviation industry affects the economy of India has been listed below.

EMPLOYMENT

Aviation in India supports 7.5 million jobs: 390,000 directly, 570,000 in the value chain, and 6.2 million in tourism. Aviation contributes some US$30 billion annually to India’s GDP, according to the data shared by the International Air Transport Association (IATA). From the millions of jobs around the world that are supported by the aviation industry, some roles are within the industry itself - at airports, for airlines, and in civil aerospace and air navigation services, while other jobs are supported by the economic activity that air travel creates. IATA adds that airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers, and air navigation service providers employ 404,000 people in India. In addition, by buying goods and services from local suppliers the sector supports another 943,000 jobs. On top of this, the sector is estimated to support a further 553,000 jobs through the wages it pays its employees, some or all of which are subsequently spent on consumer goods and services.

TIME & PRODUCTIVITY

The time-saving benefits of business aviation cannot be stressed enough, and hence there are no doubts that it enhances productivity and aids economic developments. If we look into the complexity of a multi-tour day or international business trips, the option of flying a commercial airline is often not practical from a time saving and cost perspective. The time when business aviation was perceived to be a luxury is gradually fading and the industry is now emerging as a necessity, being widely used by corporate houses not just for the promoters, but also by the top executives. Also, flying commercial in India’s chaotic, overcrowded airports many times means constant delays and frequent cancellations. By using their own aircraft or chartering one, those in business can now fly efficiently and make better use of their travel time.

EXPANSION FOR COMPANIES

Based on their business needs, many times business executives and companies also need to have access to smaller and no-scheduled destinations with private aircraft and travel to remote locations, which helps in expanding the company’s business, hence becoming a tool in contributing to the economic growth. Setting up businesses in far-flung areas also contributes to the local economy of that area. Hence increased use of business aviation by these people will only further fuel their growth. A business jet today is a way to enhance productivity, efficiency and ease of doing business.

CONNECTIVITY

We all know air travel has connected cities, counties, and continents, but the infrastructural requirements sometimes keep some remote areas away from such connectivity. However, as mentioned above, private aircraft can take

In 2010, 79 million people traveled to/ from/or within India. By 2017 that doubled to 158 million and by 2037, that number is expected to treble hence air transport is and will be a significant economic contributor to India