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

Issue: 3 / 2020By Ayushee ChaudharyPhoto(s): By SP Guide PubnsIllustration(s): By Anoop Kamath

“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.

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

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.

Air transport brings tourists and investment into India, and helps businesses trade their goods and services around the world

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 you way beyond commercial flights can travel. This boosts local as well as the national economy. More consumers and a wider economy are also benefitted by such connections between cities. This also enables the economic flows of goods, investments, people and ideas that are the fundamental drivers of economic growth. Ease of travel, cost competitiveness, and trade facilitation are significantly crucial for economic growth. Global connectivity that can only come with aviation, is a critical driver of all modern economies.

TRAVEL & TOURISM

Aviation is also a major driver when it comes to the travel and tourism industry. India has witnessed being uplifted in the World Economic Forum’s Travel and Tourism Competitiveness Index. Continued efforts for improvements in these areas as well as in human resources development, airport infrastructure density, and tourism infrastructure are among the areas that could further enhance India’s competitiveness and hence spurt the right economic growth. IATA also highlights that foreign tourists arrive by air to India, spend their money in the local economy, and are estimated to support an additional 4.3 million jobs. In total, 6.2 million jobs are supported by air transport and tourists arriving by air. Air transport brings tourists and investment into India, and helps businesses trade their goods and services around the world. In India, the air transport industry is estimated to have supported a $10.4 billion gross valueadded contribution to GDP in India while spending by foreign tourists supported a further $21.2 billion gross value-added contributions to GDP.

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).

MEDICAL EXAMINATION & SURVEYS

Business/General aviation has always been looked at as a wealthy person’s affair and has been associated with luxurious travel. However, the usage of business/general aviation goes way beyond that. One of the least explored areas in India for business/general aviation is that of medical emergencies, disaster management and conducting crucial surveys. Once tapped into, these sectors can also prove to be highly beneficial for the larger picture of the nation.

MAKE-IN-INDIA PROGRAMME

A lot of the aviation market depends on importing the various parts from other countries. However, in recent times, especially with the Government’s ‘Make-in-India’ programme, manufacturing of these parts in the country itself is being emphasised and the anticipated success programme is holding the potential to inspire India’s corporate and businesses to grow fast, and hence cater well to the nation’s economy. The aviation sector must be supported to grow as it can be one of the largest contributors in the ‘Make-in-India’ program as well as towards skill development which could further contribute towards nation-building.

The air transport jobs also tend to be highly productive – not just for their airline employers but for the economies in which they are employed. The average air transport services employee in India generates nearly 1.3 million in Gross Value Added annually, which is around 10 times more than the economywide average. India’s aviation market is set to be the third-largest market in the world which is why it is all the more crucial to focus on developments in this industry. Right now the economy of India might appear to be on a stumbling stage but if we can facilitate aviation, then the economy will also follow suit.

There are no second thoughts about the fact that this is an exciting period for air transport in India. And there is a clear mandate for the industry, its supply chain partners and the government and policy-makers to all work in a collaborative manner, towards the common goal of ensuring that the benefits that the air transport industry can bring to India are fulfilled. But this industry requires the right type of infrastructure to be put into place, at the right time and in the right place to ensure the demand is met. Infrastructure includes not just the airports, but also investment and support services, both on the ground and in the air. The broader business and policy environment also needs to be more flexible and welcoming for the industry to let business aviation deliver its benefits to the nation.