All in all, the civil aviation sector is the ‘sunrise sector’ as the Secretary of Civil Aviation has stated, with a potential of $150 billion investments in the next decade. The opportunities are huge and so are the challenges.

As the Indian civil aviation sector celebrates its centenary year, the year 2011 has been marked by milestones as the Indian skies continue to open up at an astounding pace. The airlines have led the growth story, albeit a couple of them are strapped for various reasons. Grabbing global headlines was IndiGo when it ordered 180 airplanes and a fledgling GoAir followed suit by picking up 92, both from Airbus. In December 2010, SpiceJet had placed an order for 15 Bombardier Q400 (with options for 15).

The ‘plane rush’ has not been surprising at all as Asian carriers have just started biting into the prospects that lie within the region first and elsewhere later. At the Paris Air Show 2011, Air Asia, a low-cost airline from Malaysia, made history of sorts by ordering 200 Airbus aircraft. Incidentally, Air Asia within a span of five years since its operations has connected to seven Indian cities with plans for more.

There are at present 11 scheduled operators including two cargo airlines (Table 1) with a total fleet of 429. Paramount Airways has been totally grounded, mired in legal battles, while Air India continues to be in a mess. It has forecast a loss of Rs. 6,994 crore for 2011.Though it has been in a restructuring mode with the government infusing equity of Rs. 800 crore during 2009-10; Rs. 1,200 crore in 2010-11 and ad hoc equity of Rs. 710 crore this year, the national carrier has not been able to regain its glory of the “Maharaja” days. Recently, with pressure building up from employees and other quarters, the government appointed Rohit Nandan as Chairman and Managing Director in place of Arvind Jadhav.

Be that as it may, airlines are busy acquiring aircraft in consonance with the demand. Boeing India President, Dinesh Keskar said the company forecasts a $150 billion market for 1,320 new passenger airplanes in India over the next 20 years as the economy aims for double-digit growth, stimulating strong demand for new and replacement aircraft.

What is driving such growth? The most visible is the increase in airline passenger movement as spending power is going north. In the first five months of 2011, airlines carried 24.5 million passengers, registering 17.6 per cent growth over the previous year. In the matter of a decade, passenger movement has been spectacular from 175.39 lakh in 2000-01 (plane load factor of 68.6 per cent) to 569.45 lakh in 2009-10 (plf of 71.5 per cent). Though the growth of freight not been commensurate, it has expanded from 59.385 tonnes to 3,60,297 tonnes (Table 2). The trend continues and India should be moving up the ranking within top five aviation markets in the coming years. At a conservative growth rate of 10 per cent, the throughput in 2025 is expected to be around 540 million passengers. The middle class is burgeoning and to use Air Asia’s catchline, now ‘Everyone can fly’.

The humongous growth has been on several fronts. Airport infrastructure development is happening at a considerable pace. As per the Airports Authority of India (AAI), from 50 operational airports in 2001, there are now 85 operational airports including 17 international airports and 11 are under the AAI. The AAI has embarked upon a modernisation programme of 35 non-metro airports as new sectors are adding to airline growth. The government has plans of developing 18 Greenfield airports. The hinterland is getting connected and that augurs well for economic development.

Around the same time, the government has announced incentives for those starting regional airlines. SpiceJet is all set to launch the service with Hyderabad as its likely hub. Also Chennai-based Air Dravida will soon be connecting 13 cities, all in South India, over a period of time. Regional airlines are eligible for concessions including tax on fuel which would come as a major relief, as currently the airline industry is grappling with escalating fuel costs which accounts for nearly 40 per cent of the operational costs.

Aircraft manufacturers are looking at new engine designs and technologies, which will drive efficiency. Not just the two major aircraft manufacturers, Boeing and Airbus are leading the technology developments, working on airframes, engine, etc to primarily increase fuel efficiency. The latest versions of narrow body aircraft promise at least 15 per cent less fuel consumption and airlines are re-jigging their strategies.