The global aviation industry has absorbed heavy losses amounting to an estimated $190 billion since the start of the pandemic. While there are some signs of nascent recovery, the industry is still struggling to cope with multiple waves of Covid-19, high fuel prices, and the looming possibility of low demand due to possible recessionary conditions.
Trends in Indian aviation mirrored those around the world with Indian carriers also incurring huge losses. Domestic traffic in 2022-23 will be in the range of 130-140 million passengers, slightly lower than pre-Covid levels. International traffic is expected to reach 55 million-60 million, about 20 per cent below pre-Covid levels.
However, there may be a comparatively faster recovery for the Indian aviation industry and investment in Indian aviation infrastructure, and airline fleet augmentation is slated to continue.
The pandemic led to a rise in the volume of air cargo. Some of this was due to the need to move medical supplies and equipment such as oxygen cylinders, vaccines and needles in a hurry. But the rise in cargo volumes did compensate for the loss of passenger traffic to some extent.
Prior to the pandemic, India had already been experiencing a trend driven by the RCS-UDAN scheme where travellers to Tier II and Tier III destinations opted for the aerial option. That trend seems to be continuing and may, in fact, have been driven to some extent by pandemic exigencies.
As a result, the Airports Authority of India (AAI) is investing considerable sums in airport infrastructure and policymakers are also encouraging private investments in this key area. Three major greenfield projects – Navi Mumbai, Jewar in the NCR region, and Mopa in Goa – are in play and there are a host of smaller projects in motion across various Tier II and Tier III locations. The ministry targets the construction of 100 new airports by 2024 to service 1,000 new UDAN routes by 2026.
Apart from this, there are brownfield projects and a drive across the entire airport space to push for greater digital enabling and, ideally, for fully digitised contactless airports with computerised baggage claims, electronic gates smart detection systems, biometric scanners, IoT-enabled baggage trolleys, etc. AAI is also working with Bharat Electronics Limited for the development of locally manufactured systems to manage air traffic.
In addition to improving passenger facilities, AAI targets a cargo handling capacity of about 10 million tonnes by 2026-27 and it is adding renewables capacity with the intention of taking the share of renewable energy in airports to around 80 per cent in the next couple of years.
In addition, the airline space is likely to become more competitive with two new airlines due to launch and the Tatas taking over Air India. The launch of operations by Akasa Air in August may crowd the budget airline space to some extent.
There are large-scale fleet augmentation plans on the anvil, with roughly 1,500 aircraft of various types on order. This would almost triple the seats available. There could be a shortage of trained personnel, which, along with employee-related costs, may be a constraint even though digitalisation will reduce labour demand.
The Indian aviation sector, therefore, faces major challenges. However, capacity building, along with the promise of competition and investments in the sector, augurs well for the future.