The aviation sector is experiencing a gradual recovery after two years of Covid-19 turbulence, with domestic traffic improving to normal figures, international flights resuming and Indian carriers expanding their air cargo business. Although the current global geopolitical strain may cause cost escalations due to the rise in oil prices, it is expected that domestic traffic will return to pre-Covid levels during 2022-23, while international traffic may witness slower growth. As per the Directorate General of Civil Aviation (DGCA), the number of passengers carried by domestic airlines increased by 66.73 per cent, from 34.34 million in January 2022 to 57.25 million in June 2022.
The sector has witnessed key developments in different areas…
Airports
With a projection of 0.4 billion travellers in India (both domestic and international) by 2027, the Ministry of Civil Aviation (MoCA) plans on creating 220 airports by 2030 to harness the sector’s growth. The Government of India has accorded in-principle approval for setting up 21 greenfield airports across the country, including international and domestic airports, of which eight have been operationalised.
Progress on smart airports
- Digi Yatra facilitates smart innovations: As of July 2022, MoCA has taken a big leap towards the modernisation of airports with a targeted capital outlay of over Rs 900 billion from 2019-20 to 2024-25. The Digi Yatra project initiated by the ministry is a massive endeavour to facilitate seamless and contactless processing of passengers at seven airports in two phases.
- Facial recognition systems and self-scanning at airports: In August 2022 the Delhi, Bengaluru, Hyderabad and Varanasi airports rolled out facial recognition systems for passenger verification. The Delhi and Mumbai airports have also adopted new electronic gates at the immigration counters that allow passengers to self-scan their boarding passes to move into the boarding area.
- AI mechanism adopted for efficient surveillance: Sardar Vallabhbhai Patel International Airport has introduced an indigenously developed artificial intelligence (AI)-based surveillance service called Desk of Goodness, which aims to serve passengers such as senior citizens, women with infants and people in need of a wheelchair. It also detects incidents such as falls or abnormal passenger behaviour.
Cargo facilities planned and operational
- Growth of air cargo revenues: Airlines have witnessed a 520 per cent increase in cargo revenue in the past
two years. With the government’s vision for 10 million tonnes (mt) of annual cargo throughput by 2030, the air cargo market in India is all set to tap the potential of domestic and international markets. Pradhan Air Express has been set up as a new cargo airline to promote this vision. - Work on cargo terminal of Ahmedabad airport progresses: Phase I of the semi-automated cargo terminal project at Ahmedabad Airport has begun construction work. It will be capable of handling domestic cargo, international cargo, express cargo, cold chain pharma and other perishable cargo. Work on Phase I is likely to be completed by June 2023.
- Pune airport cargo complex project sets forth: Around 1.76 acres of land has been received for implementation of the Pune airport cargo complex project by the Defence Estates Office. The project involves the development of a domestic and international air cargo complex at Pune airport in Maharashtra at an estimated cost of Rs 3 billion, and is expected to be completed by December 31, 2022.
Airline updates - Akasa Air launches new routes: Akasa Air received its third aircraft on August 16, 2022, and began its commercial operations on the Bengaluru-Mumbai route with two aircraft on August 19, 2022. The plan of the airline is to start its operations with six routes across five cities, namely, Mumbai, Ahmedabad, Kochi, Bengaluru and Chennai.
- UDAN makes milestones: As of August 18, 2022, 954 routes have been awarded to connect 156 airports under the Regional Connectivity Scheme – UdeDesh ka AamNagrik (UDAN). A total of 68 airports and 425 routes (56, 142, 159, 46 and 22 under UDAN 1.0, 2.0, 3.0, 4.0, 4.1, respectively) have been operationalised.
- Acquisition of AirAsia by Tata-owned Air India approved: In June 2022, Air India, which is now a Tata affiliate, received the Competition Commission of India’s approval for acquiring AirAsia. Almost the entirety of Tata Group’s stake in AirAsia India (83.67 per cent) has been approved, while the remaining 16.33 per cent is expected to be purchased by the Tata Group from its Malaysian partner, AirAsia Berhad.
- DGCA acts on technical issues of SpiceJet airline: DGCA has issued a show cause notice to SpiceJet after eight incidents of technical malfunction took place between June 19, 2022 and July 5, 2022. It has also initiated a two-month-long special audit of airlines, focused on hangars, stores, equipment used by airline personnel, aircraft grounded due to lack of spare parts, etc.
The aviation sector has witnessed a significant upswing and consequently, MoCA has planned for careful expansion in the coming years. There will be allocation for additional airline capacity of 15 per cent, or 100 to 110 aircraft per year, with a target of reaching 1,200 aircraft by 2027. The government has also set a goal of increasing cargo flights for perishable food items by 30 per cent with 133 new flights, as well as setting up 33 new domestic cargo terminals and 15 new flight training schools for pilots, and increasing the focus on the integration of drone technology. Further, the government plans to invest around Rs 980 billion in setting up greenfield airports and expanding brownfield airports in the coming four years, of which Rs 620 billion is planned for private sector investments with the Airports Authority of India investing the remaining Rs 360 billion.
