The government has played an instrumental role in putting the aviation sector on the path to recovery post the pandemic. Domestic capacity was opened up to 100 per cent in October 2021 and international capacity to 100 per cent in March 2022. Air traffic is now touching pre-Covid levels. Besides, there has been a growing focus on other infrastructure components of the aviation ecosystem to make air travel a means of mass transportation. At a recent industry conclave, Jyotiraditya Madhavrao Scindia, minister of civil aviation, talked about the ministry’s key focus areas and the growth drivers for the sector…
There is no other sector that was hit as hard as civil aviation by the Covid-19 pandemic. The sector suffered $370 billion worth of losses globally, with close to about $2.9 billion worth of losses faced by the Indian aviation sector. Consequently, the last 12-15 months have been spent in making concerted efforts to rebuild the service capability of the sector. This has made way for the re-emergence of the sector in some ways. We have set up eight advisory groups to look at all the components of the ecosystem including airlines, airports, maintenance, repair and operations (MRO), cargo, drones, flying training organisations and research.
We have been looking into the high rate of VAT on aviation turbine fuel (ATF). We have held multiple discussions with the state governments on the issue. Earlier, only 12 states were charging 1-4 per cent VAT on ATF, and close to 26 states charged 20-30 per cent VAT on ATF. Today, we have 16 more states under the 1-4 per cent regime. We are in conversation with the remaining eight states, imploring them to come on board. The lower VAT on ATF increases aircraft movements per week, thus improving flight connectivity, as has been the case in Kerala and Andhra Pradesh, which saw an increase of 15-20 per cent in aircraft movement. It also provides an impetus to airlines to refuel in that state. For instance, within three weeks of Jammu & Kashmir lowering the VAT on ATF, a 360 per cent rise in refuelling was witnessed.
Covid-19 came as a silver lining for the air cargo sector. The period saw India jumping from holding a mere 2 per cent share in international cargo traffic to almost 19 per cent. Several airlines have moved towards the cargo business and about 3.1 million metric tonnes of material is being transported by air at present. I believe it is a sunrise sector in India and needs to grow tremendously. We are also looking at transporting perishables by air and have launched the Krishi Udaan scheme to support this.
We are also focusing on developing more flying training organisations (FTOs) because any expansion in services must be complemented by growth in human resources as well. Currently, we need to train about 1,000 pilots and there are 34 FTOs in place to impart training. We plan to add nine more FTOs by the year end, and another 15 by end 2023.
The other big opportunity area is drones, which I believe will result in value creation, both in the services sector and in manufacturing. With the new drone policy and the PLI scheme for drones, we are looking at significant growth in this area. MRO is also an important area from the Indian standpoint. Recently, French-based Safran announced its plans to put in place an MRO facility in India through foreign direct investment of $150 million in Hyderabad. The facility will be able to overhaul over 250 engines per year initially and is expected to create 500-600 highly skilled jobs.
Growth drivers
In recent years, demand for air transportation from Tier II and Tier III cities has been on the rise. While traditionally international to domestic or Tier I to Tier I city travel has been the mainstay of the aviation sector, that growth is now being powered by Tier II and Tier III cities.
The aviation fleet size has grown from 410 aircraft in 2013-14 to about 690 today. Given the bigger focus on fleet acquisition, the sector can look at a 10-15 per cent fleet expansion per year. Thus, we can expect a fleet size of about 1,200 aircraft in the next four to five years, which will position India in a sweet spot in terms of domestic and international transport.
There also has been a growing focus on last-mile connectivity through smaller aircraft, sub-20-seat aircraft, helicopters, etc. India has one of the lowest per capita penetration of helicopters in the world. We have only 250 helicopters for a country of 1.3 billion people. There are countries like Brazil and the US that have 4,000-6,000 helicopters on a much lower population base. To improve helicopter penetration, we brought out the Heli Seva scheme. It focuses on improving the helicopter ecosystem by lowering RNFC charges and putting together a Heli Seva portal for easy and faster clearances. This will allow hilly regions to get better connectivity.
Going forward, we want to make aviation a mode of mass transport for our citizens and all our future steps would be towards making this a reality.
