Business Standard

Global ambition takes wing, but challenges ahead for new aviation minister

The new minister must navigate conflicting demands while considering potential geopolitical ramifications

For comparison, the privatisation of Air India will result in an HHI score for the Indian aviation industry increasing by nearly 730 points from 2,775 to 3,503.

Deepak Patel New Delhi

Listen to This Article

The Indian aviation sector has witnessed a seismic shift over the past two years, with Indian carriers placing orders for a staggering 1,150 aircraft, scheduled for delivery by 2035. This monumental growth presents the new aviation minister with a daunting set of challenges and complexities.

One of the hottest issues is the plea from the UAE and Qatar for increased bilateral rights. For years, carriers like Emirates, Etihad, and Qatar Airways have lobbied to operate more flights to and from India. However, around 70 per cent of their Indian passengers use their hubs merely as transit points to destinations like North America and Europe. This has raised concerns among carriers like Air India, which plans to boost flights to these regions using their newly ordered wide-body planes. Air India MD & CEO Campbell Wilson last week stated that granting more bilateral rights would undermine the airline’s prospects, likening it to pulling the rug from under their feet.
 
However, Indian carriers are divided on this issue. While Air India and SpiceJet have opposed granting additional rights, urging the government to focus on developing major Indian airports as hubs, Akasa Air and IndiGo have called for a holistic analysis. The new minister must navigate these conflicting demands while considering potential geopolitical ramifications.

The aviation ministry has been working to develop a policy to transform major Indian airports into hubs akin to Dubai, Abu Dhabi, and Doha. A prime concern is funding, as private airports like Delhi and Mumbai are overburdened due to revenue-sharing arrangements with the government, according to Air India’s Chief Commercial and Transformation Officer, Nipun Aggarwal. Last week, he emphasised the need for “out of the box” thinking to generate funds.

Adding complexity, India’s major airports are expanding rapidly, with new airports in Noida and Navi Mumbai on the horizon. This growth demands an active role from the aviation ministry to prepare the necessary human resources, including aircraft maintenance engineers, security personnel, air traffic controllers, immigration officers, pilots, and cabin crew members. Aviation consultancy firm CAPA India last week warned of a severe shortage of key aviation employees.

The disinvestment of three major aviation companies – AI Engineering Services Limited (AIESL), AI Airport Services Limited (AIASL), and regional airline Alliance Air – also remains unresolved after being put on hold following the sale of Air India to the Tata Group in 2021. Air India has shown interest in buying AIESL.

Additionally, the government’s plan to lease out 13 airports to private players has been in cold storage for the past four years. The last round of airport privatisation occurred in 2019 when six airports were leased to the Adani Group for 50 years after competitive bidding.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jun 10 2024 | 12:11 AM IST

Explore News