Get Set Go

Still shackled by inadequate infrastructure, high costs and lack of a coherent regional aviation policy, Indian regional aviation is like a tiger waiting to be unleashed

India is urbanising apace and by 2050, half its people are expected to be city dwellers. Apart from the sprawling metros, perhaps 200 population centres across the country are rapidly reinventing themselves as industrial and economic power houses. They urgently require airports and flights, as befits modern cities. There is growing demand for aviation services from places as far apart as Bokaro (Bihar), Bellary (Karnataka) and Dwarka (Gujarat). The entire North-east Region has been crying out for air connectivity for many years but sporadic efforts to provide regular services have proved inadequate.

Although India’s airports handled an impressive 162.3 million passengers during financial year 2011-12, the six metros alone accounted for almost 70 per cent of this traffic. Although six airlines are in operation, they display a marked preference for the ‘safe’ mainline routes and are reluctant to blaze new trails. And although a comprehensive policy on scheduled regional air transport services has been in place since August 2007, it has conspicuously failed to generate any great enthusiasm among the entrepreneurs. Can regional aviation ever thrive in such a difficult environment?

Democratic Dividend

Air travel, long seen as a privilege of the elite, is well on the way to being democratised. Less than three per cent of Indians can afford to buy an air ticket but their numbers and aspirations are growing. So, given the necessary will and some well-considered measures, there is no reason why air services cannot prosper even in the remote regions of the country. And it need not take long either. In 2001, only six per cent of Malaysians had ever travelled by air. Today, that figure has crossed 70 per cent. A single bold airline, AirAsia, fully embracing the low-cost model, managed to transform the aviation scene in that country. India’s potential for growth is far greater, starting as it does from a lower base. According to the International Air Transport Association (IATA), people in India travel on an average just 0.1 times per year, compared with 1.8 times in the USA. India is already poised to become the world’s third largest aviation market after the US and China, with traffic estimated to treble to 450 million travellers by 2020. In the next five to six years alone, about 400 new aircraft are on order by India’s major carriers. Can the already congested metros possibly handle so many passengers or planes?

Affordable Airports

Delhi, Mumbai, Bangalore and Hyderabad airports have adopted the public-private partnership model and introduced some impressive infrastructure; Kolkata and Chennai are following suit. But have the needs of the common folk been factored in? The managers of these swanky airports understandably wish to obtain adequate return on the huge sums invested and are keen to hike the service charges drastically, drawing howls of protest from the users. However, since low-cost flights dominate the country’s domestic market with close to 70 per cent market share (and growing), would it not have been better to plan more affordable facilities? Why should the same airport charges be applicable to full service and low-cost airlines? It is sad that the country does not have a single low-cost airport. Recently low-cost carriers (LCCs) IndiGo and SpiceJet declared that they cannot afford the higher cost of operating from Delhi’s ultra modern T3 terminal. According to Naresh Goyal, Chairman, Jet Airways, air fares in India are about 300 per cent higher than those in China and some other countries mainly because of high taxes. The major reasons are the cost of jet fuel and airport charges, both of which rank among the highest in the world. The masses wish to travel by air but they cannot afford high fares.

At least, the mistakes of the past should not be repeated. According to the Centre for Asia Pacific Aviation (CAPA), over the next 10 years, based on current growth estimates, all six metros are expected to have provisioned for a second airport while Mumbai will need to start preparing for a third. Most of the 35 key nonmetro airports need new capacity now or very shortly. This may provide a good opportunity to make air travel more affordable by aggressively adopting the low cost model for as many new airports and terminals as possible. It is quite likely that India’s regional demand will be highly price sensitive and only low-cost flights will be commercially viable for many years to come. The AAI has an ambitious agenda to operationalise 225 airports across the country by 2020. Hopefully, a significant number of them will be planned with affordable infrastructure so that regional LCCs can offer attractive ticket prices to first-time and discretionary flyers.