Looking Back at India’s Civil Aviation Industry in 2021

Jolting through the pandemic hits, the aviation industry has been pacing up with unparalleled occurrences for about two years now. The new variants of the novel coronavirus that keep surfacing have not let relief to stay long either. However, successful vaccination drives did allow travel to restart within nations as well as internationally for some. Under its own vaccination drive, festivities, as well as encouragement for local travel, the Indian aviation industry also had the opportunity to begin its journey towards recovery in 2021. With a market size of $16 billion in July 2021, India is the tenth-largest civilian aviation market, stated the Indian Brand Equity Foundation (IBEF) in a report. A Morgan Stanley research report for the same month anticipated that the Indian aviation industry could recover to 80 per cent of the pre-COVID levels (as of 2020). According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflow in India’s air transport sector (including air freight) reached $3.06 billion between April 2000 and June 2021.

2021 did allow the Indian aviation industry to experience a moment of calm with domestic flight operations reaching their pre-pandemic levels. This happened at a time when international travel largely stayed downsized amid COVID restrictions and some bubble arrangements. This does present with the hope that once international travel also gets back to its full form, the industry can expect an upwards performance.

2021 did allow the Indian aviation industry to experience a moment of calm with domestic flight operations reaching their pre-pandemic levels

Domestic passenger and international passenger traffic declined at a CAGR (Compound Annual Growth Rate) of -9.02 per cent and -28.64 per cent, respectively, from FY16 to FY21, owing to COVID-19-related restrictions on flights in FY21, mentioned IBEF. The Foundation further added that in FY21, airports in India pegged the domestic passenger traffic to be ∼105.2 million, a 61.7 per cent YoY decline, and international passenger traffic to be ∼10.1 million, an 84.8 per cent YoY decline, over the fiscal year ended March 31, 2020. In September 2021, the average daily domestic passenger flight departures stood at 2,100. While the aircraft movement declined at a CAGR of -7.79 per cent from 1.60 million in FY16 to 1.20 million in FY21. From FY16 to FY21, domestic aircraft movement decreased at a CAGR of -6.44 per cent and international aircraft movement declined at a CAGR of -18.52 per cent. India’s domestic and international aircraft movements reached 1,062 thousand and 135 thousand, respectively, in FY21.

Amid relief, expectations, corona variant fluctuation, new schemes, changes in the leadership, shifts in the airlines’ ecosystem, 2021 has been an active year for the Indian aviation industry. This is a time of string headwinds but also excitement, and anticipation as to how the industry will be recreated in this postdisease era.

Here’s a look back at some of what fared in 2021 (with inputs from IBEF and MoCA)

• Last year saw a major change in the airlines’ dynamics. Air India’s ownership has been transferred to the Tata Group; backed by Rakesh Jhunjhunwala a new airline, Akasa Air is coming into the picture. After being grounded for two and a half years, Jet Airways is also making a comeback this year.
• In August 2021, the government convened three groups to revitalise the aviation industry. This committee aims to advise the government on how to increase local and international connectivity and address concerns such as aircraft leasing & financing, aircraft & component production and other regulatory requirements.
• The Airport Authority of India (AAI) announced a few developments in Indian Airports including construction of a new airport on a greenfield site in Hollongi (Arunachal Pradesh) by November 2022, new integrated passenger terminal building expansion of Tiruchirappalli & Pune Airport (March 2022), Guwahati International Airport (June 2022), Maharaja Bir Bikram Airport (Early 2021) and major expansion of Surat Airport (December 2021). An international airport at Jewar was also inaugurated. AAI plans to invest 25,000 crore ($3.58 billion) in next the five years to augment facilities and infrastructure at airports.
• In October 2021, the Union Minister of Civil Aviation, Jyotiraditya M. Scindia, virtually flagged off six routes expanding the aerial connectivity of Northeast India.
• The Government of India launched regional connectivity scheme, UDAN (Ude Desh ka Aam Nagrik) with the aim to make flying affordable for common man. In February 2021, the government identified 24 routes in Assam under the first phase of UDAN 4.0. In March 2021, on the launch of the ‘Azadi Ka Amrit Mahotsav (India@75)’ by the Government of India, the Ministry of Civil Aviation (MoCA) proposed 392 routes under the UDAN 4.1 bidding process.
• In March 2021, the government announced plan to set up two water aerodromes in Assam and four water aerodromes in Andaman & Nicobar Islands this year to boost tourism and connectivity. In March 2021, the government submitted a proposal to develop a water aerodrome project at the Ujjani Dam, under the Ministry of Civil Aviation’s UDAN-RCS (regional connectivity scheme).
• On September 25, 2021, AAI announced a liberalised FTO policy to support growth of aviation industry in the country. Under the extant policy, airport royalty was abolished, and annual fee was rationalised significantly for new FTOs.
• 787 Commercial Pilot Licenses (CPL) were issued during January-November 2021, an all-time high.
• AirSewa 3.0 went live on October 2, 2021 with enhanced feature of grievance redressal with new features including grievance escalation by users or on Service Level Agreement (SLA) expiry, grievance transfer among stakeholders, enhanced roles and permissions for nodal officers, enhanced flight information and tracking of flights, public forum for discussions, mobile app for nodal officers. Pending grievances on AirSewa portal reduced from 1,354 on July 20, 2021 to 59 on December 15, 2021 (96 per cent reduction).

Earlier, the International Air Transport Association (IATA) had shared that India is expected to overtake China and the United States as the world’s third-largest air passenger market in the next ten years, by 2030. To ensure that happens, the industry stakeholders will be required to actively participate and collaborate with policy makers for efficient implementation of ideas directed to boost India’s civil aviation industry.