News: Recently, India has opened its airspace for international travel for the first time since the outbreak of Covid-19 in 2020 after a period of two-year.
The sector is going to witness rebound due to easing in the covid-led disruptions, and simultaneously, due to important reform measures undertaken by the government.
What are the expected trends in the Indian Aviation Sector in the coming years?
Civil aviation has become a vehicle of economic change in India, and it is going to face strong growth in coming years,
The government has launched its flagship scheme known as Ude Desh Ka Aam Nagrik. It connects some of the most remote cities of India such as Jharsuguda, Odisha. These areas will emerge as new growth avenues for the country.
At present, the number of airports stands at 140 in 2021. India will witness growth in the number of both greenfield and brownfield airports in the next 2-3 years. Therefore, the number of airports is bound to reach the tally of 220 by 2025.
India’s aircraft fleet is also likely to grow, by 110-120 every year.
In addition, the number of pilots trained by the Flying Training Organisations (FTO) is also going to increase in the near future.
Allied sectors rise during the pandemic period: Allied sectors of Aviation like air cargo have seen exponential growth in a short span of two years. As a result, India’s share in international cargo traffic movement went up from 1. 8% to 19%.
Similarly, reform measures undertaken in the drone sector will make drones part of almost every sector in the coming years. It will lead to an explosion of start-ups and skilled manpower. It will also bring huge economic benefits to Indian economy.
What are the challenges?
The civil aviation sector is highly prone to disruptions in the future. It may be due to geopolitical disturbances and a new pandemic in the future.
India’s taxation regime on Air Turbine Fuel (ATF) is very high as compared to the rest of the world. For example, at present, it now costs twice as much as the pre-Covid-19 rates.
The Aviation industry is also highly elastic to price change. For example, a minor rise in air fares could adversely impact the demand of air travel in the short term.
What is the way forward?
Rationalising ATF: Recently, 24 states/UTs have executed taxation reform (VAT) on the Aviation Turbine Fuel (ATF) rates. In addition, there are chances that remaining states/UTs will also join this reform regime soon.
India needs to focus on international travel, as well as the air cargo segment.
Source: The post is based on an article “Up & Up: Airports, Pilots, Passengers, Cargo, Drones” published in The Times of India on 7th Apr 22.
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