Sky is the Limit: India's Record-Breaking Aviation Growth

The Indian aviation space has changed dramatically in the last decade. There has been a big jump in the number of passengers travelling by air in the domestic skies. According to the Airports Authority of India’s  (AAI) website, in November 2023, over 2.53 crore domestic passengers went through Indian airports -- up almost 8.7 per cent from the same period last year when 2.33 crore passengers travelled through them (November 2023 is the last month for which traffic data is available on the website).

In comparison, in 2015 November (the last year for which official passenger data is available on  AAI’s website) 1.44 crore domestic passengers travelled through Indian airports --up from the 1.1 crore in the same year previously. 

There are various reasons for this – an increase in the middle class,   increasing disposable incomes,  growth in GDP as the direct and indirect economic impact of  tasks related to aviation, increase in the number of domestic airlines and the aircraft they are operating and airlines adding more city pairs.

All this is good news for the travellers and airlines, which have been quick to respond by ordering more aircraft to add to their fleets.

IndiGo  has now grown to a fleet of over 300 aircraft which operate over 2,000 daily flights to over 80 domestic destinations. The airline is also adding newer city pairs becoming  the only airline connecting Pune-Patna, Agra-Jaipur and Delhi-Nagpur.

In June last year IndiGo placed an order for 500 Airbus taking its total number of aircraft ordered to over 950. The June 2023 order  will provide the airline a steady stream of aircraft from 2030 to 2035.

IndiGo is not alone in ordering aircraft. Days after IndiGo, Air India ordered 970  aircraft from Boeing and Airbus.

At the moment, the  concentration of domestic air travel remains between the metro cities.

For instance, in  November 2023,  Delhi handled 43.95 lakh domestic passengers, Mumbai 31.91 lakh domestic passengers, Bengaluru 26.76 lakh and Hyderabad 16.80 lakh passengers. 

But the Tier 2 and 3 cities are also catching up. So Lucknow handled 4.4 lakh domestic passengers, Pune 7.56 lakh, Indore 2.88 lakh and Madurai 90,000. Though they cannot be compared to from metro airports, the number of flyers in the smaller cities is also increasing. 

Already airports are running at a high capacity. Ahmedabad and Mangalore at around 80 per cent, Thiruvananthapuram at over 100 per cent and Jaipur at over 60 per cent.

But this is just one part of the picture. Airports be they in the metros or the smaller cities are beset with problems.

According to Satyendra Pandey, Managing Partner,  Aairavat Technology & Transport Ventures Private Ltd., India’s airlines have more than 1200 aircraft on order. Fleets will expand significantly and this requires adequate infrastructure for fleet deployment

“The airport capacity required to accommodate the fleet is a function of demand patterns. For now, six metro cities  (Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata and Chennai) constitute a significant portion of demand with over 60 per cent- 70 per cent of blended demand tied into a metro city,” he says.

“This requires comprehensive airport capacity which includes airside, runway and airspace capacity. On the airside on parking alone, Delhi airport has approximately 230 stands but adjusted for constraints this capacity is much lower. Mumbai, has approximately 130 stands again on an unconstrained basis,” he adds. Delhi and Mumbai, the two biggest airports have a combined parking capacity of  over 360 aircraft for the close to 700 planes among them.

Mumbai, which has one runway and one cross runway, has issues about the number of aircraft traffic movements it can handle in an hour. At Delhi airport there is the issue of how best to use terminal capacity.

In July last year, General (Retd) V K Singh, Minister of State for Civil Aviation told the Rajya Sabha in a starred question that presently, the airlines were not facing parking issues at airports in July last year.

Not enough parking bays leads to problems for the airlines when they are planning their schedules. According to an  airline executive  airlines such as Air India, IndiGo and Vistara that control 85 per cent of the market are able to avail only about half the parking capacity of what they would like to have  to be able to plan all their flights in a commercially viable manner. Delhi and Mumbai airports account for one in three domestic and international flights.

Further, because of lack of night parking at the metros, airlines are forced to fly their last flight of the day to smaller cities such as Ahmedabad (the alternative airport for Mumbai) and Lucknow (alternative for Delhi), which are unlikely to record high seat occupancy or command airfares at those hours.

What further compounds the problem is that aircraft of Indian airlines remain parked at airports for lack of spares or because an airline has stopped operating as is the case with GoFirst and Jet Airways.

In November last year CAPA estimated that close to 200 aircraft are expected to be grounded by the end of fiscal 2023-24. The aviation consultancy firm maintained that at least 200 aircraft may be grounded due to various supply chain issues and for maintenance purposes by the end of FY24.

As per CAPA’s data, 161-166 aircraft were  grounded. Of this, 55 belonged to India’s largest airline IndiGo, 54 to GoFirst (since May when it filed for voluntary insolvency), 25-30 to Air India and 27 to SpiceJet, which are not operating because of strategic issues.

However, CAPA estimates that by the end of the current financial year, IndiGo’s inoperative fleet may surpass 90 aircraft, primarily due to supply chain issues while GoFirst’s entire fleet is likely to remain grounded till March 2024.

CAPA also believes that the large number of grounded aircraft may lead to a shortage of parking bays, with aircraft having to be parked at hangars and Maintenance, Repair and Overhaul facilities across the country. If the number of groundings increase, the parking challenges will become more acute, it said.

In a related problem it was recently noticed that  Mumbai airport has only two runways had a major problem. In September last year a private jet crash landed at Mumbai airport because of poor visibility due to  heavy rain. The impact of the crash landing saw the aircraft break up and block the runway. The airport was closed for some time and saw commercial aircraft being diverted to other cities.

There is also the issue that none of the metro cities, which handle a majority of the domestic air traffic, have a second airport. While Noida International airport the second airport in the National Capital Region is expected to become operational by the end of the year, it is expected that the Navi Mumbai airport project will only be ready by early 2025.

What this does is that if  Delhi airport is closed for any reason the aircraft coming to Delhi are  diverted to Lucknow or Jaipur. A far cry from when the Japan Airline aircraft crashed into a Japan Coast Guard aircraft at Haneda airport in Tokyo on January 2 leading to the closure of that airport, flights coming into Tokyo were diverted to Narita airport in the city.

Pilots who operate  widebody aircraft from India say that the experience of landing in Indian airports whether it be Delhi which will soon get four runways is miles apart from landing in an international airport.

Pilots also complain that pilot controllers at Indian airports (people who guide a pilot into a terminal or taxi point where the pilot switches on engines and prepares for take-off) need better training. “In Indian airports there is a lot of chatter among pilot controllers but that is not the case abroad and they guide you smoothly,” a pilot said. 

“Airlines are using a variety of measures including dynamic parking, network adjustments, aircraft swaps and collaborative decision making processes to address the challenge,” says Pandey.

Delhi airport with its 4th runway has added capacity and Aairavat Technology & Transport Ventures Private Ltd. estimates that the peak capacity is 87-90 aircraft movements per hour across the 4 runways. But once you adjust for constraints this number goes down. Similarly, Mumbai has a peak capacity estimated between 42-46 movements per hour. It is  now hoped that new airports at Jewar and Navi Mumbai will add to capacity on the airside.

However, the largest operator of airports in India is AAI, which has 130 airports under it.

In September last year it was announced that AAI will add 160 aircraft parking bays at 27 airports in two years to expand air connectivity to accommodate the new aircraft that Indian airlines will be inducting.

At the smaller airports issues vary from runway length (a runway has to have at least 2,500 meters for the length of the runway because if the length of the runway is not adequate then the airline will have to fly lesser number of passengers on the aircraft to be able to land there). Some of the problems with the smaller airports are also region specific. For instance, airports in the north of the country face  the seasonal problem of fog during the winter season.

But the smaller airports are also besieged by problems which have more to do with policy and larger decisions.

If the Manmohan Singh government will be remembered in the domestic civil aviation space for enhancing the number of players in the domestic market with the entry of Kingfisher, IndiGo, SpiceJet and handing over Delhi and Mumbai airports to the private sector through the PPP mode, the Modi government’s focus is on regional air connectivity, modernising and developing airport infrastructure.

The decision to give away Delhi and Mumbai airports to the private sector resulted in AAI receiving revenue share of over Rs 13,400 crore between Rs 2016-17 to 2020-21. Money which could be used for developing other airports with AAI before encouraging the private sector to maintain these airports.

The thinking now is simple. The government will exit those businesses it should not be. This probably explains why Air India was sold. Under the government the airline was losing over Rs 20 crore a day which had to be funded by the government rather than use that money for people oriented schemes.

Finance Ministers late Arun Jaitley way back in 2016-17  announced the development of 160 non-functional airports around the country and Nirmala Sitharaman  in her Budget speech 2023-24 said that the country will make operational 50 airports, helipads or aerodromes to promote regional connectivity. In addition, this government has also talked of NAHB or next generation airports for Bharat (India).

Then there is the regional air connectivity scheme which was launched to link airports which did not receive regular flights. The jury is yet out on the success of this scheme with the Comptroller and Auditor General in pointing out that till UDAN-3, 52 per cent (403 out of 774 routes) of the awarded routes could not commence operations and from the 371 commenced routes, only 112 routes (30 per cent) completed the full concession period of three years.

Further, out of these 112 routes, only 54 routes ( 7 per cent of the 774 awarded routes) connecting 17 Regional (air) Connectivity Scheme Airports could sustain the operations beyond the concession period of three years, as of March 2023.

Significant delays were observed in revival/ development of identified RCS airports out of the budgetary support sanctioned by Cabinet Committee on Economic Affairs in March 2017. Out of the 116 airports/ heliports/ water aerodromes where expenditure was incurred, operations commenced at only 71(61 per cent) airports/ heliports/ water aerodromes. Operations could not be commenced or were discontinued at 83 airports/ heliports/ water aerodromes even after incurring an expenditure of ₹ 1,089 crore.

With the government keen to monetise its assets it is a question of time before more airports with AAI are given to the private sector for developing. The scenario as it is developing right now is that AAI will develop airports and once it is felt that these airports have reached a level which will attract more passengers and airlines they will be handed over to the private sector so that the government can use the funds garnered from the monetisation for other welfare activities.

However, governments funding airports is not something that is frowned on globally. In the US Department of Transportation's Federal Aviation Administration (FAA) announced the opportunity to apply for an estimated $1.5 billion in fiscal year (FY) 2023 discretionary grants under the Airport Improvement Program (AIP). The FAA awards these annually appropriated discretionary funds through the FAA's long-standing iterative, competitive grant process.

On average, for the last ten years, $3.35 billion has been appropriated annually for AIP. AIP grants include both apportioned (or entitlement) and discretionary (or competitive) funds.

An International Civil Aviation Organisation paper of 2003 says that the Government of China enacted new measures in that year the management of all Chinese airports (except Beijing Capital Airport and those located in Tibet) were transferred to either provincial or municipal governments. In addition, the Government facilitated private investment in domestic airports, both in terms of share in airport management and in terms of investment in airport facilities. Hong Kong and Macau investors can bid for concessionary.

The government can also look at the model followed by Cochin International Airport which opened in 1999 in which Non Resident Indians are a majority  shareholder with a 74 per cent stake. The Central or state government can find out the interest of NRI or other Indians in funding an airport project in various states.

Why the government focus is shifting to aviation and airport development is not difficult to figure out. As the National Civil Aviation Policy of 2016 says that if every middle class Indian takes one flight annually it will result in the sale of 35 crore tickets a huge jump from 7 crore sold in 2014-15. While in global comparison of air travel penetration India (at 0.04 air-trips per capita per annum) stands far behind the developed countries like US and Australia despite having a population just 10 per cent larger.

(The analyst is a Delhi-based senior aviation writer)