At the ongoing Paris Air Show, Air India confirmed its orders for 470 aircraft from Airbus and Boeing. The order first announced by Air India in February this year included 400 single-aisle aircraft (mainly used for domestic travel), split between 140 A320neos, 70 A321neos and 190 Boeing 737 MAXs, and 70 wide-body aircraft (mainly used for international travel) that include 34 A350-1000, 20 Boeing 787 Dreamliners, 10 Boeing 777-9 and six A350-900.
At the same event in the French capital, IndiGo, which is currently India’s largest airline by market share, placed a firm order for 500 A320 Family aircraft, setting the record for the biggest single purchase agreement in the history of commercial aviation.
The latest agreement takes the total number of Airbus aircraft on order by IndiGo to 1,330, establishing its position as the world’s biggest A320 family customer.
Another Indian start up airline Akasa announced it will place a three digit aircraft order this year.
While the mega orders by the Indian carriers point to growing optimism, it also signals heightened competition in the world’s fastest growing aviation market.
Undoubtedly, the Indian aviation sector has experienced significant growth and development in recent years, presenting both opportunities and challenges.
The biggest opportunity lies in India’s low penetration in the air travel market, compared to developed countries. As the economy continues to grow, more individuals and businesses will have the means to travel by air, leading to increased demand and expansion opportunities for airlines.
India's middle class is expanding rapidly, leading to increased disposable income and a rise in air travel demand. This creates opportunities for airlines to capture a larger market share and generate higher revenues.
Urbanisation in India is on the rise, with more people moving to cities for employment and better opportunities. This trend drives air travel demand as people seek faster and more efficient modes of transportation, providing opportunities for airlines to connect urban centres.
The Indian government has been emphasising regional connectivity through initiatives like the ‘UDAN’ scheme, which aims to enhance air connectivity to underserved and unserved airports, opening up new markets for airlines and fostering economic development in remote areas.
The government has invested in modernising and expanding airport infrastructure across the country. These developments improve the overall efficiency of air travel and provide opportunities for airlines to enhance their services.
That said, significant challenges lie ahead for Indian aviation.
The Indian aviation sector is highly competitive, with numerous airlines vying for market share. The intense competition puts pressure on airlines to differentiate themselves, maintain profitability, and offer competitive pricing.
Price sensitivity is a significant challenge in the Indian market. Many travellers prioritise low fares, making it challenging for airlines to maintain profitability while offering affordable tickets. Rising fuel prices and operational costs add to this challenge.
Indian aviation sector is subject to various regulatory policies and procedures. Obtaining licenses, adhering to safety regulations, and navigating bureaucratic processes can be time-consuming and costly for airlines.
While infrastructure development is underway, there are still limitations and congestion issues at several airports. Insufficient capacity and outdated facilities also hinder the sector's growth potential and impact passenger experience.
The main question is whether India’s infrastructure will cope with the massive influx of aircraft by its carriers. All the orders assume that India will invest substantially in airport infrastructure.
Essentially, that means capacity addition at existing airports and building new ones. There is a plan to add 80 fields in the next two years alone to cope with the expected growth.
Prominent aviation analyst Ashwini Phadnis said with Air India and IndiGo between them ordering close to 1000 aircraft and start-up airline Akasa announcing that it will place a three digit aircraft order this year, the “focus now shifts to the urgent need to have infrastructure in place.”
Phadnis noted: “It will now fall on the government to create and ensure that new airports with parking stands come up at a rapid pace to keep pace with the fleet induction plans of airlines. Delhi is getting Jewar and Navi Mumbai is coming up at a fast pace, but the chances are there will be a need for more airport space not only in these two metros but also in Chennai and other metro cities.
In addition, Phadnis noted there will also be a need for trained manpower be it pilots or cabin crew where both the government and industry can work in a collaborative mode.
“The government will also have to create more opportunities for airlines to fly abroad through exchange of air services bilaterals,” the Delhi-based Phadnis told Gulf Times.
Analysts say navigating these opportunities and challenges requires strategic planning, efficient operations, innovative services, and a customer-centric approach.
As the Indian aviation sector continues to evolve, addressing these factors will be crucial for sustained growth and success.
