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Vistara A320 VTTTG VABB

Vistara, India’s newest pan-India airline, took the trouble to prepare a report on the aviation sector in India, highlighting the numerous areas in which India can and must improve. The report also concluded that Indian aviation is blessed with undeniably strong fundamentals such as:

  1. A large and fast growing domestic market with potential for sustainability.
  2. A strategic location (geographic) enabling hubs / transit points for key international routes.
  3. An abundance of tourism potential.
  4. A strong technical and skilled workforce that can support aviation in various functions.
  5. A traditionally service-driven culture, which augurs well for the hospitality industry.

The report went on to state that  India is not a global aviation power today despite many such favourable characteristics because of poor decisions that have actively hindered the country’s aviation sector’s growth and competitiveness.

Key Take-aways, as summarized by the Vistara communications team:

1. Criticality of Aviation Sector

  • Aviation contributes to around 5% of GDP in leading global markets
  • 3 billion people or 40% of the global population fly vs.  low 1-2% penetration in India
  • Annual per capita seats in India are a quarter of China, Indonesia, Thailand
  • Aviation drives 27% of UAE GDP; 5.4% of US GDP
  • Aviation is growing rapidly in India; incremental passengers this decade was 3 times in previous 50 years

2.  Potential of Indian civil aviation sector

  • Annual contribution of USD 250 billion to Indian economy  by 2025
  • Employment creation to multiply 10 times to 2.3 million by 2050
  • Number of domestic passengers to grow 17 times to 1.1 billion by 2050
  • Number of international passengers to grow 10 times to 500 million by 2050
  • Domestic freight to increase eighteen times , and International freight more than eight times   by 2050
  • Number of aircraft to multiply by 14 times to about 5600 by 2050

3.  Policy Measures Required

1. Cost of doing business

  • Duties make ATF, which can constitute 30-35%  of operating costs, 45% more expensive in India
  • Removal of sales tax will reduce ATF costs by 20% thus reducing operating costs by 7%, and stimulating air travel by around 8-9%
  • High taxation on MROs makes it cheaper to send aircraft abroad for maintenance, going against “Make in India” vision
  • Aeronautical charges are amongst the highest in the world

2. Ease of doing business

  • 4 months in US vs. 90 days in UAE vs. more than a year and 10 agencies in India for getting an AOP
  • Simplification of RDG

3.       Liberal Aviation regime

  • 5/20: discriminatory to Indian airlines; impacts airlines’ risk mitigation and operational efficiencies
  • Indian airlines only use 26% of their bilateral rights

4.       Invest in airport infrastructure,  airspace management and  skill development

  • Airport capacity shortage  looms in 5  years
  • Additional airport capacity of 90 million passengers will be required each year from 2030 i.e. equivalent of Delhi and Mumbai airports combined

5.       Focus on Safety

  • Access to expert and trained, fit-for-purpose resources are critical for DGCA

The 70 page report can be downloaded here.