India’s incredible take off
Chairman and Managing Director, SpiceJet
The Indian aviation story is one of cautious optimism, yet holding unparalleled promise. Indeed, India—with the fastest growing major economy in the world—is the ninth-largest civil aviation market by passengers with an estimated worth of US$20 billion. The aviation industry supports 8 million jobs in India, and with a growing domestic air traffic rate of over 20%, the number of passengers flying within the country will reach 100 million by 2017. This growth is five times more than the largest market, the US, and twice that of the second largest, China. India could very well reach its ambition of becoming the world’s third-largest aviation market by 2020.
This golden age of industry expansion has been driven by ambitious low-cost carriers such as SpiceJet, which are building hubs in major cities, benefiting from foreign direct investment, taking advantage of technology interventions and increasing regional connectivity.
SpiceJet’s success would not have been possible without a supportive policy framework, and India’s newly announced civil aviation policy does just that. The policy has been designed to promote healthy competition, widen the customer base, enhance connectivity across the country, improve security features and significantly boost investments. Noteworthy features of the policy include an emphasis on air connectivity to unconnected and lesser connected cities and towns—where 50 new airports have been built and less viable routes have been funded to support balanced development across India. The widening of the open skies agreement will also support demand reciprocity with global jurisdictions.
India’s enabling framework extends beyond civil aviation policy. For instance, the Make in India campaign emphasizes local production and modernization that will translate into creating world-class aviation hub airports besides maintenance, repair and overhaul (MRO) facilities. Similarly, the Skill India and Digital India policies will up-skill Indian human resource to global standards of best practice and work excellence.
Over the next two years, Indian carriers are expected to add over 100 aircraft to service continual double-digit growth. We learned the lessons from the self-defeating fall of a few airlines in the past, which compromised on basic fundamentals and resorted to profitless growth—it changed our business model. Route rationalization, optimum aircraft utilization and excellent on time performance (OTP) have now become the norm. Today, Indian airlines expect a collective operating profit of US$1.2 billion for the fiscal year 2016.
Provided India’s 20% year-over-year growth continues, the existing capacity across major airports will be fully utilized in the next 3-5 years, leading to the saturation of the country’s 30 largest airports in the coming 10 years. As a result, we will need to develop “second” airports in major cities.
To realize such an audacious vision, public-private partnerships will be necessary to create new airport infrastructure, including developing as many of the 350 dilapidated or underused airstrips across India into “no frills airports”.
I am proud that SpiceJet is playing an all-inclusive and responsible role in these unprecedented and exciting times. I take this opportunity to invite global business leaders as well as business influencers to support, facilitate and become a part of this historic revolution.
As aptly articulated by Tony Tyler, former Director General and Chief Executive Officer of IATA: “The world is focused on Indian aviation—from manufacturers, tourism boards, airlines and global businesses to individual travellers, shippers and businessmen. If we can find common purpose among all stakeholders in Indian aviation, a bright future is at hand”.