The Airports Authority of India (AAI) is undertaking the development and modernization of all 35 non-metro airports in the country simultaneously and work is due to be completed by March 2010. Wholly owned subsidiaries of AAI are being created for the development and operation of these airports. According to the AAI, it has already awarded work orders for terminal buildings at 13 airports, and for airside development, including runway, taxiway, apron, fire station, control tower and isolation bay, at 19 airports.

Two greenfield airports at Bangalore and Hyderabad are being developed under PPP format. The first phase is planned to be finished by end-2008.

The other two metro airports – Chennai, Kolkata — may soon be on the modernization path. At least 10 non-metro airports are being developed as strategic airports serving the region or respective states, and at least a few more non-metro airports are being positioned strategically as regional hub airports or nodes providing better connectivity to overall airport network and feeding international network through hub/metro airports.

With these developments in aviation infrastructure, we may also see some airports making money not purely on passenger traffic, but also by means of cargo, logistics, SEZs and real estate projects being developed adjacent to airports.

As per CAPA estimates, domestic passenger movement across airports is likely to grow at a CAGR of 20-25 per cent till 2010, and passenger traffic is expected to increase to around 120 million by 2010. Hence modernization, privatization and development of airports in the form of greenfield and/or brownfield airports is the need of the hour.

Policy On Merchant Airports

In a step that could allow 100 per cent foreign direct investment (FDI) in the development of airport infrastructure, the Government is fast moving towards finalizing a policy on merchant airports.

Under this new concept, merchant airports will be built entirely by private parties with their own resources, without any government funding. Under the proposed policy, the Government would allow entrepreneurs to set up and operate airports on the basis of commercial viability. However, these airports would function subject to safety and security oversight of the Government.

As such a project would require huge investments, the Government might adopt a more liberal and licence-based approval procedure, besides allowing 100 per cent FDI in such airports. Merchant airports would also be beneficial in developing new cargo hubs, thereby providing a thrust to cargo and freight handling.

Growth in MRO Segment

The advent of low-cost airlines, ever-increasing passenger traffic and fleet expansion in the Indian aviation sector has opened up a whole new business avenue for global aircraft companies in maintenance, repair and overhaul (MRO). A typical MRO facility provides major and minor maintenance, modifications, refurbishment and repairs of aircraft. Boeing and Airbus have announced their plans for MRO facilities in India. Others include Timco Aviation Services, USA, Max Aerospace & Aviation, India, Singapore Airlines and Singapore Technologies Aerospace, Lufthansa Technik, Germany, and El Al, Israel. Even renowned engine manufacturers such as GE, Rolls Royce, Snecma, CFM International and Pratt & Whitney are planning to develop MRO facilities here.

Airbus has predicted that India would need over 935 aircraft over the next 20 years. Such a large expansion also means growth in MRO activity. It is considered more prudent to have these facilities within the country rather than outside for cost saving. Growth in the MRO segment in India is estimated at 10.2 per cent, and is expected to outpace growth in Asian and global markets. The total MRO market in the country is around $405 million and is likely to touch $1.06 billion by 2014. By then, India’s contribution to Asia’s MRO market is expected to grow to seven per cent. The MRO facilities will foster creation of ancillary and associated industries and services like training institutes, component repair and testing of avionics equipment, electrical and electronic system components, hydro mechanical and pneumatic system components, repair of composite structures, passenger seat repair, cabin panel repair, etc.

Airport Security Policy

The main objective of civil aviation security continues to be safeguarding of civil aviation operations against unlawful interference and to avoid causing inconvenience to passengers. The Ministry has taken a number of steps to strengthen sense of security among the air-passengers making Indian aviation sector one of the safest in the world. More emphasis is given on passenger security. Systems like integrated registered baggage screening system, which facilitates the process of registered baggage handling in a safe and secure way, intrusion detection alarm system, biometric based integrated passenger profiling system (BIPPS), which will ensure identity of the passengers, have been introduced.

The Bureau of Civil Aviation security provides continuous training on aviation security for airports security staff, police officers of the rank of SIs and above, airlines staff, air taxi operators and airport management.

Augmentation Of Fleet by Various Airlines

With both full-service and low- cost airlines now pursuing fleet-expansion plans, the world’s aircraft manufacturers are focusing on India as a lucrative market. Alongside Boeing and Airbus, regional jet makers Bombardier and Embraer, as well as European turboprop maker ATR, have all benefited from the boom in the country’s civil aviation sector. Alliance Air, the fully-owned subsidiary of Indian, is expanding its fleet of regional aircraft in a bid to revamp its operations as a no-frills carrier. The ageing Boeing 737 fleet of the airline is being phased out and one aircraft has already been dropped from the fleet for conversion into a freighter. The revised business strategy is in line with Indian’s plan to induct two wide-bodied Airbus A330 aircraft and the impending merger with Air India.

Besides this, Kingfisher has also ordered five Airbus A380 aircraft. India is expecting to add aircraft worth about US$80 billion by 2020.

Foreign Equity Participation in Air Transport Services

The Domestic Air Transport Policy approved by the government provides for foreign equity participation up to 49% and investment by Non-Resident Indians (NRIs) up to 100% in the domestic air transport services. Foreign airlines are, however, not permitted to pick up equity directly or indirectly.

Moreover, the flow of foreign investment into aviation is likely to get smoother as the government is planning to fix a higher foreign direct investment (FDI) ceiling for five sub-sectors of the industry. The FDI ceiling for the sectors would be higher than the 49% allowed in airlines now.

The five categories proposed in the Cabinet note for FDI review include maintenance, training facilities, cargo handling, passenger handling and chartered services.

Boom in Indian Aviation Sector is Likely to Generate More Jobs

According to a recent study by Associated Chambers of Commerce and Industry (Assocham), the boom in the aviation sector is likely to generate nearly 2.5 lakh jobs by the year 2010. The study says that the civil aviation sector is also set to become a Rs 35,000-crore industry by the same time. These jobs will rise on account of the modernization of Delhi and Mumbai international airports and the revamping of 35 non-metro airports. With the sudden increase in the number of airlines and other consolidations and expansion plans, pilots are in tremendous demand. India would require approximately 7,500-8,000 pilots and an equal number or more air cabin crew by 2010.

Aviation sector in India is growing at a whopping 25% per annum, creating a large number of jobs. There is presently a shortage of trained pilots. The industry is expected to add 130 airliners to its current fleet of 270 airliners, which would, in turn, increase manpower demand. The job opportunities include that of flight dispatchers, cabin crew, airline managers, airport managers and ground handling personnel. The industry would create 2,00,000 jobs by 2017.

There is already a shortage of pilots in the sector and so is that of commanders and captains. Currently, 2,500 pilots are working with airlines in India, of which 475 are expat pilots. The doors of the cockpit are now open to the women as well. The number of women joining aviation sector is on the rise. From one or two women in a batch of 100 students, the number has now increased to 10 or 12. Indian currently has 76 women pilots, and the number is rising with every new batch. As per the statistics, forty of Air Deccan’s 496 pilots are women. Kingfisher, which has 26 women from a total of 390 pilots, also got its first woman captain just recently. Even though more and more women are opting for this career, the shortage still continues. Due to this paucity of pilots, airlines in India are largely dependent on expatriate pilots.