Open skies for tech firms in aviation market

Aviation technology firms are entering the Indian market in a big way, tying up with airlines like Air India, IndiGo and GoAir to provide critical components to enhance flight safety and run their businesses.

At last week's India Aviation Show, Air India signed a MoU with major US firm Honeywell to upgrade the landing and takeoff gears of its Boeing 777 fleet, while the two no-frill carriers joined Geneva-based SITA (Societe Internationale de Telecommunications Aeronautiques) for developing business technology solutions.

 The company says that Honeywell's 'SmartRunway/SmartLanding' upgrade, which is already in use on a large number of airplanes worldwide, would improve situational awareness for pilots, deliver safer landing and taxiing operations and lower cockpit workload across its Boeing 777 fleet.

 The upgrade helps mitigating runway accidents that cost the worldwide aviation industry $1 billion annually for injuries, damage, repairs and inspections. Air India's Executive Director (Engineering) A K Mathew said, “As we expand our network, our pilots are required to fly into an ever-growing number of airports, many of which are continually changing in terms of layout. This system could make it easier for them to navigate these airports regardless of visibility and extend passenger safety even further.”

 The Honeywell system uses GPS location information and airport and object data to determine if the aircraft is configured properly for landing, taxiing and take-off, thereby considerably reducing runway incursions or excursions. Under the MoU, Air India would hold trials for six months and share operational data with Honeywell to enable both firms to examine the potential safety gains across its entire Boeing 777 fleet.

SITA is another air transport communications and specialist IT firm which has seen huge interest from airlines keen to optimise their aviation infrastructure and resources to improve operational efficiency and profitability. GoAir and IndiGo have become the latest Indian companies to get on SITA's airline roster.

 Other Indian airlines and airports which are already part of the SITA grouping are Air India, Jet Airways, SpiceJet and airport operators of Mumbai, Bangalore and Kochi. The government has identified 50 airports for low-cost development and modernisation to boost regional air connectivity which can help reach out to consumers at the bottom of the pyramid, according to Civil Aviation Secretary Ashok Lavasa.

"We are working towards a framework where state, Centre and the airlines make collaborative efforts (to develop low-cost airports)," he said last week, adding that such airports will enhance passenger traffic in non metro cities.

Healthy growth outlookWith the demand for planes likely to rise to 1,300-1,600 more planes till 2032, leading global aircraft makers, Airbus and Boeing, have projected a healthy outlook for the Indian market. This is where the need to further develop the MRO network will be imperative. “Civil aviation sector cannot be looked at as merely an aviation services and consumer market. As a large industrial economy, India must gain excellence in the MRO industry, and must enter the technology and manufacturing spaces,” said Ficci General Secretary Didar Singh.

 Aviation experts expect that the growing demand for planes will widen the airline market for specialist aviation technology companies, coupled with the growing potential for tech companies to work with upcoming MROs (Maintenance, Repair and Overhaul) facilities in India.

 While European manufacturer Airbus expects that Indian carriers would require 1,290 new passenger aircraft valued at $190 billion to meet the burgeoning demand, US firm Boeing estimated a requirement of 1,600 aircraft during the period.

 “Indian annual passenger traffic growth rates of 8.6 per cent are well above the Asia-Pacific average growth rate of 6.1 per cent and the world average of 4.7 per cent. Of the requirement for 1,290 new aircraft, some 73 per cent will be for growth and 27 per cent for replacement,” says Airbus Eexecutive Vice-President, Strategy and Marketing Kiran Rao.

 Boeing's Senior Vice President (Sales) for Asia Pacific and India Dinesh Keskar said at the air show that his company  “projects demand for more than 1,600 new airplanes in India over the next 20 years, valued at about $205 billion.”

 Airbus projects that between now and year 2032, the new passenger aircraft requirements would include 913 single aisles like A-320 and A-320Neo Family, 322 twin-aisles like A -350 XWB and A-330 and 56 very large aircraft like the superjumbo A-380.By 2032, Airbus expects the current fleet of 343 aircraft to more than triple to some 1,233 aircraft, while rival Boeing says India will need 1,600 new aircraft worth $205 billion by the same year.

In passenger traffic terms, the Indian aviation industry is expected to grow at almost 10 per cent every year till 2032, making it the world's third largest domestic aviation market.

Dinesh Keskar, vice-president, sales, Boeing Commercial Airplanes says, “India's demographics are highly favourable to the growth of air transportation. The share of India's large population entering the workforce is growing. India could have the world's fourth largest economy if current trends continue helping drive demand for air travel.”

 "While passenger growth is recovering and we project a healthy aviation industry in the long term, adverse near-term trends of overcapacity, a weak rupee and high fuel prices will affect airline profitability in the near term," Keskar says.

Boeing projects that passenger airlines in India will rely primarily on single-aisle airplanes such as the 737 and the 737 MAX. Single-aisle airplanes will represent 83 per cent of the new airplanes in the country.

For long-haul traffic, Boeing forecasts twin-aisle airplanes such as the 747-8 Intercontinental, 777 and the 787 Dreamliner will account for 15 percent of new airplane deliveries.

 “Today one in 20 Indians travel by air and in 2032 this will increase five-fold to a quarter of the population taking at least one flight. Along with China, more people will experience the benefits of aviation for the first time in India than anywhere else,” says Joost Van Der Heijden, Airbus Head - Marketing for India.

More ordersThe company hopes this would drive the need for larger aircraft like the A380. It welcomed the recent decision by India to allow operation of A380 and hopes to bag orders from the Indian carriers.

Airbus forecasts that 36 per cent of India's fleet by 2032 will be wide-bodies, more than doubling today's level.
 It also believes that by 2032, India will have 13 cities with more than a million passengers every month against two cities today.

A KPMG report notes that low-cost carriers, foreign investment in domestic airlines, modern airlines and a new drive for regional connectivity are propelling expansion.  The number of airline passengers has grown by around 13 per cent a year over the last decade, according to the Airports Authority of India, to 159 million in 2013. New logistical and operational challenges will emerge with the growing number of aircraft  and airport network widening to match passenger growth.

India is striving in its own way to meet the challenges in the area of safety threats, US Trade and Development Agency Regional Director for South and Southeast Asia Henry Steingass said.

 “We need to look at aviation for the vast need of transportation of passage as well as cargo traffic and strengthen our economy. And this is where the US system is most evolved in handling the traffic. This is where the challenge that India faces lies, and keeping our commonality we can respond to Indian need,” Steingass says.