Touted to become the world’s third-largest aviation market in the next calendar year, the Indian aviation sector is expected to grow by 15%, touching 155 million passengers by the end of the current fiscal year. However, the year has been a roller coaster ride for the industry. Walking DH’s Lavpreet Kaur through the eventful year packed with rising cargo demand, maintenance, repair and overhaul (MRO) challenges, the lessor sentiments, the shortage in aircraft and pilots that became particularly evident, Jaideep Mirchandani, Group Chairman of SkyOne FZE, an aviation holding entity with interests in several aviation firms and globally managing a fleet strength of over 50 airplanes and helicopters, discussed the prospects and pitfalls marking the path to overtaking the UK to become the world’s third-largest next year.
Edited excerpts.
Where does India stand in the global air cargo industry?
India stands prominently in the air cargo sector, with the country's air freight market - valued at an estimated $13.08 billion in 2023 - projected to reach $17.22 billion by 2028. This growth is propelled by the substantial expansion of manufacturing, pharmaceutical and e-commerce industries. We can also see some new airlines have emerged and others are slated to begin operations soon. Leading airlines are also investing in additional widebody aircraft, which will help in augmenting existing air cargo capacity.
Despite these positive developments, there is a recognised need for heightened attention to the air cargo sector in India. Currently, a significant portion of India's air cargo exports relies on international carriers, primarily utilising belly cargo capacity. Dedicated freighter airplanes in India are limited. Furthermore, there is a pressing need for a robust network of air cargo terminals, particularly at smaller regional airports. The long-awaited National Air Cargo Policy is expected to make a significant impact on India’s air cargo sector in the future.
How do you see the Indian MRO scenario? What more can be done?
The Indian MRO industry encounters hurdles in integrating into established value chains that involve original equipment manufacturers, globally recognised MRO entities, and airline operators. The non-recognition of Directorate General of Civil Aviation (DGCA) standards by European authorities is another challenge. Going forward, solutions engendering the implementation of offset clauses, securing credit, ensuring infrastructure availability, obtaining licensing and certification, managing taxes and duties and dealing with land lease rentals should be taken up.
What has the Go First fiasco done to lessors' perception of the Indian market? What challenges lie for the new entrants?
The recent amendments to the Insolvency and Bankruptcy Code are a positive change to keeping aircraft lessors' confidence intact. The trajectory of the market and its growth will be boosted by this and given that many domestic airlines often resort to leasing options there will be more options available. New airlines should prioritise financial stability and effective risk management. Building strong relationships and ensuring effective communication with suppliers and partners are also crucial elements.
What is your reading of the domestic leasing market in India? What does it take to establish a global quality leasing hub here?
Currently, almost 80% of Indian airlines' fleets are leased and with the recent regulatory changes, there is a conducive atmosphere for further expansion. To establish a global-quality leasing hub in India, collaboration between policymakers, industry stakeholders and global players will be key, also to create an environment that encourages transparency, trust and innovation.
What led to the pilot crunch globally? How can we address the mismatch in pilot hiring?
A significant pilot shortage, particularly for captains, is looming in the Indian aviation sector. The aviation sector's expansion has led to a significant demand-supply gap for pilots. On the flip side, we are also seeing a high attrition rate due to low salaries, poor working conditions and limited career growth opportunities.
The root cause for shortage varies by region. In the US, an ageing workforce has resulted in a sudden surge in demand for pilots. In contrast, in India, pilot shortage is due to insufficient high-quality training facilities and the associated high cost of training.
Consecutively the responses to address the concern are also different. Globally, some leading airlines are reaching out to retired pilots who can still fly while they have extended the retirement age for pilots to 65. The Indian government and the market on the other hand are implementing measures like providing financial assistance to flight training schools, enhancing working conditions and raising salaries. The country is projected to hire over 10,000 new pilots, including 5,000 captains, in the next five years. While these measures will take time to materialise, I am certain that the supply of qualified pilots will catch up with demand soon.
Please share your thoughts on startups in the Indian aviation industry.
The aviation start-up scene is starting to grow: if the regulatory authorities support the entrepreneurs' ambition, then we will see many innovative ideas bring efficiency, safety and sustainability to the sector. The next decade will see drones for delivery and eVTOL air taxi services in India. I hope that we can leverage technology to train people at a faster rate and ensure that predictive maintenance provides support to MROs. There is also a notable interest in the development of electric aviation, reflecting a broader global trend toward sustainable air travel
With the advent of helicopter taxis, how do you look at the urban air mobility space?
Urban Air Mobility stands as a revolutionary force in shaping India's transportation landscape. With burgeoning cities and increasing urbanisation, the nation grapples with formidable challenges tied to traffic congestion, pollution, and the need for efficient transportation solutions. The recent launch of helicopter taxi services under the Union Government's UDAN-II initiative, connecting Shimla-Chandigarh, and the introduction of intra-city helicopter services between Bangalore Airport and Hosur Aerodrome, exemplify steps toward addressing these challenges. However, the viability of such services necessitates more comprehensive policies. Anticipated regulatory developments are expected to integrate Air taxis seamlessly into the aviation landscape within the next decade.
How important is the Indian market to your growth? Are you exploring any strategic acquisitions and forging new partnerships?
The Indian market’s growth potential is very important and we are actively considering expansion in the country. We are already present there with Sky One Airways, providing helicopters, though our bid to buy a stake in Pawan Hans did not materialise.