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Aviation on cusp of vertical take-off

It used to be a huge task then for even trivial things like booking or cancelling an air ticket, Niranandani said.

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Aviation consultant CAPA expects double-digit traffic growth of around 15%
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When real estate tycoon Niranjan Hiranandani of the Hiranandani Group was asked during a seminar organied by Indian Merchants' Chamber (IMC) four years back to talk on "what needs to be done to bailout the Indian aviation industry", the businessman was quick to reminisce his early days when he had to call someone in the Prime Minister Office (PMO) for cancelling and rescheduling of his air ticket.

"It used to be a huge task then for even trivial things like booking or cancelling an air ticket," Niranandani said.

"The industry has certainly come a long way since the pre-liberalisation days. I can recollect during those days people would literally beg for getting plane seats, especially during emergency situations," said Devesh Agarwal, a Bengaluru-based aviation expert and blogger.

Speaking to dna, Agarwal, a frequent flier, recounts as how when his grandfather took seriously ill during early 1990s, his father drove all the way to Chennai during the night (roughly about six hours) to catch flight next morning from Chennai.

"There were hardly three flights from Bangalore then." he said. "Also, these fares then used to cost a bomb as a result of which it was away from reach of common man."

Experts say the industry has since then come a long way with flights lined up every few hours on most major and non-major routes. With India's GDP forecast to grow at around 7.5% in FY2017, aviation industry consultant CAPA expects double-digit traffic growth of around 8-10% for international and close to 15% for domestic sectors. This would result in international traffic increasing to 54-55 million passengers and domestic traffic to around 80 million. Domestic traffic could rise higher if airlines engage in extended periods of aggressive pricing. The number of fliers was about 7.27 million passengers in 1994-95.

The liberalisation process in aviation started in India in 1994, when the government allowed entry of private airlines, after which carriers like Jet Airways, East-West, MidiLuft, Air Sahara and Damania soon took to skies.

Though, this ended the monopoly of the national carrier, the advent of new airline companies could not come up with a formidable business model for future growth, with many of them shuttering down, expect for Jet Airways .

According to Hormuz Mama, an aerospace journalist who has tracked the industry for more than half-a-century, earlier the private airline and its management had very little experience and therefore the services were of poor quality. "As a result, many of these did not last long," said Mama, an author of several books on Indian aviation.

The second phase of growth came in around 2003-2004, with the arrival of 'low-frill' airlines in the form on Air Deccan, promoted by Captain G R Gopinath. Also, the same year the domestic airlines were given the permission to fly international routes, provided the airline had spent five years operating domestic sector in India and had at least five aircraft in its fleet.

Now it seems the industry captains, airline and airport company promoters are betting big on the sectors for years to come. With privatisation of major metro airports and others since mid 2000, the airports started getting better and some offering enhanced passenger experience. Further in expectation of super growth combined with over economic growth of the country; the airlines including IndiGo, SpiceJet, GoAir, Jet Airways, Air India started ordering for more aircraft anticipating future demands; thereby increasing the overall capacity of the market.

Now, the fall in fuel prices has given a new lease of life to the airlines, which together have lost over $1.25 billion during the last financial year.

As per Mama, today things are very different with about fleet of 350 aircraft already taking off and landing on a daily basis. " However, most of the airlines have placed large orders for future delivery of aircraft. The result is the total number of aircraft on order (about 700-plus) is almost twice the fleet operating at present. There is already a problem of overcapacity today, and as a result, the airfares are lower. By the time, these aircraft are delivered, the situation may get completely out of hand."

However, what the industry insiders term as a 'game-changer' is the introduction of new civil aviation policy by the current regime. " Due to the 5/20 policy earlier, the Indian airlines must have lost billions of rupees as it were not allowed to fly abroad. On the other hand, foreign carriers (particularly the Gulf-based ones) made away with a lot of foreign currency due to it."

The Indian government and industry now expect the next big growth to come from regional connectivity, with ministry already announcing a cap of Rs 2,500 for a one hour flight.

So are we yet there for a mighty leap so that flying becomes affordable to most Indians? Maybe only time would tell.

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