Airlines flying towards infrastructure airpocket

Air travel demand has picked up beyond everyone’s expectations and airlines are gearing to fly high on it but inadequate aviation infrastructure could play the spoilsport.

And this is giving the local industry a sense of dejá vu.

A similar situation had played out for the domestic air carriers between 2005 and 2007, when demand had soared while creation of runways, parking bays, airport terminals and others such facilities had pathetically lagged behind.

Ankur Bhatia, executive director of travel conglomerate Bird Group, said unless the pace of infrastructure development catches up with the swift rate of growth in demand, airlines will not be able to tap the full potential of the growth.

“We are not really there (in terms of infrastructure) to take full advantage of the growth in the air travel. This could mute the growth of the (airline) companies like in the past (2005-2007) and could come in the way of their expansion plan,” he said.

Samyukth Sridharan, chief commercial officer of SpiceJet Ltd, believes airlines would especially feel constraint on the Mumbai route, where there was no scope for further expansion due to insufficient infrastructure.

“Even though Bangalore, Delhi and Hyderabad have seen commendable airport infrastructure development, insufficient capacity at Mumbai, Kolkata and Chennai could restrict growth of airlines. However, having said that, it is difficult to get a visibility on how well prepared (in terms if infrastructure) we are for a 13% growth every year over the next 10 years,” said the senior executive of the budget airline.

Experts say rising demand from India’s growing companies and the middle-class have prompted some companies in the industry to increase their forecasts.

The Center for Asia Pacific Aviation (CAPA), a Sydney-based research company, recently raised its estimate of annual traffic growth in India to 13%, from about 10% for the next 10 years, which would make it one of the highest growth rates in the world.

Outlook like these by research firms are prompting airlines to draw up ambitious expansion plans. For instance, no-frill airline SpiceJet’s aircraft induction plan is similar to the heyday.

The New Delhi-based low cost airline will be adding 12 planes to its existing fleet of 22 planes by December next year.

“These (12 planes) would be absorbed in the existing infrastructure in most airports except Mumbai,” said Sridharan.

Another senior executive of a private airline, who did not want to be named, said airport infrastructure was a critical factor in the growth of the aviation sector and any lapse on that front will only hamper the growth of airline industry.

“There will always be a lag (in infrastructure development) since it is difficult to accurately predict the growth in the sector,” he said.

According to him, the only way for airlines to counter it was take a balanced view on expansion during boom period.

“Airlines should be rational when they draw up their growth plans and should take into account aviation infrastructure development or, like in the past, they could be saddled with overcapacity, which could run up their losses,” he said.