An Outlook on Indian Aviation Market 2022

Aviation is a mainstream industry that not only connects individuals across the nations but it is a gateway for the commutation of cultures, businesses, global connectivity, and economy. The immense success of aviation economics in Singapore and UAE poses as an exemplar before the other countries propelling them to learn, adapt and indulge various policies implicated by the country which lead them to carve out as a global aviation hub since the last two decades. With advancing time India too has also been gearing up to introduce new schemes and policies by the government to remodify and strengthen the structural blocks of the aviation industry in the country. Even though the industry took a major hit with Covid 19, a rapid recovery was observed after the second wave of covid which underlines the demand for air travel in the country. Asia-Pacific has become a significant hub for the aviation industry over the years. The emerging economies in the region, like India are experiencing a massive surge in their respective civil aviation markets, due to an increased demand for air travel in these countries. The commercial aircraft segment is projected to witness the highest CAGR during the forecast period between 2020-2030. In 2020, there was a decline in the deliveries of commercial aircraft due to the COVID-19 pandemic. However, major commercial aircraft OEMs, like Airbus and Boeing, are currently increasing their aircraft production and delivery rates. Before the advent of the pandemic, several airlines placed aircraft orders to expand their fleet sizes and cater their services to more passengers, with a positive outlook for the commercial aviation industry; unfulfillment of those orders translated to high levels of backlogs for the aircraft OEMs. Even after airline order cancellations and deferrals due to the COVID-19 pandemic, Airbus reported a backlog of 7,184 jets, while Boeing’s backlog was 4,223 aircraft by the end of 2020. Thus, despite the reduction in demand from the airlines, deliveries of commercial aircraft may continue at a healthy rate during the forecast period. Domestic airline passenger traffic is expected to recover faster, leading to a higher demand for narrow-body aircraft in the years to come.   Impact of Covid-19 and Recovery Covid-19 impacted Indian aviation quite badly, and the onset of Omicron has only exacerbated the situation. However, the State governments and the Centre have already initiated steps to combat the disease. Before Omicron hit, the Ministry of Civil Aviation (MoCA), had said the industry is returning to pre-Covid levels and airlines have reached 90 per cent of the pre-pandemic peak traffic in November 2021. The Centre for Asia Pacific Aviation (CAPA) India, in a report titled India Airline Outlook 2022, has indicated that 2022 is expected to see a surge of 52 per cent in domestic and 60 per cent in international air traffic. The key factors that will determine the pace of recovery will be the successful implementation of government initiatives, new private investment and opening up of regional airports. 2022 holds a lot of promise. A major driver of growth for the aviation industry over the past few years has been UdeDesh ka Aam Nagrik (UDAN). It enhanced the regional air connectivity from unserved and underserved airports by making air travel affordable to the masses, and helped tap the potential of airports in driving revenue. The years 2019-2020 have seen an increase in passenger demand from Tier-II cities. MOCA presently has set a target of operationalising as many as 100 unserved and underserved airports by 2025 under UDAN. Out of that, 61 airports have already been operationalised. Covid-19 has given the Indian aviation industry an opportunity to re-imagine its future. For now, as passenger traffic nears pre-pandemic levels and with ambitious targets set by the government, it appears that 2022 may prove to be a defining period for the sector. Omicron might affect the growth a bit, but 2022 will be key in determining the long-term outlook for Indian aviation.   Entry of Akasa and Revival of Jet Airways Akasa Air is an upcoming ultra-low-cost Indian airline co-founded by billionaire and stocks trader Rakesh Jhunjhunwala and former Jet Airways CEO VinayDube. In October 2021, Akasa Air received a ‘no objection certificate’ (NOC) from the Ministry of Civil Aviation. The NOC will be held by SNV Aviation, the holding company for the proposed airline. The airline is now in the process of receiving the Air Operator Permit (AoP) certificate after aircraft acquisition and other required procedures. Acquiring the NOC is the first stage, which is followed by a security background check after which an AoP is issued. Thereafter, the technical viability of the airline receives a safety clearance. Akasa Air, backed by Indian billionaire Rakesh Jhunjhunwala, will begin flight operations in the next six months after receiving an AOC. The airline plans to operate approximately 72 planes in the next four years. It is planning to launch flights in the summer of 2022 with an endeavour to be the nation’s most dependable, affordable and greenest airline. The airline has placed order with US aerospace giant Boeing for buying up to a 72 737 Max aircraft. They are also planning to induct 18 of these aircrafts by march 2023. The process of Jet’s revival is in full swing, and on track with the team’s expectations. Jet Airways has applied for the Air operator’s certificate (AOC) and has sought all the necessary approvals. The consortium has received security clearances for three directors including Murailal Jalan (the lead of the consortium), Manoj Madnani (representative of Kalrock Capital) and Ankit Jalan, Murarilal’s nephew. Jet Airways is likely to start its operation in 2022.  The consortium plans to induct 20 aircraft and is in conversation with aircraft manufacturers Boeing and Airbus for orders. The team will also hire its key managerial personnel, technical, IT and commercial staff Air India Privatisation The long-awaited sale of India’s national carrier Air India is now done. The Tata group has snapped up the loss-making airline four years after the government announced its intention to sell it. Air India is now back to the Tata stable, 68 years after the government nationalised it. Tata Sons’ enterprise value bid of Rs 18,000 crore with a cash component of Rs 2,700 crore was higher than the offer from a consortium led by SpiceJet Chairman Ajay Singh. The acquisition gives the Tatas 141 planes and 900 slots at overseas airports, the most valuable of which are at London’s Heathrow airport. This change will bring a positive impact in Indian Aviation Environment, even though the turnaround of such a massive organisation is a difficult task, Tata’s are the right people for the job combined with robust growth potential in the Indian Aviation market, this can lead to a huge amount of employment generation in Indian Aviation sector.