Monday, July 15, 2024

No nation in the world is purchasing as many airplanes as India. Its largest airlines have placed orders for nearly 1,000 jets this year, committing tens of billions of dollars to an unprecedented spending spree in the aviation industry. Indira Gandhi International Airport in New Delhi is preparing for 109 million passengers next year, aiming to become the world’s second busiest airport, trailing only Hartsfield-Jackson Atlanta International Airport in the United States. This significant growth in the aviation sector is emphasized by the fact that India, a country heavily reliant on trains, still has 20 rail journeys for every one air journey.

India’s aviation expansion, fueled by substantial investment, plays a central role in its desire for a stronger global presence. As the country climbs the ranks of the world’s largest economies, it is striving to meet the increasing aspirations of its growing middle class. Airports serve as visible symbols of achievement. However, air travel remains out of reach for most Indians, with only about 3 percent of the population flying regularly. Nevertheless, this percentage translates to 42 million individuals, including executives, students, and engineers, who long for efficient domestic travel within India and easier access to international destinations for both business and leisure purposes.

Kapil Kaul, the CEO of CAPA India, an aviation-focused advisory firm, emphasizes the critical nature of the next two to three years in achieving the desired quality of growth in India’s aviation industry. Growth so far has been unprofitable, and now Indian aviation must demonstrate its ability to generate revenue. The effects of this spending spree are expected to have positive ripple effects throughout India’s economy. Increased passenger traffic brings cargo, and foreign investment often follows closely behind.

The international terminal at Indira Gandhi Airport features a captivating display of giant sculptural hands, representing age-old yet futuristic symbols of Buddha’s gestures. In 2012, when these sculptures were installed, the airport served 30 million passengers. By the time the airport reaches its new capacity, another airport will have been constructed from scratch on the opposite side of the city. Indira Gandhi Airport is racing to expand and enhance its infrastructure. In July, it added a fourth runway and an elevated taxiway. The airport, managed by GMR Airports since 2006, has evolved from a place where arrivals had to walk past lazing cows in the dust to reach a taxi stand to being recognized as India’s most valuable infrastructural asset in 2018. Efforts to reduce jet fuel consumption include the use of a battery-powered TaxiBot to move planes on the tarmac and an automated luggage-handling system capable of sorting 6,000 bags per hour.

Boeing in the United States and Airbus in Europe, the world’s largest airplane manufacturers, are among the notable beneficiaries of India’s expanding aviation market. In February, Air India, which was privatized by the Tata Group last year, agreed to purchase 250 planes from Airbus and 220 from Boeing, totaling $70 billion in combined value. In June, IndiGo, India’s largest carrier in terms of passengers and flights, ordered 500 new Airbus A230s.

The majority of the growth in Indian aviation has been driven by domestic airlines, which have experienced a 36 percent increase in passenger numbers since 2022. While foreign tourist arrivals are rebounding after the pandemic, they remain relatively limited, with numbers barely surpassing 10 million in a good year (equivalent to Romania’s). Low-cost carriers are expanding their destination offerings to accommodate India’s demand for international tourism. Azerbaijan, Kenya, and Vietnam, for example, are now accessible through direct flights from Delhi or Mumbai, India’s financial hub, for less than 21,000 rupees ($250) one way.

The Delhi-Mumbai air corridor has long been one of the world’s 10 busiest routes. Like Delhi, Mumbai boasts new airport terminals that would envy any city in the United States. Additionally, Bengaluru, located in southern India, features the stunning all-bamboo Terminal 2 at Kempegowda International Airport. However, infrastructure expansion is not limited to major metropolitan areas alone.

Prime Minister Narendra Modi’s government proudly highlights that the number of airports in India has doubled since he took office nine years ago, increasing from 74 to 148. Minister of Aviation Jyotiraditya Scindia has set a target of at least 230 airports by 2030. The government has invested over $11 billion in airport development over the past decade, with an additional $15 billion promised by Scindia. Consequently, even small towns like Darbhanga, located in the impoverished state of Bihar in eastern India, now have direct flight connections to Delhi, Bengaluru, and beyond. For the 900 daily travelers who fill its flights, including many from neighboring Nepal, the new airport has revolutionized their journeys.

Prasanna Kumar Jha, a 52-year-old tax consultant who was born in Darbhanga but works in Delhi, expresses amazement at the fact that his hometown is now on the air map. While the cost of flying to Darbhanga on short notice to visit his ailing mother, which amounted to 10,500 rupees ($126), strained his finances, he recognizes the time efficiency it offers compared to a 30-hour train and taxi journey. Flying is no longer a luxury but a necessity.

Darbhanga’s airport may not compare to the facilities available at Indira Gandhi Airport, lacking features such as a parking lot. Passengers have to walk from the edge of a highway past a checkpoint to wait on benches outside the terminal, and after clearing security, they wait on another set of outdoor benches. However, despite its modest infrastructure, the airport functions effectively.

Ajay Jha, a passenger on the same flight at Darbhanga, holds his 1-year-old daughter, Saranya, as he waits near the basic baggage claim area. His family embarked on a journey from Bellevue, Washington, where he works as an engineer for Amazon, to a family reunion in the Bihari countryside. The travel time was shorter than the time Mr. Jha used to spend commuting from school in Bengaluru. However, the majority of Indians still cannot afford such conveniences. The annual mean income is lower than the price of an economy-class airfare from the United States. Additionally, in this top-heavy economy, most Indians earn significantly less. The term “middle class” in India refers to those near the top of the socioeconomic pyramid.

A report by CAPA India highlights the low air travel penetration in India, with just 0.13 passenger seats per capita in 2019, compared to 0.52 in China and 3.03 in the United States. However, aviation companies and elected officials see this as an opportunity rather than a limitation. The scarcity of competition, with IndiGo and Tata-led airlines poised for a duopoly, is a distinctive aspect of the new aviation landscape. Smaller competitors often struggle, and the recent bankruptcy of Go First in May and flight cancellations by promising upstart Akasa Air in August due to a shortage of pilots, after larger companies poached them, underline this trend. Nevertheless, in today’s global economy, supply shortages are not the worst problem to have. With India’s aviation growth averaging 15 percent per year in the decade before the pandemic, it is almost certain to reshape the future of aviation worldwide. If the benefits received by winners in India’s economy can be effectively distributed to other sectors and income levels, this positive impact could extend far beyond aviation.

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