Challenges and issues faced by the Indian Aviation Industry

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  • 1. Challenges andIssues faced by theIndian AviationIndustry

2. Infrastructural woes 3. With infrastructure constraints one of the biggest obstacles to thegrowth of Indian civil aviation, a good deal has already been invested in airport development. The Indian Civil Aviation Ministrys Vision 2020plan stresses a need to develop the countrys infrastructure,with a particular focus on well-equipped, user friendly airports to handle as many as 280 million passengers per year expected in the country by2020. Public-private participation and FDI has funded the construction ofultra-modern airports at Bangalore, Hyderabad and Kochi in SouthIndia. While New Delhi airport has been given a boost with thecommissioning of Terminal III in 2010, modernization programmes at Chennai and Kolkata are far from complete. Furthermore, the countrys plan to develop and modernize airports at 35 secondary cities has yet to pick up momentum, while the construction of Navi Mumbai Airport, which is meant to relieve congestion at Mumbais main Chhatrapati Shivaji International Airport, has encountered repeated delays. There is non-availability of FBOs (Fixed Base Operator), terminals. The numbers of agencies for ground handling are extremely restricted, there is non-availability of MROS (Maintenance, Repair & Overhaul)and increases cost of maintenance. There is no separate parking and thehelicopters are operating out of airports. There are no heliports and heli-routes in India till date. 4. Rising Airline Turbine Fuel (ATF) prices 5. Aviation Turbine Fuel (ATF) prices in India are higher than theinternational market. The airline industrys operational cost component is dominated by the cost of the (ATF). The ATF price accounts for nearly 45% of the operational expenses. A 10% increase infuel price would push up costs by atleast 4%, thus causing a dampener onthe financial health of an airline business. 6. Congestion 7. Presently capacity constraints are reported mainly at Delhi andMumbai airports. Congestion leads to a huge wastage of fuel. It isestimated that if a flight hovers in the sky for an additional half an hour due to delay in allocation of landing slot, it can consumebetween 25 to 30 per cent extra fuel thereby increasing the operational cost of the airline. Half an hour of hovering costs anairline anywhere over Rs. 50,000 /-.There are over 40 flights thatoperate about 80 trips between Mumbai and Delhi every day. If all of them have an average circling time of 30 minutes each,around Rs 40 lakhs of fuel is wasted in a day. The congestion also affects the turn around time of the aircraft and reduces the average aircraft utilization. 8. High airport charges The airports / aeronautical charges include- Route Navigation Facility Charges (RNFC)- Landing, Housing and Packing Charges- User Development Fees ( in case of private airports) - Terminal Navigation Landing Charges- X-ray Baggage Charges 9. Alternate/secondary airports not available Airline operators elsewhere in the world have theflexibility of using alternate or secondaryairports where the airport charges are comparatively low. This option is notavailable in India. 10. Emergence of substitutes 11. With the emergence of the Low Cost Carriers (LCC), the passengers who would have traveled in III / II class AC rail considered the option of LCCs beneficial due to marginal cost difference ascompared to the rail travel. The railways on its part sensing competition from LCCs undertook various measures to consciously compete with the LCCs and to retain and improve itsexisting passenger base. Some of the measures included introducing faster trains between short to medium distances,improving connectivity, maintaining on-time schedules, introducing entertainment facilities, structuring the rail faresintelligently, providing a reliable e-ticketing facility and ingeneral improving the overall quality of services offered. Giventhe provision of such improved rail facilities and with the recent increase in air fares, the price conscious passengers who would have weighed the option of traveling in a LCC are again optingfor rail travel. 12. Lack of technical manpower 13. The Civil Aviation Sector is facing acute manpower shortage, especially in the technical cadre. As perestimates of the Sub-Group on Human Resource Development for the Civil Aviation Sector, Indiawould need 5,400 pilots by the end of the 2012.Similarly the demand for AircraftMaintenance Engineers and Air Traffic Controllerswould rise with the increasing number of flightsand the new airports. Pilots and airline pilots in particular, need to be trained as older ones retire. However for training the pilots, there is an acuteshortage of qualified Flying Instructors. 14. Safety and Security 15. Given the high intensity serial bombings witnessedacross several parts of the country in the past few years, there is a need to review and upgrade the nature of security and safety measures provided atthe countrys airports to mitigate against any drastic measures planned against Indian aviation sector byany form of terrorism. There is a need forsurveillance, surprise checks, safety oversightaudits, and enhanced accident prevention activity 16. Land EncroachmentAnother problem that some airports face is the proliferationof slums around the airport boundaries in places like Mumbai. This is another security threat. 17. Land acquisition 18. Recent government initiatives of buildingGreenfield, merchant, cargo and low cost airports and modernization of existing domestic andinternational airports require huge tracts of land. Of late, a number of large projects are facing extreme opposition from landowners and thecumbersomeness of the land acquisition process has recently come to significant highlight. Thecoordination between administrative departments of the state and centralgovernment agencies plays a major role in the land acquisition process. 19. Closure of old airports 20. With the commissioning of the new private airports at (BIAL) Bengaluru and (HIAL) Hyderabad, theold airports at HAL and Begumpet respectively hadto be decommissioned. There would be a hugewastage of the existing infrastructure and if theinfrastructure is not utilized for aviation related orancillary activities, it would imply a colossal waste of public money. 21. User Development FeeThe new airports have been charging user development fee resultingin increase of fares whichare already rather high. 22. Connectivity to new airportsLocating the airports on the outskirts of the city has made the commutersto spend more time for traveling to the airports for the shorter durationroutes. This has led to the commuters preferring rail /roads for the shorterroutes. 23. Thank You!