Year Ender: Did India's Aviation Industry Take Off? From technological advancements, sustainability efforts to grounding of aircraft, several events shaped the course of Indian aviation sector in 2023
By Shrabona Ghosh •
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
As air travel peaks, India is expected to overtake China and the United States as the world's third-largest air passenger market by 2030, said a report by the International Air Transport Association (IATA). With the evolving landscape, several trends shaped the booming Indian aviation sector in 2023. From technological advancements to sustainability efforts, the industry witnessed watershed moments.
Humongous fleet order
The 2023 Paris Air Show witnessed fleet expansion orders from Indian airlines. IndiGo, India's largest airline with market share of almost 60 per cent, defining its long-term future, placed a firm order for 500 Airbus A320 Family aircraft. This will provide IndiGo a steady stream of deliveries between 2030 and 2035. The official statement by Air India said that the airline has ordered 250 Airbus aircraft and 220 new Boeing jets worth $70 billion at list prices. India's newest airline announced an order for four additional Boeing 737-8 jets at the Paris Air Show, a follow-up to the already placed order of 72 aircraft taking it to a total of 76 aircraft which include 23 737-8s and 53 high-capacity 737-8-200 aircraft.
Sustainable aviation
Aircrafts primarily rely on jet fuel and account for 2.5 per cent of global carbon dioxide (CO2) emissions. To combat the effects, airlines are promoting the use of Sustainable Aviation Fuel (SAF). SAF is a biofuel used to power aircraft that has similar properties to conventional jet fuel but with a smaller carbon footprint. Unlike traditional jet fuels, SAF is produced from renewable sources such as agricultural waste, municipal solid waste and forestry residues. "SAF has the potential to reduce greenhouse gas emissions by up to 80 per cent compared to conventional jet fuel," Hardeep Singh Puri, minister of petroleum and natural gas of India told the media earlier.
To meet the target of one percent SAF blending in ATF, India would require around 14 crore litre of SAF per annum. "More ambitiously, if we target for 5 per cent SAF blend, around 70 crore litre of SAF/ annum will be required," the petroleum minister added.
IndiGo has joined the World Economic Forum's Clean Skies for Tomorrow (CST) initiative and aims to blend 10 per cent SAF in all aviation fuel consumption by 2030. Similarly, Air India is committed to sustainability goals set by IATA. "The new aircraft order should be seen in the perspective of this commitment as the aircraft will be more efficient with less emission. Apart from this, we have also been working with CSIR-IIP on the development and adoption of SAF at scale," an Air India spokesperson told us earlier.
Employment opportunities
Both the deals put together (Air India & Indigo) are expected to create over 4 lakh jobs directly and indirectly by 2035 across technical and non-technical roles. Demand for pilots alone is expected to grow three times every year for the next five years and demand for critical technical profiles like aircraft craft engineers and aerospace engineers is expected to grow by 10-15 per cent, said a report by NLB services.
"The country is projected to receive over 90 per cent of South Asia's airplane deliveries, requiring over 2,400 new aircraft, while its cargo market is set to expand significantly, with the fleet growing from 15 to 80 airplanes by 2042, driving a $135 billion demand for commercial services," said Salil Gupte, head of Boeing India.
Expressing optimism for the employment prospects associated with the deals, civil aviation minister Jyotiraditya Scindia told media during the Paris Air Show, "Every dollar invested in civil aviation yields $3.1 in terms of new growth, as well as the employment multiplier. Every direct job in civil aviation results in 6.1 indirect jobs in the sector. And therefore, there are tremendous dividends that accrue from the ever-expanding civil aviation sector."
Not all is well
On December 6, Aviation Working Group (AWG) reversed India's aircraft leasing compliance outlook to "negative" amid the ongoing row between the insolvency-hit Go First and its lessors, as per a notice issued by the UK-based global aviation watchdog. Go First Airline stopped operating flights from May 3. The aircraft's lessors have moved the court seeking re-possession of their aircraft.
The Indian aviation industry may see 200 grounded aircraft by the end of this financial year, aviation consultancy firm CAPA India has said in its outlook. This could cross 200 aircraft by the end of March 2024. "This could cross 200 aircraft by the end of March 2024. This is also creating a shortage of parking bays, with aircraft having to be parked at hangars and MROs (maintenance, repair and overhaul) across the country. If the number of groundings increases, the parking challenges will become more acute," it added. The grounding of aircraft will also impact air traffic.
Capa India revised its domestic traffic forecast for FY2024 downwards slightly from 160 million to 155 million airline passengers, due to the sudden grounding of GO FIRST, scaling down of SpiceJet Limited operations, greater focus by IndiGo (InterGlobe Aviation Ltd) on international routes, more aircraft on the ground than expected and unexpected weakness in demand during October and first half November.
