The Hindu Business Line : Action-packed year for aviation

The year gone by was indeed an exciting one for airlines and air passengers. Two big announcements in January — first, the buyout of Air Sahara by Jet Airways and, second, the award of contract to the GMR and GVK led consortiums for the modernisation of Delhi and Mumbai airports respectively — galvanised the sector and set the pace for an action-packed year. GMR has tied up with Fraport, the operators of the Frankfurt airport, and Malaysia airports, while GVK has tied up with South Africa airports.

But while the Jet-Sahara story may have had an unhappy ending, with the `marriage' ending in failure and the matter now in arbitration, the hectic activity of the first month sustained its momentum over the year.

One of the areas that saw huge growth was domestic air travel, which recorded a growth of 29.59 per cent, with domestic airlines carrying more than 29 million passengers till November 2006. What probably spurred this growth was not only the availability of low fares but also the fact that scheduled domestic air services were now available from 75 airports as against just 50 earlier.

During the year, at least two new airlines — low-cost airlines IndiGo and Indus Air — spread their wings while a number of proposals for starting new airlines were also approved by the Government.

Wooing the passenger

The year saw the domestic passenger being further wooed by airlines. The practice of offering an Inflight Entertainment System (IFE) that includes television and audio programming during the flight caught on, with Jet Airways offering the facility on new aircraft inducted by it. A similar facility will also be available on the new aircraft of Indian while Kingfisher already offers this facility.

The growth in the domestic airline sector was replicated in the international air travel market, which grew 13.7 per cent. Policy initiatives played an important role here, as India entered into bilateral air services agreements with a number of countries including Dubai, Thailand, Japan, Sharjah, Qatar, Oman and Egypt.

During the year, Jet Airways finally got clearance by the United States authorities for launching flights between the two countries. The airline's plans for operating to the US had been pending with US authorities as issues had been raised about the funding of Jet Airways.

Besides, in a move that is likely to boost international tourist arrivals, the charter policy was further liberalised, scrapping the restriction on a tourist having to spend a minimum and maximum number of days in the country.

The northward movement in global oil prices almost threatened to spoil the party, though. It forced the domestic airline industry to raise fares four times during the year. International airlines also kept adjusting their fuel surcharge during the year, to mitigate the impact of rising fuel bills on their bottomlines.

Modernisation

To ensure that the development of the sector was not restricted to the metro cities alone, the Government announced its plans to modernise 35 non-metro airports into world-class entities at an estimated cost of Rs 4,662 crore. The airports to be modernised include Thiruvananthapuram, Visakhapatnam, Tiruchi, Coimbatore, Port Blair, Mangalore, Agatti and Pune.

Among the metro airports, work moved at a fast pace in Delhi, Mumbai, Bangalore and Hyderabad even as the process of modernising the airports in Kolkata and Chennai was initiated by the Government. At the same time, the International Civil Aviation Organisation (ICAO) gave its nod for the construction of a second airport at Navi Mumbai.

Fleet expansion

The year also proved beneficial for the two state-owned airlines, Air India and Indian, as both welcomed new (purchased) aircraft into their fleet. Both the airlines inducted purchased aircraft after a gap of more than a decade.

While Indian received an Airbus A-319, Air India's subsidiary, Air India Express received two Boeing 737-800 aircraft. It was also during the year that Indian Airlines was re-christened `Indian'.

The merger of Indian and Air India, which will create a global airline with a fleet of more than 110 aircraft, also got underway. The eventual merger of the two airlines will create a global mega carrier that will have a fleet larger than carriers such as Singapore Airlines and the Dubai-based Emirates airlines.

Indian also firmed up the lease of two Airbus A-330 aircraft that it plans to utilise to launch services to new international destinations in the UK, Australia and Africa.

A final decision on the route on which the new aircraft would be deployed is expected soon and flights are likely to begin from the second half of 2007.

Maintenance facility

Both aircraft manufacturers Airbus and Boeing announced huge investments in India as part of their contractual obligations for selling aircraft to Indian and Air India. Boeing signed a Memorandum of Understanding with the Maharashtra government to set up a Maintenance, Repair and Overhaul facility in Nagpur. The project envisages an investment of about $100 million.

Besides, the CEO of Airbus' parent company EADS, Mr Tom Enders, during a visit to India, announced that his company would be investing close to Euro 2 billion in setting up a number of facilities, including an EADS Technology Centre India.