What does the New Year 2023 hold for Indian Aviation industry: Expansion or Recovery?

Civil Aviation Minister Jyotiraditya Scindia said in a statement that the Indian aviation sector is on a path of recovery and is expected to continue the same growth ahead, reports PTI.

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The nation's civil aviation sector is firmly on a V-shaped recovery trajectory thanks to tailwinds of increasing domestic air passenger traffic and airlines' aggressive development ambitions. Nevertheless, turmoil in 2023 may be brought on by the accumulating Covid clouds and geopolitical challenges. The aviation industry, which has been experiencing more than four lakh domestic passengers per day for the past few weeks, will be greatly impacted by Air India's plans for growth and operation consolidation, IndiGo's emphasis on wide-body aircraft, Jet Airways' future flight path, and airlines' overall profitability.

All things considered, concerns exist about global supply chain disruptions that have led to a lack of aircraft parts, delays in plane deliveries, and an increase in coronavirus infections worldwide. From Tata group taking control of loss-making Air India to Akasa Air commencing operations to Jet Airways' future remaining uncertain, 2022 leaves the domestic airlines industry with many vital developments. 

Also, the government's ECLGS (Emergency Credit Line Guarantee Scheme) provided much-needed financial relief to budget carriers -- SpiceJet and Go First. As the aviation sector is climbing higher in terms of passengers and planes, the number of airports is also going up, with new ones being inaugurated in Goa and Arunachal Pradesh. The country has 146 operational airports, heliports, and water aerodromes, and the government aims to have at least 200 operational airports in the coming years.

"I believe that the civil aviation sector has rebounded and what we in economic parlance say is a V-shaped recovery. A very strong V-shaped recovery... I am very confident that this growth in India will continue in the coming years," Civil Aviation Minister Jyotiraditya Scindia said in an interview with PTI this week. Also, this year, scheduled international flights to and from India restarted in March after more than two years.

While the focus in 2023 will be on profitability and the possible impact of COVID, the outlook is positive. However, with the pandemic still around, one does not know how things take a turn, Ameya Joshi, Founder of aviation analysis website Network Thoughts, said. According to him, one of the most keenly watched areas in the New Year will be aircraft orders by the Indian carriers, especially Air India.

In November, Air India chief Campbell Wilson said the airline will soon place a historic aircraft-order. Under the Tata group, which took over Air India in January this year, the existing airline businesses are in the process of being consolidated. AirAsia India is being merged with Air India Express,s while Vistara, where Singapore Airlines has 49 percent, will be combined with Air India. Subsequently, Singapore Airlines will have a 25.1 percent stake in Air India.

The merged entity of Air India Express and AirAsia India is also expected to be a formidable challenge to the country's largest airline,e IndiGo, which had its share of issues related to engines as well as staff this year.

Mark Martin, CEO of aviation consultancy Martin Consultancy LLC, said IndiGo's ambitious international plans though ambitious would expose the airline to aggressive, vociferous,s and ferocious competition,n so the airline should work towards raising capital and ensuring its global aspirations are well-funded.

IndiGo, under the stewardship of new CEO Pieter Elbers, is also working on ambitious expansion plans and is also wet-leasing wide-body aircraft.

During 2022, SpiceJet grappled with multiple headwinds varying from safety concerns to financial woes to aircraft leasing issues, and lessors also took back some planes. The budget carrier, which has received funds under ECLGS, is working to raise funds,s and its plan to demerge the air cargo business will be completed in 2023.

Wadia Group-owned Go First, which has availed funds under ECLGS, will be looking to bolster its finances. At the same time,e experts opined that the airline's initial share sale is unlikely shortly, considering the global headwinds.

SpiceJet and Go First have stiff competition now, with a resurgent Air India and Akasa Air, which launched its operations in August.

Jet Airways, which was supposed to restart operations this year, remains grounded amid differences between the lenders and the winning bidder Jalan Kalrock consortium. And a final picture of the once-storied carrier, which stopped flying in April 2019, is expected to emerge in 2023.

Earlier this month, the congestion issues at airports, especially at Delhi airport, came to the fore amid domestic air traffic touching 2019 pre-pandemic levels. The situation has eased in the last few weeks, with authorities taking various measuress.

On the airport's side, efforts will continue for the privatization of more AAI-owned airports. In a significant development, India is now among the top 50 countries with the best aviation safety in the latest ICAO rankings. The breakthrough will help domestic airlines expand internationally.

As per the rankings by the International Civil Aviation Organisation (ICAO), India is now at the 48th position, a "quantum leap" from the 102nd rank it had in 2018.

In November, Civil Aviation Secretary Rajiv Bansal said Indian carriers have been struggling for want of engines being supplied by OEMs (Original Equipment Manufacturers). "... The pace at which Indian aviation wants to grow is getting actually hindered by global supply chains, OEMs not being able to supply at the pace at which this country is asking...," he had said.

Earlier this month, global airlines' grouping IATA's chief Willie Walsh said India is seeing a much stronger recovery than the Asia Pacific region in general and that the challenge will be in getting new aircraft and spare parts.

Around this time last year, regular international flights remained suspended. And this year, random Covid testing is in force for arriving international passengers as part of efforts to curb the possible spread of infections amid a surge in cases in different parts of the world. As authorities closely watch the current Covid situation, the aviation industry hopes there is no Dejaa vu'.

With PTI inputs