Regional airports to offer great potential for India

There is a large untapped potential for growth in India as access to aviation is still a dream for nearly 99.5 per cent of the population.

Indian aviation academy students looking at a CFM 56-5B PIP, which is used for the Airbus A320 family of aircraft, on display at an exhibitors venue at the India Aviation 2014 airshow at Begumpet Airport in Hyderabad. — AFP

In view of the vast untapped potential, the next generation of aviation growth in India will be triggered by regional airports, offering significant long-term opportunities for global aviation players.

According to the “Indian Aviation 2014” report, launched at the ongoing India Aviation exposition here, there is a large untapped potential for growth in the country as access to aviation is still a dream for nearly 99.5 per cent of the population.

“At present, there are around 450 used, unused or abandoned airports and airstrips spread all over the country,” the report, compiled by consultancy firm KPMG Advisory Services, in association with the Federation of Indian Chambers of Commerce and Industry, or FICCI, said.

Many Indian states, especially in Eastern India, have started taking proactive measures to promote air connectivity. These initiatives include reduction in sales tax on aviation turbine fuel, or ATF, development of no-frills airports, promotion of aviation academies and supportive policies for airlines and tourism, the report said.

“West Bengal deserves special mention as it is the first large state in the country to declare zero per cent sales tax on ATF at its regional airports and 15 per cent sales tax on ATF used by additional flights started at its metro airport in Kolkata,” the report said.

The Aviation Ministry had introduced scheduled operator permits for regional airlines in August 2007 to increase air services to small cities. Regional airlines are required to operate in the small towns within one of the designated regions — north, south, west, east and the north-east.

The report pointed out that India has the potential to become the third-largest aviation market by 2020 and the largest by 2030. “The central government and the eastern states have brought in many reforms in the aviation policy, procedures and taxation. We hope this trend continues,” said Amber Dubey, partner and India head of aerospace and defence at KPMG. The country’s civil aviation industry, the report said, had ushered in a new wave of expansion driven by low-cost carriers, modern airports, foreign direct investments in domestic airlines, cutting-edge information technology interventions and a growing emphasis on no-frills airports and regional connectivity.

The Indian civil aviation industry is among the top 10 in the world with a size of around $16 billion.

“This is a fraction of what it can actually achieve,” said Siddhartha Birla, president of the FICCI.

A lot more needs to be done as several tier-II and III cities are still unconnected or underserved. These involve relaxation of regulations, revising the security requirements, allowing domestic code sharing, providing free or discounted utilities and connecting infrastructure.

The proposed Essential Air Services Fund by the Ministry of Civil Aviation needs to be set up immediately.

All this will have a multiplier effect in terms of higher growth of local economic activities, tourism and employment.

“India is blessed with a great geographic location, a large upwardly mobile middle class and immense tourism opportunities. We have just touched the tip of the aviation iceberg,” Dubey said.

— business@khaleejtimes.com