Around 73 hitherto unserved or underserved airports, including nine heliports and two water aerodromes, have also been operationalised.
The massive orders of 1,000 Boeing and Airbus aircraft by Air India and Indigo clearly represent a long-term bet on India’s civil aviation industry. A rule of thumb is that the natural growth of the aviation market is 1.5 times India’s GDP growth. Thus with a likely GDP growth rate of 6 to 7% in FY 24 and beyond, the ideal growth of the market is 9 to 10.5% per annum. That is the scenario ahead with the prospect of India becoming the world’s third largest civilian aviation market. Earlier in February, Prime Minister Narendra Modi, who participated in a video call on the launch of the partnership between Air India and Airbus, stated that more than 2,000 aircraft will be needed in the next 15 years.
This bullish scenario for civil aviation is predicated on the fact that the enabling infrastructure is in place. The number of airports has increased from 74 to 147 during the last eight years. The regional connectivity scheme, UDAN, has ensured air connectivity with smaller towns and remote parts of India. Around 73 hitherto unserved or underserved airports, including nine heliports and two water aerodromes, have also been operationalised. Civil aviation is a major growth driver as it has output and employment multipliers of 3.25 and 6.10. An investment of Rs 100 in air transport boosts overall output by Rs 325. Hundred direct jobs in air transport generate 610 jobs.
The historic fleet expansion plans naturally raise questions as to whether efforts are being made to ensure that civilian passenger aircraft are domestically assembled. Although the government has for long been pushing for jet assembly, PM Modi raised the bar stating that India would soon be manufacturing big passenger aircraft proudly bearing the words “Made in India” at the foundation ceremony of the Tata Airbus C-295 aircraft facility in end-October 2022. As to whether Airbus or Boeing should establish a facility, Union civil aviation minister Jyotiraditya Scindia said “That is for Airbus and Boeing to decide. But I think it is ripe to look at India (to establish a manufacturing facility)”.
While the higher level of policy ambition is to be welcomed, the process will take more time to bear fruition. Airbus and Boeing have resisted the policy pressures for civil final assembly lines citing the critical mass of their investments in engineering, supply chain and maintenance in the country. Airbus’ president of India and South Asia stated that the company’s industrial footprint already generates more forex value and jobs for India than any modern assembly activity would. Boeing sources $1 billion in products and services from the country and has recently announced a plant in Hyderabad to convert its 737 passenger planes into dedicated freighters to cash in on the boom in e-commerce.
The president of Boeing India has been reported in the media stating that the volumes required for final assembly on the commercial part of the business are just far greater. The big question is what is the sort of demand that Airbus and Boeing are looking at to deciding on local assembly? If a final assembly line is justified if it turns out 5 to 10 aircraft a month and there is overall demand for 120 a year — as reported in the Business Standard — then the massive fleet expansion plans of Air India and Indigo indicate that the time is right for assembling civilian aircraft in the country.
Persuading Airbus and Boeing to set up shop, however, calls for greater strategic intent by taking the C-295 deal as an exemplar. As this project entails purchasing a certain number of aircraft in a flyaway condition and the rest to be assembled in Vadodara, there is a warrant to similarly reconfigure the massive fleet orders by the domestic airlines to ensure that a certain proportion are assembled in India. Otherwise there is no deal. The other option is a process staggered in time to push the jet makers to source more from the country to enable domestic suppliers to gain more expertise and a manufacturing ecosystem is established to assemble civilian aircraft for Boeing and Airbus.
A degree of realism is also necessary as to the time frames involved for a Made in India plane. Look no further than the domestically manufactured Chinese C919 which made its first commercial flight from Shanghai to Beijing in the end of May. This was built by the Commercial Aviation Corporation of China and relies heavily on western components, including engines and avionics. This state-backed programme, which entailed expenditures of around $49 billion, dates back to 2007. The first prototype was ready in 2015 with the first production done in December 2022. So if India is to follow suit with domestic assembly of civilian aircraft, this process is bound to take a couple of decades.
https://www.financialexpress.com/business/airlines-aviation-making-planes-in-india-this-needs-strategic-intent-and-will-take-more-time-like-chinas-short-medium-haul-c919-3138458/
