Indian aviation set for an exciting year ahead

With three international airlines announcing investment plans in India’s struggling commercial aviation sector, 2014 will likely be a busy year for the sector and potentially a pivotal one as Indian carriers stagger out of last year with nearly US1.6 billion in losses.


Indian aviation set for an exciting year ahead


With three international airlines announcing investment plans in India’s struggling commercial aviation sector, 2014 will likely be a busy year for the sector and potentially a pivotal one as Indian carriers stagger out of last year with nearly US1.6 billion in losses. While Abu Dhabi-based Etihad Airways sealed a deal for a 24 per cent stake in Jet Airways, Malaysian budget carrier AirAsia and Singapore Airlines both struck deals with the Tata Group for a new budget carrier and a full-service carrier, respectively. And more recently the Star Alliance gave the go-ahead to restart the integration of state-owned Air India into the alliance.

“With FDI (foreign direct investment) being allowed, the Indian aviation sector has the potential to grow 120-130 per cent, as more international carriers look to invest in domestic airlines.

Therefore, there is an urgent need to have strong regional infrastructure, as foreign airlines will consider this before investing,” says Ankur Bhatia, chairman of the Confederation of Indian Industries’ core committee on growth potential of civil aviation & airports.

But Amber Dubey, partner and head (aerospace and defence), KPMG highlighted that to improve the operating environment, central and state governments need to introduce systemic reforms in ATF (aviation turbine fuel) and maintenance, repair & overhaul taxes; speed up clearances and approvals by various aviation departments; support the growth of regional no-frills airports and promote the growth of air cargo and general aviation.