Indian aviation: A conundrum

Dec 11 2012, 17:56 IST
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The CAPA India Aviation Summit 2012 held in Mumbai recently saw industry leaders engage in dynamic discussions on the existing challenges, future of the Indian aviation sector and investment opportunities. The CAPA India Aviation Summit 2012 held in Mumbai recently saw industry leaders engage in dynamic discussions on the existing challenges, future of the Indian aviation sector and investment opportunities.
SummaryThe CAPA India Aviation Summit 2012 held in Mumbai recently saw industry leaders engage in dynamic discussions on the existing challenges, future of the Indian aviation sector and investment opportunities.

in three months of operations. Brara said, “As it is a price elastic market, we at Air India sometimes find it difficult to offer stimulating fares. Hence we need to have a unique structure, besides we also have a taxation regime. Our government does not look at the aviation industry as a principal economic sector and the absence of airport infrastructure poses as a deterrent to the connectivity growth. Full services carriers are looking beyond offering point to point service. And we would like to relate capacity increases from these services. And in the future this scenario will still remain the same.”

Adding to Brara's point, Raghavan said, “If the Indian carriers become financially strong then we can take on the world. Surely the government has opened FDI up to 49 per cent in the aviation industry, but viability of certain routes also comes at the cost of growth. Hence fleet planning should follow network planning and we see East Asia as a lot more attractive market.”

Putting forth his opinion on the session on ‘LCC Stories from the Frontline: Success, Mistakes, Learnings and Next Steps’, Amitabh Malhotra, managing director, Rothschild India said, “The year 2004-05 was a favourable period for all transactions in aviation markets for LCC model airlines. Capitalisation leads to tremendous changes and timing is another aspect. For instance, IndiGo has performed well by running a low cost carrier with appropriate investment and good timing. Besides this, another good step from the government to enhance the segment was to increase the FDI margin, but, except an airline from Gulf countries, there are not many international airlines interested in investing in India. But given a chance for flying with code-share agreement, there will be several airlines that will look forward to join Indian carriers.”

After giving a brief presentation on the airport operations experiences in India, V P Agarwal, chairman, Airports Authority of India mentioned that currently the traffic has been constrained. In the future, land acquisition and costing would become difficult as earlier it was five per cent but now due to skyrocketing prices the project cost would also increase by 30 per cent. The issue which needs immediate attention is that of providing benefits to the ground handling staff as most of the companies today are looking at opting for low cost options.

Lessor perspective

Addressing the session on 'Lessor Perspectives in the South Asia Market', Ashish Sonawala, VP,

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