Aviation Sector: Current Challenges and solutions

Economic Affairs Infrastructure

Aviation sector in India seems to be doing well. Air traffic has grown at 14% over the last 10 years and India is expected to become the third largest aviation market in the world by 2020. But this growth has remained concentrated in a few big cities with the top 10 cities contributing 80% of the air traffic while having only 7% of the population and 8% of the GDP.
Airlines are also in poor health, having lost more than $10 billion since Financial Year 2009.
In spite of the fall in fuel prices, Financial Year 2015 also saw airlines rack up a combined loss of $1.2 billion, of which $900 million was Air India’s alone. On the airports’ side, only seven out of 75 operational airports are profitable

Analysis:

Aviation sector is facing various challenges in its operations. First challenges is Air India, which blocks the market space which could otherwise have been occupied by new players with more efficient and innovative business models. This is against the spirit of free market
Second biggest challenge is to build airports in smaller cities along with changing preference of airlines toward smaller routes. Airlines prefer metro routes because smaller routes aren’t currently profitable although there is future growth potential
In order to solve current challenges, civil-military aviation cooperation programme could go a long way in those locations where there is very less traffic. Enabling civilian operations for a few hours per week at military airfields in select locations along with investment in a bare-bones building to process passengers could substantially bring down costs.Once traffic grows beyond a certain point, a new low-cost airport can be built.
There may be concerns around security but civil enclaves in military airfields already exist and we have successful operating models to handle civilian passengers in a military environment.
There is a need to look air travel as a means of mass transportation instead of luxury.
An incentive-based approach: One such has been proposed in the new aviation policy—the domestic flight credit system where airlines earn higher credits by flying smaller routes.

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