India’s airlines confident but wary

Singapore Air Show » 2006
November 30, 2006, 10:14 AM

Remember the days not too long ago, when any aspiring young computer whiz with a domain name and a smile could convince a venture capitalist to invest six or seven figures in his or her product-less Internet concept? India’s airlines are experiencing a similar frenzy of business development today, pouring billions of dollars into their fleets and expanding their routes at such an unprecedented rate that the nation’s air traffic system is having an increasingly difficult time keeping up. Hopefully, this trend will prove to have greater longevity than the so-called Dot-com boom.

India’s prolific growth in air travel is being driven largely by the “low cost” (not to be confused with “low fare”) carriers whose competitive pricing and schedules are luring middle-class families and business travelers off the nation’s railways. These airlines are modeling their services after successful low-cost carriers in the West, such as Texas-based Southwest Airlines, in an attempt to make air travel the most economical and efficient means of traversing this vast and extremely diverse nation of one billion people.

While legacy carriers Air India and Indian Airlines have operated domestic and international routes for more than 50 years, the Centre for Asia Pacific Aviation (CAPA) predicts that India’s new low-cost carriers will account for nearly a quarter of the nation’s airline passenger market share by the end of 2006.

At its October 2005 conference in Mumbai, CAPA predicted that over the next five to seven years, Indian air carriers would acquire between 250 and 300 new aircraft, nearly doubling India’s current fleet. However, the Sydney-based consultancy subsequently reported that during the course of 2005 alone Indian carriers had placed orders for approximately 400 aircraft.

“When it’s happening in the rest of the world, there’s no way India can be immune from it forever,” CAPA executive chairman Peter Harbison said at the conference. “The revolution is about deregulation.”

Regulatory changes initiated by India’s Civil Aviation Minister Praful Patel–namely relaxing route access rules and allowing private investment in the nation’s airports infrastructure–has led low-cost carriers to flourish and provided national flag carriers Air India and Indian Airlines with a financial opportunity to remain competitive.

Paul Behnke, director of economics for the Airports Council International, told Aviation International News in early December what he’d learned from a recent conference in Malaysia, which many of India’s new low-cost carriers attended.

“They all acknowledged severe capacity problems, particularly at Mumbai and Delhi. But they also have confidence in Patel, as the government man now in charge of getting the infrastructure built. Bangalore is well in hand, with Zurich Airport and Siemens committed to a major upgrade by 2008,” he explained. “Mumbai and Delhi are both up for privatization. A series of snafus has delayed the bidding processes, but it looks like we will finally see sincere movement in the next few months. For the near term, if low-cost carriers are to satisfy the huge demand for air travel in India, we will need to see secondary airports used more intensively–the slots at Mumbai and Delhi will hamper the system through the next several years.”

In early January, Air India announced an order for 68 Boeing aircraft including 23 B777s (to replace the airline’s aging fleet of B747-200s), and 27 B787-8 Dreamliners (to replace the Airbus A310s). Air India Express, a wholly owned subsidiary of Air India, will receive 18 B737-800s.

“We need more aircraft to respond to the tremendous growth in air traffic that we are experiencing in India,” said Air Deccan CEO and founding managing director Capt. G.R. Gopinath in announcing the company’s order for 30 additional A320s. Air Deccan operates seven Airbus A320s and 17 Avions de Transport Regional turboprops, and has announced plans to increase its fleet to more than 100 aircraft over the next six years.

In October, Jet Airways ordered 10 A330-200s, with delivery expected to begin in the first quarter of 2007. India’s oldest private carrier, Jet Airways, operates three A340-300Es, eight ATR 72-500 turboprops and 40 Boeing 737s.

IndiGo Airlines, which as of press time had yet to make its first takeoff (or launch a public Web site), created quite a stir at the Paris Air Show last summer when it announced an order for 100 leased Airbus jets for its India domestic service, slated to begin sometime this year.

In November, Kingfisher Airlines also announced it would acquire 30 more A319/320s, with delivery expected in 2008. The airline already operates seven A320s and three A319s and last year announced plans to acquire five Airbus A380s, five A330s and five A350s for use on international routes, for an all-Airbus fleet of more than 40 aircraft.

What About Pilots?

But there is a short-term downside to all this growth. India’s mostly state-run flight-training academies are unable to churn out enough pilots to fly all these aircraft, forcing potential airline pilots to earn their wings abroad.

“It is our understanding that India is able to train only about 15 percent of its projected growth,” said Pat Cobleigh, marketing director for Phoenix East Aviation, a Part 141 flight school based in Daytona Beach, Florida. “They anticipate that air travel is going to grow by 25 percent a year for the next five years, and based on the aircraft that are being purchased, they’re putting their money where their mouth is. We’re getting as many as five inquiries per day from Indian students.”

Cobleigh said she could not say how many Indian nationals the school has enrolled because Phoenix East doesn’t categorize its students by country of origin, but that the demand for training is so great the company is looking to hire an additional on-site recruiting representative in Mumbai to supplement the person it already employs in Delhi.

“One reason that international students typically look to the U.S. for training is that it’s cost effective compared to most other places in the world” such as Europe, she said.

While each airline sets its own minimum experience requirements for new recruits, Cobleigh said the Indian government grants a commercial pilot’s license to individuals from Part 141 schools who earn a commercial pilot certificate and instrument rating, with 225 hours of flight time including at least 25 hours of multi-engine time. Cobleigh said Phoenix East charges $39,000 for its 12-month training package, which does not include room and board. The school assists trainees with obtaining the necessary U.S. M1 visa–a requirement that has become much more onerous in the wake of the 9/11 attacks. Most arrive from India with zero flight time, she said.

On its Web site, the American School of Aviation reports that company representatives visited four major cities in India in September 2005 to recruit students. During their 20-day visit, the Atwater, California-based team conducted aviation seminars and on-the-spot admissions. “Hundreds of students and their parents from all over the country attended these seminars. More than 80 students were enrolled on the spot,” said the school.   

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