Page last updated at 18:03 GMT, Sunday, 24 January 2010

Taking off: How India's aviation industry is soaring

By Ben Richardson
Editor, BBC India Business Report

An Air India passenger jet flies over the Jari Mari slum before landing at Mumbai Airport
Indian airports dealt with 10.7m passengers in October 2009

In a leafy Indian garden, Captain Anil Gadgil goes through the final flight checks and fires up his jet motors.

As they whine into life, his fingers flick switches and push buttons, the control panel blinking a reassuring response.

The tarmac runway of Mumbai's international airport stretches out in front of him, which is odd as we are sitting on the back of a small truck more than a 100 miles from the city, and any attempt to take off would put us firmly into the next door neighbour's front room.

Today, in India, hundreds and hundreds of people who have never flown are coming to the aviation industry
Captain Anil Gadgil, Jeet Aerospace

But Capt Gadgil is unconcerned, and turns round to explain the motivation behind his self-designed mobile flight simulator and aviation academy.

"No matter what the economy says, no matter what the jobs market is, a youngster will always want to fly," he says.

"There is always a thrill about this kind of career and many youngsters are looking for it."

'Inspire and train'

Capt Gadgil and his wife Kavita set up Jeet Aerospace in 1991 after their son Abhijit was killed during a training flight with the Indian Air Force.

Captain Anil Gadgil set up Jeet Aerospace in 1991
Anil Gadgil set up Jeet Aerospace in 1991 after the death of his son

Operating out of Pune, Maharashtra's second-biggest city after Mumbai, it aims to inspire and help train the next generation of commercial and defence pilots, and to cut the accident rate that was, at the time, robbing the country of some of its best flyers.

And while the simulator has helped them achieve many of their goals, it has also given them a unique insight into the way India's aviation industry is developing.

"Today, in India, hundreds and hundreds of people who have never flown are coming to the aviation industry," Capt Gadgil explains.

"They are attracted to the industry, not just for flying, but for many other jobs.

"I don't think we will see a very quick boom. It's going to be slow, but it's going to be steady and there is a huge market waiting to open up."

We are developing the small hub and spoke airports by which we can create a network of airports across the length and breadth of the country to facilitate our economy
Deepak Shastri, Airports Authority of India

The most recent figures seem to back up his view, though the boom may be arriving a little quicker than he expected.

According to the Airports Authority of India, the total number of domestic and international passengers was 10.7 million in October 2009, up 23% on the same month a year earlier.

Aircraft movements climbed by almost 59% in the same period.

At a time when many of the world's other airline markets and carriers are going through some of their toughest ever months, this sort of growth jars as freakish and unsustainable.

But for Deepak Shastri, the director of Pune's international airport, there are a number of very good economic and business reasons why India should be seen as unique in terms of its aviation industry development.

Planes versus trains

Sitting in his office at the airport, the sounds and dust of building work filling the air, Mr Shastri explains that today only a tiny percentage of India's more than 1 billion population flies.

Pilgrims crowd the train station at Prayag in India
Train travel in India is more popular than going by plane

Most still use the cheaper, though slower, option of the train to traverse this massive country.

As a result, he says that India will not be dependent on international flights or foreign tourists for growth, and can rely on the expansion of its internal market, which is being driven by economic growth of more than 7%.

Also, the issues that have plagued many of the world's airlines, such as high fuel costs, declining passenger numbers, and cut-throat price wars have had a more limited impact in India.

Low-cost carriers such as Spicejet have had to price competitively and are still making a loss, but that shortfall has narrowed in the most recent earnings figures and the company is predicting a return to profits in the financial year 2009/2010.

Many of the full-service companies such as Air India are in the process of reworking their business plans and analysts forecast that while some of them are still losing millions of dollars a day, they will be in a better shape once the changes are made.

Airport expansion

For Deepak Shastri, the future is not in doubt and he is taking steps to prepare for the boom in air travel that he believes is only a matter of time.

He explains that at Pune airport they have grown in size from 4,000 square metres to 12,000 square meters, has doubled the number of passengers it can handle, and has increased its plane parking bays from four to eight.

Deepak Shashtri, director of Pune's international airport
Deepak Shastri is the director of Pune's international airport

The next step is to build a brand new airport that will allow them to meet the increasing numbers of passengers looking to fly to and from Pune, which he expects to rise from 2 million to 2.5 million in the next financial year.

Mr Shastri, who also works for the state-run Airports Authority of India, explains that his ambitions for Pune are matched nationwide by the government, which views the industry as a driver of development and not just a consequence of an expanding economy and rising consumer demand.

Seeing the past trends, the way in which demand has increased especially in the domestic market, we see a lot of growth
Anirudha Thete, Altos Electronics

In the next 10 years India has "very ambitious plans of investment in large numbers through different business models," he says, adding it will include government funding, public and private partnership systems, and private financing.

"We are developing green field airports and brown field airports," he continues.

"And we are developing the small hub and spoke airports by which we can create a network of airports across the length and breadth of the country to facilitate our economy."

Technology

One company that is directly benefitting from the growth in the airline industry is Altos Electronics.

Motherboard made by Altos Electronics
Altos Electronics exports to the UK and the Gulf states

Based in their new factory down a road that threatens to loosen your fillings and remove chunks of your car, the firm makes aviation warning lights that are placed on structures such as tall buildings and antennas.

An exporter to the UK and the Gulf states, company boss Anirudha Thete says he can draw a direct comparison with the way India is performing when compared to other countries worldwide.

"As the aviation industry grows, naturally the demand for our products will increase," he says as his workers solder and assemble the light emitting diodes and motherboards that are central to the company's flashing lamps.

Mr Thete explains that demand for his products has tripled in the past years, and while domestic sales are still climbing, exports to the UK have dropped by 50% over the past year, reflecting the tougher times the British economy faces.

"Seeing the past trends, the way in which demand has increased especially in the domestic market, we see a lot of growth," he says.

He's not the only one. The question now is if India's aviation industry can live up to the hype and expectations that are surrounding it.

Or if it will continue to be a market with huge potential just waiting to take off.



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