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New Delhi. The term “Global Village” may have become a bit hackneyed
but the concept it describes is more and more a fact of life to be reckoned with;
technological improvements are allowing people and countries to be linked in ways
that would have been inconceivable in earlier times. Just to name a few endeavors
– trade, banking, news reporting –all these would have been unable to reach their
full potential without worldwide connections. Civil Aviation is
just another area of human endeavor crucial to world development. Apart
from the social benefits of safely transporting over two billion people a year
through out the world, air transport is a global business which has been one of
the driving forces of economic growth since World War II. It has an integral role
in the world economy as a tool for conducting much of the world’s business,
a foundation for the tourism industry and a cost effective means of distributing
goods and services. It is therefore crucial for decision makers to recognize
it as a vital player in India’s domestic and international trade. The benefits
that follow from investments in civil aviation are tremendous. Indian
Scene The rapidly changing face of the aviation sector in India, with booming
economy, heavy dependence on market- oriented approach, and globalization and
deregulations are important economic developments in the air transport growth
in India. Equally significant is the fact that the Asia and Pacific Region
is going to have the highest growth rate in the aviation sector and in turn the
tourism potential, both of which put together emerge as the largest single industry
in the world, with an output of US 4.2 trillion dollars, and 160 million jobs
under its wings. The industry carries with it 10% of world’s domestic
gross product (GDP), 10.3% of the global wages, 11.7% of the indirect taxes, and
9.8% of the global profits thus making the travel and tourism industry a creator
of maximum wealth and employment in the world. In India, the aviation sector
has undergone a sea change during the last five years. Like most parts of
the World, India too had its own share of woes after the 9/11 terror attacks.
Fortunately, after some hiccups, the civil aviation industry the world over recouped.
In India particularly, it is showing a great promise but needs to be managed
efficiently, and cost effectively. The air traffic growth is closely related
to the GDP of a country. The GDP in India has touched a high of 9.5% and currently
due to inflation is hovering close to 7.2%. For years though, it was stagnant
at 4.5 to 5% in India. Thanks to the deregulation of the economy, India
is finding its due place globally. The World Bank has estimated that for every
one percent of the GDP growth, there is 1.5 to two times the growth of air traffic.
The international trade and Foreign Direct Investments (FDI) has changed
the geo-economic face of India. Added to this is a liberalization of trade sector.
The World today is moving towards mega projects to cater to the commercial and
trade interests, thus triggering the growth of many economies all over. These
trends have led to the sustained growth of international air traffic. Developments
in many parts of the world, including in India, and the emergence of low frill
and low cost airlines is a factor to reckon with. These airlines have captured
about 25% of the domestic traffic, with occupancy of around 80% on an average.
Naturally, these airlines also require parking and handling facilities at very
low costs, to include at the Metro airports. Infrastructure
– a Poor record in India India has built no new airport after its Independence
in 1947. Old structures have been modified or upgraded periodically to meet the
growing demands of traffic, but generally, at least till now, they have been inadequate. The
Government, having realized the seriousness of the problem, has now handed over
the Delhi and Bombay (Mumbai) airports to private parties to build, operate and
manage them. The airport at Delhi has about 5000 acres of land, but by 2025
or so, it would again need to expand further. How? It is difficult to say now. The
situation at Mumbai, Chennai and Kolkata is much worse because of limited land
availability. The time has now come accordingly to look for satellite airports
in close proximity to the Metros. The basic philosophy will be to cater
to low priority sector like General aviation, and other aviation needs such as
charters, helicopter operations and some cargo activity. Poor
Planning Despite the rapidly growing needs of a very vibrant sector like
civil aviation, issues are still tackled in knee jerk reactions to meet the essentials
of the industry. This sector is cost intensive and thus calls for joint planning
by all stake holders like the Service Providers, Airlines, Cargo operations and
other business partners. This is still a dream in India, but it is better to appreciate
and do the needful now than later. Challenges and new Systems Virtually
all the regions of the world eventually plan to transition from terrestrial based
air traffic control to satellite based air traffic management systems. India too
is currently busy examining the potential and possibility of Satellite aided CNS/
ATM systems. The prospects for transition phase challenges involve international
sovereignty issues, global coordination, user acceptance, step by step transition
plans. This complex task has been under the scanner for some time. A constant
review and guidance by experts will be a mandatory requirement to create affordable
CNS/ATM options for India. Implementing Best Practices During
the last two decades, the regulatory environment governing the airline industry
has been liberalized. As a result, the competition has increased markedly.
Price wars, coupled with general economic development, have generated strong additional
demand. In the long run upward pressure on capacity and downward pressure on ticket
prices is expected to continue. Consequently airline yields, already reduced
significantly, are likely to continue to fall. To survive, the airlines need to
adapt their business models to the new environment. There is a need to have a
strong focus on costs, controls, and performance improvements. Conclusion In
the final analysis, if one analyzes the unprecedented growth rate of air traffic
which was 24% annually during 2004-2005, one is able to deduce that with 8 to
9 percent of the GDP, an average growth of 16% was achievable by the year 2010. Notwithstanding
the high crude oil prices, any increase in the expenditure due to the high costs
of services like airport and security charges etc. casts a shadow on the sustained
growth of this sector. The Government must take all possible steps to encourage
growth of Civil Aviation, particularly as India has a 300- million strong middle
class which is not only a market to boost travel but also an engine for the country’s
economic growth. The author was the first Chairman
of combined Airports Authority of India (AAI). | 
