India is spending money on planes and airports. here’s why.

India is spending money on planes and airports.  here's why.

No country in the world is buying as many airplanes as India. Its biggest airlines have ordered nearly 1,000 jets this year, investing billions of dollars in unprecedented spending across the aviation sector. In New Delhi, Indira Gandhi International Airport will be ready to handle 109 million passengers next year as it prepares to become the world’s second busiest airport after Hartsfield-Jackson Atlanta International Airport in the United States.

And this is happening in a vast country that is still heavily dependent on trains – where for every person traveling by air, one has to make 20 journeys by rail.

The massive aviation manufacturing, with investment growth behind it, holds pride of place in India’s superior position on the world stage. As it rises into the ranks of the world’s largest economies, India is struggling to meet the rising ambitions of its growing middle class. Its airports present highly visible achievements.

Air travel is out of the financial reach of most Indians. It is estimated that about 3 percent of the country’s population flies regularly. But in a country of 1.4 billion people, that percentage represents 42 million – executives, students and engineers eager to get from here to there quickly within India’s borders, and easily to destinations beyond for both business and leisure. Want to get access.

“The next two to three years are critical to achieving the quality of growth that India desires and deserves,” says Kapil Kaul, chief executive of aviation-focused consultancy CAPA India. The development has been unprofitable so far. Now Indian aviation will have to prove that it can make money.

The impact of the spending spree should be visible again on India’s economy. Shri Kaul said that cargo comes with passenger traffic and foreign investment also follows it.

Those arriving at the international terminal at Indira Gandhi Airport are greeted by a wall of giant sculptured hands, their fingers and palms folded into the symbolic shapes of Buddha’s gestures, looking both ancient and futuristic. In 2012, when they were installed, 30 million passengers passed through the airport. By the time the airport is expanded to its new capacity, another airport will have been built on the other side of the city.

Indira Gandhi Airport is in the race to become bigger. In July it added a fourth runway and opened an elevated taxiway. When GMR Airports, the company that operates it, took over in 2006, there was a time when all the visitors had to walk through cows lying in the dust to reach the taxi stand. As of 2018, the facility was ranked as India’s most valuable infrastructure asset. To avoid the use of jet fuel, battery-powered Taxibots move idle planes around the tarmac. An automated luggage-handling system can sort 6,000 bags an hour.

The two beneficiaries of India’s expanding aviation market are the world’s largest airplane manufacturers: Boeing in the US and Airbus in Europe. In February, Air India, which was taken private by Tata Group last year, agreed to buy 250 aircraft from Airbus and 220 from Boeing, worth a total of $70 billion. In June, IndiGo, the country’s largest carrier by passengers and flights, ordered 500 new Airbus A230s.

The bulk of Indian aviation’s growth has been from domestic airlines, which have seen a 36 per cent increase in passengers since 2022. Foreign tourist arrivals are increasing again since the pandemic, but are still relatively low, barely reaching above 10 million in a good year (similar to Romania). Hence low-cost carriers are adding new countries to their destinations to accommodate India’s overseas tourism demand. Azerbaijan, Kenya and Vietnam are all direct flights from India’s financial capital Delhi or Mumbai for under Rs 21,000. Rs, or $250, one-way.

The air corridor between Delhi and Mumbai was already among the 10 busiest airports in the world. Like Delhi, Mumbai has new airport terminals that would be the envy of any city in the US, not to mention the spectacular new all-bamboo Terminal 2 at Kempegowda International Airport in Bengaluru, a city in southern India . But the expansion in infrastructure is not limited to the country’s major metropolitan areas.

Prime Minister Narendra Modi’s government likes to point out that the number of airports has doubled in the nine years since he took charge, from 74 to 148. Mr Modi’s aviation minister, Jyotiraditya Scindia, said there would be at least 230 by 2030. The government has invested more than $11 billion in airports over the past decade, and Mr. Scindia has promised another $15 billion.

This means sleepy towns like Darbhanga, a former princely state in the poor eastern Indian state of Bihar, now have unhindered access to Delhi, Bengaluru and beyond. For many of the 900 passengers a day who board its flights, including many from nearby Nepal, the new airport has transformed travel.

Prasanna Kumar Jha, 52, was born in Darbhanga but works as a tax consultant in Delhi. “Who would have ever thought that Darbhanga would be on the aerial map?” He asked. It cost him 10,500 rupees ($126) to travel to his hometown at short notice to see his ailing mother, which was too much.

“But if you calculate the option – Delhi by train and then taxi to Darbhanga – it will take at least 30 hours,” he said. “Airplane travel is no longer a luxury but a necessity.”

Darbhanga airport is very far from New Delhi. There is no parking space. Passengers walk along the highway past a checkpoint to wait on benches outside the terminal. They then wait on another set of benches outside after completing the security check. But it works.

Another passenger on the same flight in Darbhanga, Ajay Jha, was holding his 1-year-old daughter Saranya in his lap as he stood near the primary luggage. His family was on the final leg of a trip that started in Bellevue, Washington, where he works as an engineer for Amazon, and headed for a family reunion in the Bihari countryside. Traveling halfway around the world took Mr Jha less time than it took him to come home from his school in Bengaluru.

Yet most Indians cannot afford such facilities. Annual average income is still less than an economy-class fare from the United States, and, in this top-heavy economy, most Indians earn much less than that. Middle class, in Indian parlance, indicates somewhere near the top of the pyramid.

According to a report by aviation analytics firm CAPA India, there were only 0.13 passenger seats per capita for Indians in 2019, compared to 0.52 for the Chinese and 3.03 for Americans. But airlines and India’s elected officials see less access and opportunity.

The lack of competition in the face of the emerging duopoly between IndiGo and Tata-led airlines is one of the most significant features of the new scenario. Smaller competitors continue to decline, most recently Go First declaring bankruptcy in May. Akasa Air, an emerging company, was forced to cancel flights in August due to a shortage of pilots after dozens of pilots were poached by larger companies.

But supply shortages aren’t the worst problem in today’s global economy. With aviation growth stagnating at around 15 percent per year in the decade before the pandemic, the Indian boom is guaranteed to completely change the future of aviation around the world. If the benefits to the winners in India’s economy can flow outward and downstream, the same can be true for many other sectors as well.

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