TDP's Ram Mohan Naidu inherits a high-stake job to navigate India's aviation boom amid pressing issues

Aviation Minister Ram Mohan Naidu

Telugu Desam Party’s (TDP’s) Kinjarapu Ram Mohan Naidu, who became India’s 34th Minister of Civil Aviation on June 10, has a tough task ahead.

Despite being the youngest minister in PM Narendra Modi’s Cabinet, Naidu has been given a huge responsibility as the Indian aviation industry is on the cusp of a boom, on course to become the third-largest market in the world.

India is projected to become the world's third-largest economy by 2027, which will need hundreds of aircraft and many more airports as millions of new passengers take to the skies.

The new minister will not only have to oversee the creation of new airports and the setting up of an aircraft manufacturing ecosystem in India but also navigate through domestic turbulence in the form of pilot fatigue.

Naidu will have to tread a thin line in trying to make Delhi and Mumbai international air traffic hubs and cater to demands for increased bilateral flying rights.

Four ministers have led the Ministry of Civil Aviation in the last 10 years, and nearly three airlines have collapsed during the current government’s regime.

Ashok Gajapathi Raju, Suresh Prabhu, Hardeep Singh Puri, and Jyotiraditya Scindia have all shared the hot seat at the civil aviation ministry in the last 10 years.

Bilateral Rights

Naidu will have to tackle the pleas from the UAE and Qatar for increased bilateral rights. For years, carriers like Emirates, Etihad, and Qatar Airways have lobbied to operate more flights to and from India.

Currently, the bilateral flying rights allow Dubai carriers – Emirates and Flydubai – to operate 65,000 seats weekly to India. Similarly, Indian airlines can operate 65,000 seats to Dubai every week.

The flying rights on both sides are fully utilised and the last increase in the number of seats was in 2015.

Aviation Hub

The Modi government and domestic Indian airlines have in the last two years talked about creating international air traffic hubs in India.

Air India always had a hub at Delhi, which now offers good connectivity for international transfers.

While the ministry has formulated a draft national aviation hub policy, implementation of the new policy in a timely and efficient manner will be key.

Under the new hub policy, the government proposes to introduce differential charges for Indian and foreign airlines at airports in the country.

That would mean foreign airlines would have to pay more than their Indian counterparts for landing, parking, and ground handling, among others.

Furthermore, the government is assessing the possibility of dedicated terminals for large Indian airlines to ensure economies of scale.

Pilot Fatigue

While the Modi government has set up several Flight Training Academies (FTAs) in the country over the last few years, some incidents have shown that not all FTAs are up to industry standards.

The incidents and accidents at such places have led to injuries or loss of lives.

Hiring new pilots is key for the Indian aviation industry at a time when domestic airlines have ordered nearly 1,620 aircraft which will be delivered in the next 10 years.

The lack of proper training institutes has led to several cadet pilots opting for foreign shores for training, thus increasing the cost of training and delaying the payback period for the individual.

While most airlines have a cadet flying program, it also is in tie-ups with some foreign entities in most cases. The government needs to incentivise airlines to forge tie-ups with Indian FTAs with complete training in India.

Furthermore, pilots currently working with domestic airlines have voiced concerns over the existing Flight Duty Time Limitations (FDTL) norms or rules on pilot duty and rest periods.

In April, pilots took the aviation regulator Directorate General of Civil Aviation to court, and four cases connected to FDTL are before the Delhi High Court.

Flight crew fatigue and exhaustion are seen as major factors contributing to human errors in aircraft operations, which can lead to catastrophic accidents.

The DGCA had cited a few incidents of pilot deaths due to exhaustion while pushing airlines to adhere to the new regulations from June 1. However, it withdrew that deadline.

Aircraft manufacturing

Despite doubling of the market size in the last nine years, the government has failed to attract the big aircraft original equipment manufacturers to set up shop in India or create infrastructure for commercial aircraft leasing.

The lack of manufacturing facilities in India poses a massive problem for domestic airlines which suffer due to unavailability of spare parts and engine manufacturing in the country.

In fact, Go First had blamed engine manufacturer Pratt & Whitney’s inability to supply spare parts and engines for its Airbus aircraft for the grounding of its fleet in May 2023. The two companies are currently in a legal fight.

As of May 2024, around 130 planes of Go First, IndiGo (the country’s largest airline by passengers carried) and SpiceJet were grounded across multiple airports in India due to the unavailability of spare parts and lack of aircraft maintenance, repairs and operations (MRO) infrastructure in India.

Airline collapses

Even as Indian aviation took off in the last nine years in terms of passenger traffic, airports and routes, the age-old problem of the financial health of domestic airlines in India continues.

In 2014, CAPA India, the domestic arm of the aviation data analytics company, had said that Indian carriers together were expected to make losses of $1.3-1.4 billion in 2014-15. Fast-forward to 2023-24, CAPA India said that Indian airlines posted a consolidated loss of $300-400 million in 2023-24. However, excluding IndiGo the industry posted a loss of $ 1.3 billion in 2023-24.

Despite the likely rise in traffic, domestic airlines are likely to widen losses to $400 million-$600 million in FY25, aviation consulting agency CAPA India chief executive officer Kapil Kaul said.

Since 2014, SpiceJet went bankrupt and had to find a new owner, Jet Airways, once a high-flier, went into insolvency and has been awaiting resurrection for four years now, and no-frills carrier Go First has filed for voluntary insolvency.

CAPA India has said that India needs a new civil aviation policy that should deliver airline viability and growth by design. According to Kaul, airlines must be provided a level playing field by dismantling the negative fiscal regime and providing infrastructure ahead of time.