Indian aviation ready for take off despite hurdles: Report

The booming Indian aviation sector is all set to face roadblocks like opposition from the Left parties on key policies, fierce competition, inexperienced management and infrastructural constraints, says the Annual Outlook Report of the Centre for Asia-Pacific Aviation (CAPA).

The report, released at the Asia-Pacific, Middle-East Aviation and Tourism Outlook 2005 conference in Singapore, says this year will be a year of growth and see a number of significant developments. However, it points out, fierce competition and inexperienced management can lead to some failures.

"There will be bumps along the way. The Communist parties are opposed to a number of aviation initiatives, including airport privatisation, foreign investment and private carriers operating internationally. This is unlikely to prevent further reforms, but may lead to some delays and possible dilution," the report says.

CAPA also warns that continued growth in the range of 25 to 30 per cent in domestic traffic in 2004 will place increased pressure on already congested airports and on demand for skilled labour such as pilots.

"Inadequate infrastructure may prove to be a constraint on growth. A buoyant market will attract new entrants as well as increased capacity by incumbent carriers," the report points out.

The report predicts that the domestic Indian carriers could place orders for up to 200 aircraft over the next 12 months and the private Indian carriers are likely to be flying to Southeast Asia and possibly even in Europe in 2005.

According to CAPA, India's two state-owned carriers, Air India and Indian Airlines, enter 2005 with great hope, but possibly tinged with some concerns.

"Hope, because after years of neglect by the state and ongoing uncertainty about their ownership, the government has clearly committed to funding the carriers' fleet expansion and modernisation," the report says.

The report, however, warns that the government's decisions like allowing private carriers to fly on international routes would significantly increase the competitive pressures faced by the two carriers.

Saying there was no question of privatisation of the two state-run carriers in 2005, the reports adds that the government may, however, be preparing for a partial float in 2006-07.

The report points out that the low-cost airline model is likely to take firm hold in 2005 with a number of proposed start-ups set to take to the skies, including Kingfisher, Go and Royal Airways.