Welcome onboard Indian skies. We will soon be taking off to one of the most exciting journeys in Indian aviation history. During the journey, airfares will drop 15-25 per cent on domestic and foreign travel. Travel options-be it the type and number of airlines or the choice of destinations-will multiply like never before. By the end of the trip, India will have world-class airports. Depending on market conditions and the policy environment, the journey could take between two and five years and could result in investments of up to Rs 1,00,000 crore. That's over Rs 1,500 crore a month, Rs 50 crore a day.

PICTURE SPEAK

At any other time in the past 14 years, such a description would have been considered an outright fantasy. After all, the recent history of Indian aviation is littered with failed promises and recurring controversies. To sample just two, a committee headed by Vijay Kelkar had suggested a fleet of 97 aircraft for Indian Airlines by 2001. The airline still has 62 aircraft with an average age of over 15 years. Bangalore was to have a new international airport by 2001. It is nowhere in sight.

Yet, a mix of policy changes and a shift in preference for air travel in the past one year hold out hopes of a revolution in Indian civil aviation in the next few years. The policy push came in four stages. The clearance of fleet-expansion plans of Air-India and Indian Airlines, on hold since the mid-1990s, alone means that 100 new aircraft will be at the disposal of Indian air travellers by 2010. That is only a third of the new aircraft that are likely to come into Indian skies in the next few years. The launch of low-cost airlines and the permission to private Indian airlines (with five years' flying experience) to fly to all global destinations except the Gulf has airlines scouting the globe with a shopping list of aircraft (see box). Raising foreign investment limit from 40 to 49 per cent in October 2004 added to the impetus.

SOARING AMBITIONS

AIRLINE NUMBER OF AIRCRAFT COST(Rs cr) Indian Airlines 43 15,000 Air-India 50 15,000 Kingfisher 34 8,000 Air Deccan 42 8,000 Jet Airways 16 1,000 Go 20 NA Jagson 5 NA Royal Airways 20 NA Total 230 47,000 Estimates for next five years. Figures for aircraft include purchased and leased planes but cost is only of purchased aircraft.

No wonder, from airlines to aircraft manufacturers and airport managers to tour operators, the mood is upbeat. "India has the fastest growing aviation sector in the world," says Dinesh A. Keskar, senior vice-president, Boeing. Adds Rono J. Dutta, president, Air Sahara: "These are very exciting times. The Government must be commended for doing all the right things." Sure, many policies still need to be finalised-like the one on the modernisation of 40 airports and leasing of Delhi and Mumbai airports-but a few policy measures after a long drought of decisions have rekindled confidence.

Can a funds crunch be a hindrance? Especially when the bill could run up to Rs 1,00,000 crore. It's unlikely, since the bulk of the funding is to come from the private sector. Of the Rs 45,000 crore airport modernisation budget, more than 75 per cent may come from the private sector. And of the 300 aircraft on the purchase list for the next five years, more than 200 will be bought or leased by private airlines. Two factors that will drive private-sector investments are clarity in policy and booming demand for air travel. After several years of single-digit growth, domestic air passenger traffic rose by 12 per cent in 2003-4. In 2004-5 the growth rate is expected to double at 25 per cent with total domestic air passenger traffic touching 20 million. "It is safe to predict that India's air passenger traffic will grow by at least 20 per cent in the next few years," says Kapil Kaul, CEO, Centre for Aviation for Asia Pacific (India and Middle East). He expects total air passenger traffic to grow to 50 million in the next five years.

WHAT TO EXPECT AHEAD

BETTER CONNECTIVITY Smaller cities like Dehradun, Amritsar and Ludhiana to get onto the air map. LOW-COST BUZZ At least three low-cost airlines-Go Kingfisher and Royal Airways-to be launched. GOING GLOBAL Air Sahara and Jet Airways to become full-fledged international airlines. PRICE WARS Domestic and international airfares likely to dip as competition hots up. WHAT COULD GO WRONG CLOGGED AIRPORTS As air traffic increases, getting a parking slot will become more difficult in the future. ERRATIC FUEL supply There is uncertainty over the privatisation of aviation turbine fuel supply. DELAY IN MODERNISATION Despite the commitment, there is no time frame for revamping airports.

This optimism is showing in the expansion and entry plans of airlines. Three new airlines are likely to start operations in 2005-Vijay Mallya's Kingfisher, Nusli Wadia's Go and Royal Airways, the relaunched ModiLuft. Air-India's low-cost airline Air Express is also in the queue. The number of foreign carriers, up from 38 in 2002 to 51 in 2004, will also rise. Aircraft manufacturer ATR sold 24 aircraft in the past five years. It expects to sell over 70 by 2010.

This growth will have its trickle down effect on tourism, jobs and income. Boeing is contemplating setting up training and maintenance centres in India so that private carriers don't have to send aircraft and pilots overseas for training. "We will have enough aircraft here to make the centre commercially viable," says Keskar.

But the growth will also have its pangs. A crumbling airport infrastructure-110 out of 125 Indian airports make losses-will make things worse as passenger and aircraft traffic surge. Airport modernisation has been given a time frame of 3-5 years, but it will be some time before the results. become tangible. "The biggest constraint in the otherwise promising story is the airport bottleneck," says Jean Luc Establie, sales director, ATR.

Even if all the plans of the Government or the private airlines aren't fulfilled, air travellers can be sure of better deals and more connections to their destinations in the months and years to come.

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