Opening of Indian skies and successful positioning campaign with “Incredible India branding has openup many new markets for India. Though late, it is good that the decision makers have put priority to aviation sector as major vehicle for tourism development. Nodoubt, airport transport is a driver of economic development. The economic stimuli of airlines, airports and their direct affiliates beyond their direct impact can be judged with the multiplies of job and that too involving other industries. During the last two years, liberalized civil aviation policy made radical changes in the aviation sector with varied opportunities.
In India GDP growth in the period between 1995-2004 was averaging to 6.21% where as annual average increase in domestic and international travel has been 11.2% and 8.7% respectively and since than GDP growth is progressively (BRIC (Brazil Russia India China) report of M/s. Goldmanasch) has predicted India will be amongst the foremost growth centres of the world by 2020.
The demand for air transport is rising and growing number of airlines in India for domestic sectors and even request for additional traffic rights to India are the right indicative to the demand segment and only such airline activity is the most essential to sustain the economic growth.
With rising incomes, domestic sector has seen boom and new airlines are coming every moth. Indus Air, the tenth domestic airlines in India finally look off starting operation from Delhi & Mumbai to Chandigarh begin with, giving air connection to many new destinations within India, recent news about the finance Ministry’s consideration a proposal to allow domestic airlines to hedge aviation turban fuels (ATF) has boosted further the aviation sector. Currently carriers are allowed to hedge ATF for international flights; they are not allowed to do so for domestic operations. Since fuel accounts for 40% of the total cost, an airlines now feel confident that the move will allow them to stablise costs and check losses. Also in another major step taken which is very positive for the civil aviation sector is about private operators of international airports in India will now have the right to decide which company would supply aviation turbine fuel to airlines in their respective airports. Until recently this was decided by the Airports Authority of India, (AAI) but the Government has decided it should have no role in restricting the market. The move is expected to spark fierce competition from private operators like Reliance, Essar and Shell.
In the aviation sector the merger of Indian and Air India is a positive development. Both the airlines are now looking into final details like Branding and HR issues primarily. It appears post merger, there will be one full service airline and one low cost arm with higher levels of air transport activity and relatively higher level of disposable per capita income will made this national airline more competitive and more revenue generating for the country.
In has to be seen from other angle also which is about the spreading the wings at many international routes where we could not utilize of our rights in full capacity based on bilaterals. Bilateral air traffic rights on international routes between India and other countries. These had been decided on the basis of reciprocity. The actual utilization of available rights on international sectors had remained heavily imbalanced – while the utilization of foreign airlines are over 60% whereas that of Air India/Indian airlines are around 40%. Hence there is loss of business and tourism growth too is restricted. The new policy imitative by Govt. of India have led to strengthening of Air India and Indian Airlines by acquisition of new aircrafts, improved operational synergy between these two airlines, allowing eligible Indian scheduled carriers to operate on international routes and to follow aggressively open Sky Policy without reciprocity contract as primary terms for operations.
The year 2005 and 2006 saw Govt. of India approving additional traffic rights to committees like USA, UK, South Africa, and especially USA carriers are now authorized to operate to any airport in India. New flights from UK to India can cover new routes and even new destinations. All these have opened up new places like Bangalore, Hyderabad, Goa, Kochi, Nagpur etc. All these increased availability of air seat capacity match the growing demand for India holiday destinations. Earlier lack of seat capacity was one of the bottleneck areas for India’s Tourism Development. Elimination of market control and fair competitive opportunities have shown positive results and have significant impact on growth and expansion of both trade & tourism. Atleast in tourism sector, it enabled Govt. to achieve average 15% year on growth.
It is understood that the eligibility norms for airlines seeking to fly abroad are also set to be relaxed. The Govt. is planning to ease the entry norms to a minimum of three years of domestic operations from five years at present. Low cost carriers like Air Deccan may be the first to make use of the relaxed norms since it has already completed three years in August 2006. It may bring its low cost model for foreign destinations also. Even Kingfisher may join and that will create strong competition to foreign carriers. Air Deccan has setup a subsidiary in Srilanka, Deccan Lanka and once it gets the nod based on Govt.’s Civil Aviation Policy ( to be in place of February/March 2007), it may start operation to Singapore, Malayasia, Thailand, Maldives as per indication given by its Managing Director, Mr. G. R. Gopinath. Kingfisher has already setup a fully owned company in the US from where it plans to fly to India. Jet airways have started its operations to Bangkok recently from Delhi & Kolkata. Jet Airways plans to fly to Newyork via Brussels around August 2007 and may add second American City like Sanfrancisco through a flight from Shanghai, may also have flight to Gulf destinations by early 2008. All these can bring higher revenue & create new jobs.
Similarly the civil aviation Ministry has mainly finalized the draft policy on ground handling which seeks to bring in at least 3 players to offer these services at airports across India. The airport operator could be private players like the GMR run Dial or airport authority of India (AAI). This is mainly to avoid monopoly & this policy is likely to create competition for state owned carriers Air India and Indian which have a strong presence in the ground handling segment. All these have made Indian Civil Aviation scene the most happening in India with lot of opportunities to take investments form private players. With such developments, India is now on a roll with a visibly strong economy and higher rates of GDP growth.
The second powerful & visible scene of progress in tourism field is the global recognition, which India is getting now as a major tourist destination which has been possible with Govt. of India, Ministry of Tourism “Incredible India” brand campaign since last two years. Ministry’s earlier campaigns were just generic and even lack colourful presentation. Budget constraints were the main reason to restrict campaigns to be taken in black & white format which could never present the riot of colours which is India main forte. Also it was always a complex job to have one precise identity for a multi product destination like India where each state itself is a product. Incredible India was envisaged to bring a balance to this unique position by placing Incredible India as mainboard on which state promoting their products as sub-brands. In the mother brand it focused India : as a journey of mind and soul, as a journey of five senses, journey of self discovery and journey of self fulfillment and states putting their products dovetailing to these unique experience of India. This was further strengthened by forming Public-Private partner ships and State Governments joined with development of special thematic products.
The results were there to vouch for the usefulness of this branding effort. In 2005 when average world growth was 4 to 5%, India tourism achieved 14% in tourist arrivals. Lonely Planet in a survey of 167 countries selected India as one of the five top destinations of the world. Even World Tourism Organisation (UNWTO) has termed India as the fastest growing travel & tourism destinations. With the positive image and growing business opportunities, all leading tour operators of global standing are now well established in India like Kuoni, Thomas Cook and hold a big share of the business. Big hotels chains are establishing their chains hotels & holding partnerships with Indian Partners for hotel business. All these efforts have given a sound economic growth and have made enough contribution of the quality and quantity of infrastructure throughout India. Now with 100% FDI regime in hotels & hospitals sector lot of investments are pouring in for Medical tourism and hospitality sector.
Surface transport, national highways, railways, cruise segments all are now synergized in the over all national development plan. All these are helping India tourism to Re-emerge as a destination of choice and take its time market share.
India is getting significant growth in international tourism arrival and receipts as may be seen from the recent Press released on tourist arrivals (visit Ministry of Tourism Website www.incredibleindia.org)
With increased air capacity and strong framework to safeguard consumer interests including pricing & service levels. India is now a right path for tourism progress.
