Saturday, January 01, 2022

Passengers' Gain: Competition to soar as new players enter aviation sector

New Delhi: Competition is expected to soar in India's aviation sector during 2022, as new players enter the industry along with deeper penetration of air transport in hinterland.

Accordingly, a new airline as well as more privately operated airports are expected to increase competition in the sector which has faced the brunt of the ongoing pandemic.

Besides, expanding regional and intra-regional presence will continue to widen the scope of the industry.

Moreover, passengers will gain from increased competition, Centre from divesting airport assets and the workforce from more professional opportunities in the aviation sector.

In terms of airlines, in 2021, Jet Airways and Air India found new owners.

"The cherry on the cake was the launch of Akasa Air underpinning the future prospects of this sector in India," said Jagannarayan Padmanabhan, Director and Practice Leader, Transport & Logistics, CRISIL Infrastructure Advisory.

"Competition will continue to be strong across the airlines, it's important that the sector learns from the previous misadventures of undercutting prices to gain or maintain volumes."

In the medium term, the sector's growth is expected to come from the tier 2 and tier 3 cities for which it is necessary to augment capacity as well as open up new regional airports.

"While Covid-19 has led to uncertainties in the airport sector, the established regulatory framework as well as the growth potential in the Indian market over a long term would continue to attract private developers," said Vishal Kotecha, Director, India Ratings and Research.

Notably, there have not been any bids in the airport space over the last two years, however, 2019 saw a significant number of bids in the airport sector with Adani Group winning six airports, GMR and Zurich airports being awarded with one airport each.

"There was a significant interest seen from both domestic as well as international players in these bids," said Kotecha.

Under the National Monetisation Pipeline, the Centre plans to divest brownfield assets such as airports, thereby increasing competition in this sector.

At least 25 additional airports have been identified for monetisation in the next three years.

Furthermore, there has been increased focus on increasing regional connectivity.

In terms of the RCS-UDAN scheme, 948 valid routes have been awarded.

Out of which, 395 routes connecting 63 unserved and underserved airports including six heliports and two water aerodromes have been operationalised.

As per data, under UDAN 4.1, 168 routes were awarded during the year.

01/01/22 IANS/Business Standard

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