India's shifting aviation landscape
A spokesman for Mumbai-based freight forwarder Allied Aviation Pvt. is worried about the number of freighter aircraft in the country and the scarcity of skilled labor. He thinks the new aviation strategy should address these issues along with facilities and handling, but also of concern is the growing price competition among industry shareholders and the rise in labor costs. These issues can be addressed, he says, by reconfiguring the regulatory structure, eliminating the fuel tax and, of course, improving the quality of and access to airports and cargo facilities.
But some regulations, he admits, could help Indian aviation companies. Allied sees huge growth potential in the domestic Indian market, which is off limits to foreigners. “Allied Aviation would concentrate more on the domestic market, and then the international market,” the spokesman says. “The growth at the domestic market is fast, as it offers greater potential since regulations prevent foreign airlines from competing in the domestic air cargo market.”
Allied also approves of the government’s recent move to increase the amount of investment allowed by foreign companies in the air cargo sector from 49 percent to 74 percent. According to the spokesman, the rule change “will bring in the much-needed capital and global best practices to the Indian air cargo industry. Proactive and favorable government policies will greatly encourage investments in the air cargo industry and facilitate the setting up of the required amenities and infrastructure.”
U.S.-based forwarder BDG International opened its Indian office in 2007, and in the ensuing years, Lisa Victoria Waller, BDG’s vice president, has experienced the slow transition of the aviation sector as an outsider looking in.
The move to privatize airports, she says, was absolutely necessary to the industry’s continued growth, but she cautions that there are still airports that need to be handed over to the private sector. “They have a long road ahead of them,” she says. “But the Indian government knows that they are better off privatizing than trying to manage them themselves because they have a really hard time managing major projects like this for infrastructure improvement.”
The government, of course, can’t step out of the picture entirely. Like her colleagues at Allied and Blue Dart, Waller says the government needs to pave a new path on security, Customs processing and a host of other regulatory measures. She adds that the government also needs to help private aviation shareholders prosper.
With all these issues still brewing, progress in India can seem slow at times, but Waller has also seen what seem like massive structural issues resolved in no time at all. India is funny like that, she says, adding that five years down the road, air services in India will likely be vastly different than they are today.
“In India, the changes are night and day. Today you don’t have a service you want, and tomorrow you do,” she says. “That’s the cool part of India.”