It is a matter of pride that Tata, an Indian company, has signed a letter of intent to acquire the biggest ever fleet of 470 planes from Boeing and Airbus to support Air India’s expansion plans. Air India has an option to increase this order to 840 planes.
However, It is rather surprising to see sarcasm and scorn coming from some of our more educated political leaders including Manish Tiwari and Raghav Chadha. They wonder why India should be happy to create corporate history in aviation when this will, ostensibly, create more jobs in the US and Europe (at our cost). I sympathize with this observation except it betrays a lack of basic economic literacy and is simply misleading the public.
There is every reason for the prime minister to share such a big announcement along with the US and French presidents. It is a matter of pride for Jyotiraditya Scindia, aviation minister, for expanding the aviation sector and for Piyush Goyal, our commerce minister on increasing bilateral trade with the US and Europe.
Growth in the aviation sector reaffirms India’s growth story and the power of Indian businesses to take on the challenges of the new world order. Growth in the industry is based on many assumptions – domestic travel will increase multiple times with increasing disposable household income; new airports will come up; tourism sector will expand with more people exploring India or foreign tourists to visiting us; hotel industry will expand to keep pace with changing times; medical tourism is expanding and will continue to do so; availability of skilled manpower is improving to support this expansion; and there will be continuity of the current industry supporting policies.
Are these reasons not good enough to rejoice? Absolutely!
However, some of our people’s representatives have failed to acknowledge the positive assumption underlying this purchase. Let us not forget the times when Air India was a public sector company and was forced to buy the new planes while taking away prime sectors leaving them to bleed.
Times have changed
In the next 15 years, about 520 million people will take to the skies compared to 80 million during 2010. India will require 2500 planes to support this expansion and we are just at the beginning. It is noteworthy that this increase is aviation infrastructure is taking place alongside an improving highway and rail network. In the last eight years, the number of airports has doubled to 141 and this is expected to further increase to 200 in next five years. This expansion represents a massive job creation opportunity: India will need thousands of high-end, skilled, and semi-skilled workers.
Currently, this sector employs upwards of 250,000 people. As it expands and we have a greater number of aircrafts in India skies, MRO (Maintenance, Repair and Operations) facilities are likely to increase as well. A greater number of flight and associated training schools will train pilots and inflight and ground staff adding to huge opportunity for our younger generation entering the job market.
employment potential OF aviation infrastructure
India has projected inflow of 30 million international tourists in next 5 years, not considering Indians travelling on vacation or for business within and outside India. The tourism sector is expected to generate 137 million jobs and US$ 250 Billion in revenue by 2030. The supporting hotel and transport industry is expected to flourish with aviation as an important pillar. Medical tourism is also on the rise and will require specialised planes to transport patients. Religious tourism will need multiple helipads to make shrines accessible to devotees. Business jets will be required for our growing business houses.
Indigo had been acquiring aircrafts since past 5-6 years. Many other Indian operators are also likely to seek more planes to add to their fleet. The global aircraft leasing market is huge and is expanding @7-8% per annum and some of India’s fleet can support this market.
In a democracy, the role of the opposition is extremely important as an accountability mechanism for the government’s policies and decisions and must call out instances of crony capitalism and misguided policy decisions. At the same time, the opposition must support development initiatives benefiting ordinary citizens. Important questions around this deal that the opposition can ask include whether the government will ensure that such significant outsourcings and expansions are supported by quick modernisation of airports, landing infrastructure and adequate MRO facilities to ensure safety and convenience of the passengers.
If the job creation in India is to be the rallying cry, the opposition must ask that pilot training hubs and simulators be built locally instead of outsourcing this crucial activity, pilots must be trained and certified in India. Currently these training modules are in the US and UK and pilots need to go there for weeks for training every year. By bringing these facilities to India will not only support domestic skill development and certification for local pilots but also support pilots from other Asian countries in a cost-effective manner. The opposition should question the government of its plans to ensure the safety of the passengers as Indian skies get busier.
In a globalised economy, growth in one part of the world cannot be isolated. The Indian aviation industry’s growth will indeed support jobs in the US as well just like US companies are generating millions of jobs in India.
The Tatas have expressed confidence in India’s growing consumption-led growth story and the government’s plans to support this. We must all share in this pride.
Rakesh K Chitkara has led public policy practice for major US corporations including Abbott Lab, General Electric, Dow Chemical and Monsanto.