Early Trends 2023: Will Indian Aviation Sector Take Off To New Heights?

There is no doubt that the Indian aviation market is resilient and survived through two difficult years when air travel was completely on hold across the globe. The sector has picked up at a tremendous pace right after the pandemic. 

It has also seen the merging of the airlines to maintain cost efficiency and also witnessed the execution of policies to felicitate affordable air travel for the common people through schemes like Ude Desh Ka Aam Nagrik (UDAN). 

As India’s air traffic is constantly increasing, the airports and terminals are being newly constructed to cater for each passenger. According to India Brand Equity Foundation (IBEF), India’s airport capacity is expected to handle one billion trips annually by 2023.

In the global space, India’s aviation market is escalating to a higher stare and reaching a new height. As per one of the reports of IBEF, it has become the third-largest domestic aviation market in the world and is expected to overtake the UK to become the third-largest air passenger market by 2024.

However, the growing demand for air travel in India requires more policies and funds so that the sector would be able to contribute significantly to the GDP, employment and overall economic development of the country. 

The year 2023 is definitely going to be an important year for every other sector but for the aviation industry of India, it will be a time of numerous milestones as the Indian aviation market is one of the most dynamic functioning sectors in the ambit of the Indian economy. 

Let’s look upto few trends which will reshape Indian Aviation Industry in 2023— 

Mergings as master plan— 

Merging is not new but a popular trend going in the aviation industry that is expected to expand in 2023. Tata is emerging as a strong player in this market and is having command of multiple airlines. 

After getting back Air India on its hand, Tata has planned to merge Vistara with Air India. Vistara is India’s second-largest domestic airline that holds a market share of 9.7 per cent while Air India has 8.5 per cent of the market share. Vistara has a parent body Singapore Airlines (SIA) that is getting a 25.1 per cent stake in the merged entity at an investment of Rs 2,058.5 crore (USD 250 million) in Air India. 

After the completion of the merging process, the Air India group will have Vistara, AirAsia India, Air India and Air India Express. This merging process is expected to be complete by 2024. The group is already in the process to merge Air India Expres with AirAsia India, in order to provide low-cost flight options to travellers. 

Infrastructural development to meet increasing demand—

Serving the huge population of India, the aviation industry is witnessing a surge in the demand for air travel. Infrastructure is a crucial component to deal with the surging demand. 

There are a number of airport construction and terminal building lined up for 2023; Uttar Pradesh is gearing up for the completion of the air traffic control (ATC), runway and terminal building of the Noida International Airport by December 2023. Ayodhya is also going to have its first airport by June 2023. 

Another IT hub Pune is going to get added one more terminal to its international airport by May 2023. These projects will not only help to manage the traffic but also promote air travel for the common people of the country. 

Airline fuel bill to hit a new height—

The airline fuel cost accounts for almost 20 to 25 per cent of the total expense of running an airline. The International Air Transport Association (IATA) expects oil prices to decline to USD 99 a barrel in 2023 but the total industry’s fuel bill is expected to be nearly USD 229 billion in 2023. 

The expected bill of fuel constitutes 30 per cent of total expense. The increasing air traffic is the major cause behind increasing fuel bills which eventually influences the ticket fairs of the airlines. 

Cut In Corporate Travel Budget—

Due to the risk of global recession and geopolitical matters the corporate travel budget is expected to decline in 2023. In order to maintain their cost the company, they are cutting down the travel budget as corporate travel is one of the largest segments in the expense. 

According to a survey by EY and ICF,  92 per cent of businesses said corporate travel was adversely impacted by Covid-19. As per the report of the survey 76 per cent of respondents believe that virtual working is the biggest adversity to business travel in the corporate world. 

This trend seems to be followed in 2023 as covid cases are rising again and firms are scared of the forecast of the global recession. 

Also Read:Year-Ender: Did 2022 Give Wings To Indian Aviation Sector?