Indian aerospace: Growing up fast

On the eve of the Aero India show in Bangalore, we look at how a successful industry is being built despite a creaking infrastructure, red tape and skills shortage

Only two years may have passed since the last Aero India show in Bangalore, but the country's aviation industry has changed drastically in that time. Seven new airlines, both full-service and no-frills, have started operations and offer domestic passengers more options than ever.

Most of the carriers have embarked on a massive spending spree, with firm orders for new aircraft totalling more than 450, plus options on several hundred more.

Some things, however, are unchanging. India's infrastructure is still struggling to keep up with this boom and waiting times have increased tremendously. A severe shortage of qualified personnel - notably pilots and engineers - is also holding back growth.

The industry, however, is creating overall economic benefits for India. Civil aviation minister Praful Patel has predicted that 400,000 jobs will be created in the next 10 years - going a long way towards alleviating the chronic unemployment that persists in many parts of the country.

The defence aviation sector is also booming, with several major contracts worth almost $20 billion set to be awarded in the coming years. The foreign companies competing for the military deals will be going all out to convince the Indian bureaucrats, media and public about the strength of their case.

Given the setting, the sixth Aero India show's organisers - the Ministry of Defence's Department of Defence Production, the Federation of Indian Chamber of Commerce and Industry (FICCI) and Farnborough International - are pulling out all the stops this year.

The infrastructure at the Yelahanka airfield has been upgraded since 2005. Aero India, to be held from February 7-11, will have an exhibition space of 25,000m² (270,000ft²), about 40% more than in 2005. Five new hangars with an area of 1,320m² each have been added, doubling the space from two years ago. The runway length has been increased from 2,200m (7,250ft) to 2,440m, while the taxiways and dispersal area have been widened and resurfaced.

While 148 Indian companies participated in 2005, this year sees 286 firms confirming their attendance. More than 480 foreign companies from over 40 countries including France, Germany, Israel, Italy, Russia, Sweden and the USA will also be participating.

Those in the industry and members of the public are in for a treat when it comes to the static and flying displays. From the USA, Boeing will bring its F/A-18E/F Super Hornet, CH-47 Chinook, and C-17 Globemaster, while Lockheed Martin's F-16 and C-130 Hercules will be present. The RSK MiG-29M from Russia, the Saab Gripen from Sweden, and Eurocopter's helicopters will be on show.

Not to be outdone, home-grown products from Hindustan Aeronautics (HAL) will also be on display, including the HJT-36 Sitara intermediate jet trainer, HAL Dornier, Dhruv advanced light helicopter and advanced versions of the Cheetah helicopter, such as the Chetan and Cheetal.

Capability gap

India's booming economy has also led to growth in the demand for business jets. The number of these aircraft is expected to double to 300 by mid-2008, and in the second half of 2006 the government gave almost 30 companies the nod to import around 100 aircraft.

Reflecting that, a special area has been set aside at the show for companies involved in the sector to promote themselves and their aircraft. Several of the latest business jets will be there for static and air display, and demonstration flights will be available for customers.

Talk at the show is expected to focus on forthcoming defence contracts, for which many tenders have been delayed for several years. But there is a growing belief that a decision could be made soon as the Indian government streamlines the selection process, following warnings from the military establishment that further delays could lead to a major capability gap.

India has traditionally relied on Russian hardware for its air force, and only looked beyond it when it bought the Dassault Mirage from France. Now, however, there is growing expectation among European and US manufacturers that New Delhi could consider their offerings for its next generation of fighters.

The major contract, worth around $15 billion, will be for 126 multirole combat aircraft. Six jets are in contention: the Boeing F/A-18, Dassault Rafale, Eurofighter Typhoon, Lockheed Martin F-16, RSK MiG-35 and Saab Gripen.

Russia, however, appears quietly confident about its chances. Its confidence has been boosted by the high-profile visits of President Vladimir Putin and defence minister Sergei Ivanov to India in the last month. And there remains an influential block within the Indian air force that would rather stick to a supplier it knows, whose aircraft are generally reliable.

Another major contract is for 197 army light utility helicopters, with the Bell 407 and Eurocopter AS550 in contention. The contract is valued at around $600 million, but the large number of aircraft being ordered makes it a crucial one to win for both companies.

The Indian navy is also seeking proposals for eight maritime reconnaissance aircraft, with BAE Systems, Boeing, EADS, Ilyushin and Lockheed throwing their hats into the ring. It is also seeking 16 ASW helicopters, with AgustaWestland, Eurocopter, Kamov and Sikorsky all in contention. The air force is also looking to buy up to 12 transport helicopters, mainly for VIP travel.

On the civil side, 2007 is expected to lead to further change in the sector, following the expected merger of state-owned Air India and Indian Airlines around April. Some believe this could lead to consolidation among the many privately owned carriers, following a failed start last year. At the beginning of 2006 Jet Airways agreed to buy Air Sahara in a deal that was expected to lead to a wave of mergers, but the arrangement ultimately fell apart and no other tie-ups were forged.

There are now more than a dozen passenger airlines in India, and several more are seeking approval to launch. The government has said it is concerned about the sector overheating, however, and is making it more difficult for new airlines to get off the ground.

The existing airlines are also pushing for an easing of the restrictions on international flights. Currently, airlines need at least five years of operations on domestic routes before they are allowed to fly outside the country.

But with many of the start-ups losing money on their current operations, and with dozens of new aircraft to pay for, they are hoping to fly the more lucrative overseas routes. This would allow them to form a network of domestic and international flights that would appeal to both tourists and local passengers.

Improving infrastructure

The government is also reportedly considering an increase in the foreign direct investment (FDI) limit in domestic airlines to 74% from 49%. While this would allow the airlines to fund their expansion plans, the government remains lukewarm about the idea. If anything, it would rather the airlines consolidate their operations.

There are likely to be many more opportunities on the airport development front this year as well. Last year Delhi and Mumbai airports were privatised through the sale of long-term leases, and major upgrade works are due to begin soon. Many other airports are also being upgraded in other parts of the country in line with government efforts to improve infrastructure.

To cope with the country's rapid civil aviation growth, India has asked for technical assistance from the US Federal Aviation Administration in areas ranging from airspace design to satellite navigation and aircraft certification. There is also a move to increase the number of airports available for commercial aviation from the current 24 - it is estimated that there are about 100 unused airfields throughout the country, and these could be used for smaller aircraft and to connect smaller towns with bigger hubs.

Investment has increased in the growing maintenance, repair and overhaul (MRO) business as well, with Boeing scheduled to open a base in Nagpur in conjunction with HAL. The Indian company is also reportedly studying the creation of another MRO centre, this time in collaboration with Airbus, at Bangalore airport. This year's Aero India has been highly anticipated, given the exciting times in the Indian aviation industry, and challenges and opportunities abound for its participants.

Source: Flight International