Wasted potential

If you approached any air transportation expert and asked about the regional market forecast for the next decade, you would most definitely get an answer that included India and China leading the “rate of growth” category. Although the USA has the most domestic travellers per year, given the population of India and China, they would have surpassed that number had it been for efficient infrastructure and better regulatory efforts. The figure below (courtesy Prof John Hansman at MIT), one of my favourites, gives a good example of an air transportation model and its interactions with the economy.

I really can’t comment on what’s happening in China, but India’s system is miles away from exemplary. Firstly, it is unacceptable that the economic flow is disrupted by an external beneficiary agent. Not only does that agent not belong to the industry, but there also is no paper trail. Secondly, the figure above involves a feedback loop, which in the case of today’s market doesn’t exist in India. Some might argue that things are changing, but I don’t believe the rate of growth is justified. Thirdly, the infrastructure and regulatory framework is virtually zero, unless intervened by a private agency looking for a profit. That is exactly what is happening with the airport development in India today. It’s being privatized. My question is: Do we even need any government overlooking the industry when all it is going to do is either withdraw support of the national carrier in its darkest times and ensure smooth transition into privatization?

It was the IATA director general who recently visited India and reminded them of the potential boom that is possible by saying, “If Indians flew as much as Americans, it would be a 4 billion dollar market“.

Another figure (courtesy Prof John Hansman of MIT) shows that this potential has been visible since 2005, yet almost 6 years later, we are still discussing about prospective targets while the wasted opportunities prove the existence of the Doppler Effect.

Again, arguments like the successful construction of new terminals at hub airports in India can be made, coupled with the progress made in increasing traffic. According to me, way below par. A simple illustration is the fact that projections of traffic passing through Mumbai airport a few years ago have not been fulfilled. The reasons lie in a very bureaucratic, politically (read money-making) driven process to approve a new airport at the Navi Mumbai site. Meanwhile, Delhi has overtaken Mumbai in traffic by constructing a new terminal. Airlines want to target profits the minute they are in sight, and rightly so, as there is a thin line between profit and loss. Hence, they will not wait for Mumbai to realize its potential, rather just move on to the next best option.

Whether it is the work culture, the organizational hierarchy or the industrial illiteracy that is causing this reversal of fortune is yet to be determined and fixed. Promises are still being made as we discuss this, but the infrastructure is not even in place to try to keep them. For an industry that can create jobs, provide a solid financial influx, the transportation ministry of India needs to reevaluate their position on the situation and understand its gravity. That would be job one.


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