Indian aviation industry sees credit deployment at 5-month high in Nov

Gross credit deployment by Indian banks in the aviation sector witnessed a five-month-high in November 2023. The total outstanding credit by 40 scheduled banks was at ₹42,033 crore in June 2023. In November 2023, the total investments in the sector stood at ₹40,449 crore. Overall, CY2023 has witnessed a gradual uptick in investments. Industry analysts peg this credit deployment within the aviation sector, considered a part of the services sector by the RBI, has surpassed the services sector’s average deployment, which grew at 25.4 per cent for the same period.

According to economic research analysts at Bank of Baroda, “almost 49 per cent of the investment intentions are in the services sector, of which, transport services contribute to 94 per cent of the total. This is mainly in the aviation sector, with orders being placed for new aircrafts by some companies.”

After a long time, possibly for the first time since deregulation, India has a stable airline system led by two principal players — IndiGo and Air India Group. The analysts at BoB said that while the investments in general are still in a wait-and-watch mode, there has been an uptick in investments, mainly “dominated by the airlines industry as of the first three quarters”.

• Also read: Expect 12–14% growth in aviation industry for 2024: Crisil’s Padmanabhan

In 2023, three airlines announced aircraft orders, including two massive aircraft orders. While Air India announced the purchase of 470 Airbus and Boeing planes in February, IndiGo ordered 500 A320/321 aircraft in June. The newest kid on the block, Akasa has also placed an order for 76 aircraft. To top that, the DGCA has granted AOCs to 16 firms.

Along with this, Air India has also committed over US$400m to fully refurbish existing widebody aircraft cabin interiors. 

To top that, the Tata-owned has also said that it will invest $200 million in a pilot training facility. OEM Boeing has also announced $100 million investment in India to train pilots that would be needed to fly new planes. The plane manufacturer estimates that over next two decades South Asia would need over 37,000 pilots.

Additionally, in 2023, Delhi, Hyderabad, and Bengaluru airports were expanded to add capacity, while Kolkata and Chennai are getting new terminals. Delhi and Mumbai airports, constrained for capacity, will get new airports in Jewar and Navi Mumbai, respectively, which are likely to become operational by 2024.

According to a recent report by aviation analytics firm Network Thoughts, India’s domestic air passenger traffic hit a record high in 2023, reaching the pre-pandemic peaks. According to the firm, Domestic air traffic in 2023 is estimated at an all-time high of 15.2 crore passengers, beating the previous record of 14.4 crore passengers in 2019. 

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