The Indian aviation market growth will cause new challenges in MRO supply chain
Jan 25th, 2012
In the upcoming twenty years the number of middle class citizens in India that equals the entire population of the Russian Federation will inevitably cause an increase in demand for aviation services in the region. Last year alone more than 55 million people travelled by air within the country’s borders and, according to Locatory.com experts, the expected growth in the overall number of middle class citizens should bring the figures up by 18% in the next several years. In 2022 the number of air travellers in India will triple and reach 360 million. According to the standards established by the World Bank Group, India is a home country to 400 million poor people who make up a third of the entire poor people population worldwide. They will continue to provide cheap labour in the country which spells countless opportunities for both local and international aviation companies in the region.
According to the latest Boeing forecasts, by 2030 the global fleet of commercial aircraft shall increase to 33 thousand, a third of which will be based in the Asian-Pacific region. One of the key reasons for such a rapid growth in the region is an increase in its citizens’ welfare and purchasing power. According to the CCO of Locatory.com Vytautas Vorobjovas, from an economic perspective, the current middle class in India has been recently observed to display an increasing self-reliance and confidence in their abilities.
“People are willing to spend some extra income not only on consumer products and goods but also on travelling, with preference to air transportation. A tangible growth in passenger flows will undoubtedly influence the expansion of aircraft fleet that is expected to increase by 1.5-2 times. Naturally, airlines will be reluctant to let go of their operated aircraft. Therefore, aviation market is to expect an upsurge in the demand for high quality MRO services, aircraft parts and components,” commented V.Vorobjovas.
People are willing to spend some extra income not only on consumer products and goods but also on travelling, with preference to air transportation
Larger aviation market players are seeking ways to embrace the opportunities in the rapidly emerging Asian-Pacific region – Boeing and Airbus have already engaged local partners in manufacturing aircraft parts and components. Contracts with local manufacturers have thus far topped USD 1 billion. However, Locatory.com maintains that the Indian region has a great growth potential aviation-wise too – mainly due to its almost twice cheaper labour force which, compared to other countries, determines significantly lower aircraft maintenance costs. “With that in mind, both local and regional airlines will definitely opt for MRO services in nowhere else but India,” said V.Vorobjovas.
Unfortunately though, the emerging Indian market not only spells new opportunities for the aviation industry but also raises some concerns. Globalization processes accompanied by deregulation in the Indian aviation industry will attract many new market players. Spare parts’ manufacturers, MROs, airlines – it is highly likely that the entire industry ‘food chain’ may cause chaos, mainly due to the amount of services on offer. With regards to the current situation in India, it is hard to foresee whether the country‘s government will be able to control all the new market players. In most cases the situation poses the question – whom to trust and whom not to?
“In today’s fast moving world and the age of information technologies more and more companies put their faith in specialized platforms. These are increasingly used by both – companies with well established traditions and position within the market as well as industry newcomers. A person does not require a phonebook to find a reliable partner or a business contact anymore. With platforms such as Locatory.com that connects aviation market players all around the world, a buyer can locate the right supplier immediately. These are, of course, designed differently than ordinary search engines,” explained V.Vorobjovas. “Locatory.com is a certain aviation hub where buyers and sellers are accompanied by a team of dedicated professionals who control the quality of services offered on the platform and assist the platform users in their communications”.