INDEPENDENCE DAY SPECIAL PRIVATE SECTOR

Not to be outdone IndiGo Airlines, the domestic market leader with a commanding 63.2 per cent market share in June 2023, placed a whopping order for 500 Airbus airliners – the largest order in the history of commercial aviation. And it cannily chose the high-profile Paris Air Show to do so. Against a fleet of 317 aircraft, IndiGo now has almost 1,000 jets on order.

The carrier in third place, Akasa Air, is following a meteoric trajectory. Having commenced commercial operations as recently as August 7, 2022, it raced ahead of SpiceJet and grabbed 4.9 per cent market share in June 2023. It will hit the magic figure of 20 aircraft by its first birthday, qualifying it to launch overseas operations. This is the fastest any airline has grown, both in terms of market share and fleet size, since Indian aviation was opened up to the private sector. Akasa has another 55 jets on order.

Domestic aviation is dominated by the LCCs that now control as much as 80 per cent of the market. That is all to the good. But the airline industry is fast becoming a duopoly with IndiGo and the Air India group cornering nearly 90 per cent of passenger traffic. And that is not good news because, whenever just two entities control the market, consumers rarely get competitive prices. The woes of LCC Go First have also highlighted the plight of small operators who are struggling to compete against the bigger ones. And LCC SpiceJet too is under severe pressure from lessors over unpaid dues.

Private Industry To The Fore

Be that as it may, commercial aircraft numbers are bound to surge. With government and private airport developers planning to infuse almost `75,000 crore over the next 8-10 years, airport infrastructure also seems likely to keep pace albeit with some lag. Next is the turn of manufacturing. And almost every global aerospace major already has a significant technological presence in India, lured by the availability of inexpensive yet quality talent in aeronautical engineering as well as in software, simulation and electronics.

In 2014, the government introduced several measures under the ‘Make in India’ initiative that signified a determined shift away from a reliance on imports. The aim was to establish India as a force in the aerospace and defence manufacturing industry. The Aatmanirbhar Bharat Abhiyan mission launched in 2020 had aerospace exports as a focus area. India aims to achieve a turnover of $25 billion from aerospace and defence goods and services by 2025, with exports accounting for $5 billion, or roughly `41,000 crore. Although the figure of almost `16,000 crore aerospace and defence exports achieved in FY23 was an all-time high, there is still a long way to go to meet the 2025 target. And there is no way the target can be achieved without massive participation by private industry.

TASL’S TURN

Tata Advanced Systems Ltd (TASL) is now gearing up to become the first private company to build a military aircraft in India. Till now all military aircraft have been manufactured only by state-owned Hindustan Aeronautics Limited (HAL), so this will be a giant leap for private industry. Set up in 2007, TASL has not had a free run. Back then all government contracts for defence projects went almost automatically to public sector units (PSUs).

‘Make in India’ was unknown. Besides the Tata Group had no experience of defence or aerospace engineering. However, within two years, TASL struck a deal with Sikorsky Aircraft to make aerospace components in India, followed by another long-term contract to assemble Sikorsky S-92 helicopter cabins. Over the years TASL also entered into significant contracts with Lockheed Martin, Boeing, Airbus and Rolls-Royce.

In September 2021, India signed a long-awaited `21,935 crore deal with Airbus Defence and Space to procure 56 C295 new-generation tactical airlifters to replace the Indian Air Force’s (IAF) ageing Avro HS 748 planes, which entered service in the early 1960s. Airbus will sell 16 C295 twin-engine, turboprop aircraft in fly-away condition between September 2023 and August 2025. The remaining 40 aircraft will be manufactured and assembled by TASL at its new facility in Vadodara, Gujarat. The first made in India C295 is scheduled to emerge in September 2026 and all 40 aircraft by August 2031. By then, the IAF will become the largest C295 operator in the world.

TASL and its subcontractors will manufacture over 13,400 detail parts, 4,600 sub-assemblies and all the seven major component assemblies of the C295 along with tools, jigs and testers. Also, 96 per cent of the total man-hour work per aircraft that Airbus employs at its manufacturing facility in Seville, Spain, will be undertaken by TASL. Thereafter, TASL will provide complete MRO (maintenance, repair and overhaul) support and service to the IAF, which creates another channel for future revenues. It is also likely that another 15 C295 aircraft will be acquired later – nine for the Indian Navy and six for Coast Guard. Exports too are eminently possible. Further into the future, the IAF’s An-32 transport fleet will be up for replacement in the early 2030s and the C295 could be a strong contender. Therefore, the importance of the Airbus C295 project for India’s private aerospace manufacturing sector cannot be overemphasised.

In March 2023, Lockheed Martin and the Tata Group inked a contract to build fighter jet wings at their joint venture in Hyderabad – Tata Lockheed Martin Aerostructures Ltd (TLMAL). TASL also aims to make India truly self-reliant in the defence aerospace sector by working on other core technologies routinely denied to the country by foreign vendors.

Best Of The Rest

TASL may be in the limelight today but it is by no means the only company destined for a bright future. Below is just a small sample of scores of private companies that are showing the way in defence and aerospace manufacturing and are poised to capitalise on the sector’s huge potential.

• Bharat Forge is a leading multinational company that specialises in the manufacture of high-quality metal products. It is a trusted partner of several leading aerospace and defence companies worldwide.

• Larsen & Toubro has a portfolio of aerospace and defence products that includes electronic warfare systems, advanced radar systems, aerospace structures, and missile launchers.

• Godrej Aerospace is in talks to build aircraft parts for suppliers to Airbus. It expects its civil aviation business to be as much as 50 per cent of its total revenues next year. It also