THIRUVANANTHAPURAM: For a long time, it was known in trade circles that Kerala was not so investor or industry-friendly like many other states in the country. To some extent, it was true due to various reasons, including geographical and trade-related factors, and its industrial backwardness has always been a subject of debate and discussion until recently. But the state has changed in many fronts and counts. The aviation sector in the state has emerged as one of the fastest growing industries in the country during the past couple of decades.
Out of the seven international airports that registered profit in the country in the last fiscal, three were from Kerala which has the highest number of international airports. And the state is set to add another feather to its cap with the opening of its fourth international airport – Kannur International Airport Ltd (KIAL), by the second week of December. Further, with another international airport in the pipeline at Sabarimala and over half-a-dozen airstrip projects on the anvil, the state is all poised to scale new heights in the aviation trajectory.
But the sector requires projects with far-sighted vision and investment to aid the growth or sustain the momentum especially in the backdrop of the turbulence in the Middle East economy, which is the mainstay of the state. The oil-based economy of the Middle East countries has a major role in fuelling the state’s economy in general and the aviation sector in particular. But this too is being subjected to rapid changes and if the present trends are any indication, domestic pax will overshadow the international pax volume shortly.
Though Kerala has long been a favourite destination of international airlines and the growth of international pax was much higher than the domestic passengers when it was vice-versa in the rest of the country, the state has surpassed the national growth rate of domestic aviation sector, touching a cumulative 25.34 per cent in 2017 against the national average of 23.1 in 2016.
In this backdrop, it will be interesting to look into whether the addition of another international airport will speed up the current growth of the aviation sector or will it hot up the serene skies over Kerala, where the highly competitive airlines explore ways to attract passengers. Although experts are divided over whether it would bring any immediate change, they are unanimous in saying competition is good and customers will be the beneficiaries.
However, it raises questions about whether the new airport will take away a major chunk of passengers from the neighbouring airports such as Calicut and Mangalore.
K Srinivasa Rao, director of Calicut Airport, said the airport authorities are anticipating a drop of 20-30 per cent of passengers in the beginning. “But we are hopeful of retrieving a major chunk of its business with the airport starting the operation of wide-bodied aircraft by the middle of December as Malappuram district, a portion of Palakkad, Kozhikode and Wayanad will be depending on Calicut airport even after the opening of the new airport. Further, the advent of Malabar as a major tourist destination will help the airport regain its supremacy as the major airport in Malabar,” he said.
A senior official with Air India Express said the airline company has conducted a market analysis before announcing around 10 flights to and from KIAL in a week. As per our analysis, there is still job creation in the Middle East market. For instance, around 10-20 travellers of AIE are still first-time visa holders. It means there is still employment generation in the Middle East, hinting that the market will be buoyant at least for the next few years. And it is obvious the priorities of the airlines will be changed if there is any unexpected slide or slump in the Middle East passenger traffic in the long-run, he said.
Further, he said the job prospects are also subject for changes. “If one economy is down, naturally there will be other places which will rise to the occasion cashing in on it. So, from the airline perspective, we do not see any major downfall in our revenue and we will be expanding our network to new horizons in sync with changing marketing dynamics,” he said.
However, VJ Kurien, managing director of Cochin International Airport, said, “The market will soon witness a shift with domestic growth surpassing international pax growth. So, we are getting prepared to stay afloat in the market by introducing better amenities for domestic passengers on par with those for international travellers. In tune with the changing market dynamics, the state government should also bring in more investment in the tourism and allied sectors which is essential for the growth of the aviation sector in a state like Kerala,” he said.
Only tourism can propel a long-term growth in the aviation sector in Kerala now. So, developing the tourism sector on par with international standards is essential along with the developing the hub-and-spoke model aviation network inside the state by setting up airstrips. This will bring in humongous opportunities and ensure steady growth in the state aviation market, he added.
Tapping the market
For tapping the market to the hilt, it is also equally important to take a combination of measures like effecting improvement in infrastructure, improving connectivity and relaxing the flying norms or giving sops for airlines by capitalising on the growth prospects of the sector. A senior bureaucrat in the state government said the state has decided to reduce the state sale tax or VAT levied on jet fuel (ATF) from 28 per cent to one per cent to attract more airline companies. Further, it has directed a private entity to explore the feasibility of holding heli-taxi or small aircraft services from Kasargod, Wayanad and Idukki to neighbouring airports after developing airstrips on PPP mode.
And this will be tried out in other selected places if this experiment yields results. Further, the government is in consultation with various stakeholder to start the Maintenance, Repair and Overhaul (MRO) facility cashing in on the growth of the aviation market. “If we can build state-of-the-art inter-planetary rockets, we should use the magnitude of the MRO opportunities. Further, the state has also asked the Mahindra Aerospace to explore the feasibility of setting up an aircraft manufacturing unit in Kerala,” he said.
He also said the time is not far away when the state will be connected with hub-and-spoke model aviation network as it can’t afford large-scale land acquisition. The state government is also giving thrust to the tourism development in Malabar which will hasten the aviation growth of North Kerala along with bringing in investment in key trade sectors, he said.