The aviation fraternity is in a buoyant mood. The ministry is looking at vast spends in aviation infrastructure, private airliners are hiring resources: human and aircraft, aeronautical firms are happily making frequent trips to the Rajiv Gandhi Bhawan, where the ministry of civil aviation is located - expecting brisk business and Indian air travellers are beginning to expect world-class travel services.

Two recent decisions explain the upbeat mood. First is the government's decision to allow private airlines to ply on international routes. Airlines with a fleet strength of at least 20 aircraft with five years of flying experience can now fly overseas. Currently, all domestic airlines are allowed to fly only to the SAARC countries, a facility granted recently.

Second, the final go ahead from the cabinet committee on infrastructure headed by prime minister Manmohan Singh, for the modernisation of all 80 airports in the country. The modernisation process would involve an estimated expenditure of Rs40,000 crore, and bring spin-off benefits to several sectors ranging from tourism to infrastructure related manufacturing activities.

Private airlines on international routes
The five-year experience clause for private domestic airlines effectively includes only Jet Airways and Air Sahara. That leaves the ambitious upstart Air Deccan and the promising Kingfisher out in the cold.

The Gulf region has been reserved for state-run carriers Air India and Indian Airlines for the next three years, shutting out Jet and Sahara from the region. This is because these government carriers make their profits mainly from these routes.

Barring this caveat for the Gulf region, private domestic airlines can now have the freedom to choose the frequency of their flights and would have vast avenues as Air India's fleet inadequacy forced India to utilise only 20 per cent of its bilateral landing rights with over100 countries. Foreign airlines capitalised on this internal inadequacy of India's national carrier, which allowed foreign airlines to use its unutilised quota for a premium.

The guidelines are still in its nascent stage, and the government is still grappling with it. But Jet Airways and Sahara Airlines, eager to fly to popular destinations like Australia, China, London and New York instead of the current SAARC countries, have already approached the ministry for allotment of air rights. India's international air traffic is expected to grow over 25 per cent year on year for the next few years.

Modernisation of airports
Airport modernisation, kicked off about a year ago, is finally finding the ground beneath its feet. The statutory regulator for the sector, according tot Planning Commission deputy chairman Montek Singh Ahluwalia, is expected to be in place soon and the funds - Rs40,000 crore approximately - will be raised through public-private participation.

The modernisation of airports at Mumbai and New Delhi would be the first to take off. The government expects to finalise the bid documents by end January 2005. Bidders will be asked to submit technical and financial bids once the documents are finalised. According to some estimates, the investment required for modernising each of the two airports would cost anywhere between Rs5, 000 and Rs10,000 crore.

Low cost air travel in India is also spreading its wings. Regional travel has seen increased air traffic. Air Deccan is now in the process of acquiring larger aircraft for its long-haul routes, while Vijay Mallaya's Kingfisher Air, yet to start operations, has booked the wide-bodied Airbus.

The airline industry's buoyancy over the recent policy decisions to allow private airlines to ply international routes, airport modernisation, and the popularity of low cost air travel, has created a huge demand for both large and small aircraft.

"There is an increased demand for smaller aircraft. India is the largest market in the Asian region for us. We expect about 25 per cent of demand for our aircraft to come from India," says John Moore, senior vice president, ATR.

Airlines in India are expected to buy some 200 new aircraft in the next 12 months. Latest reports even suggest the possibility of a strong manufacturing base being developed in India owing to the collaboration between ATR and HAL in the southern parts of the country.

According to a Centre for Asia Pacific Aviation (CAPA) forecast, total air traffic in India will rise by 5 million passengers each year over the next 10 years. India's domestic air passenger market is expected grow over 30 per cent this calendar year, to around 23 million passengers. CAPA estimates the aviation sector alone to absorb $55billion of project financing over the next 10 years. Looks like the industry has finally developed the traction for taking off.