final article For Indian Aerospace and Defence

For Indian Aerospace and Defence
Gravity of Coordination in Aviation at National and International Level
Drastic reduction of fleets, staff cuts, accelerated closure of unprofitable subsidiaries,
adjustments to security measures and sluggish demand. This is what the aviation industry faced
during the COVID-19 crisis. The elements for complex coordination include, Airports,
Airlines, Sky (rather skies!) and the Passenger; all these have complex geopolitical, national &
international, and Operational & Environmental influence.
Geopolitical Pressures - At Global Level
Geopolitical Pressures are political issues between two or more countries that cause tension
and global unrest. This is particularly relevant in present circumstances, where the ongoing
Russian-Ukrainian war is causing inflationary pressure on fuel and cost-of-living prices.
Many airports are concerned about the effect of geopolitical pressures. These issues include
longer flight times (on account of planes having to avoid the Russian-Ukrainian airspace and
therefore fly longer routes) and rising jet fuel prices. Add to this, a cost-of-living crisis –
reducing the disposable income passengers have to purchase plane tickets – and it becomes
clear airports’ means of income and livelihood are threatened by the continuation of the war.
Statistics by the International Air transport Association (IATA) found that jet fuel prices had
risen, up to USD $150 per barrel on 21 March 2023. This was a rise of 39% from the previous
month and 121% year-on-year1. Consequently, airlines must either absorb costs themselves (a
precarious decision since profit margins are already slim) or increase airfares, burdening costs
onto travellers.
This was a tough reality (since 2023) for Asia-Pacific travellers, as it was reported by CNN
Business, that airfares across this region are rising more than other regions and were expected
to surge further beyond 2023. In some cases, they reported that customers are paying twice
what they did four years ago.
Geopolitical pressures were a main topic of discussion at recent conferences. The challenge is
that of economic and geopolitical uncertainty and those that we are currently facing; high
inflation, rising costs, and difficulties in finding qualified workforce.
Further, the ongoing conflict in Israel and Gaza, which has seen airport-based protests, the
increase in aggressive behaviour at airports and in aircraft cabins between travellers with
differing views, and we have since seen stories like that of an American Airlines passenger
being asked to remove his ‘Palestine’ sweater to minimise the potential for offence to be caused
to other passengers. All these factors could be potential major security issues for airports and
airlines.
According to ACI World’s ASQ Global Traveller Survey 2023 globally, 54% of respondents
travelling for leisure and personal reasons reported that economic and geopolitical events have
influenced their travel plans in the past year.
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Airports at Operational Level : With rising inflation, overhead costs, and challenges
recruiting enough personnel, airports are struggling to remain operationally efficient. Some
airports have reported having to shut terminals down to save on costs, or close airport sections
to keep limited staff at more ‘important’ passenger touchpoints. Some airport retail spaces, and
food and beverage outlets remain shut or with limited opening hours due to staff shortages.
Airports were experiencing a shortage of ground handlers, which impeded their operational
efficiency and resulted in an ‘overwork’ on current staff. Industry has seen how “operational
challenges affect consumer’s confidence in airports. Having cancellations and delays knocks
the general confidence of passengers.
Achieving operational efficiency has always been a key focus area for airports, however this
challenge is further compounded by the rising inflation, energy and material costs, workforce
shortages and changing behaviours of passengers, making efficiencies difficult to achieve.
However, ways that airports have been trying to improve operational efficiency include
implementing new emerging technologies such as virtual queuing which allows passengers to
reserve their place in line without physically waiting which reduces congestion, streamlines
check-in and increases efficiency.
Other security-related technologies include automated screening lanes, and next-generation
security scanners which allow passengers to keep their laptops and liquids in their hand
baggage, thereby reducing the time required to unpack belongings and will reduce queues. Selfbaggage
drops afford many efficiencies in that the passenger becomes your unpaid airport
worker because they scan, tag, and check-in their own bag.
The shortage of staff can be tackled by the introduction of artificial intelligence to create
chatbots and virtual assistants, as well as helping with demand prediction and resource
allocation; autonomous vehicles such as self-driving shuttles and baggage carts; and robotics,
which allow staff to focus on more high-value tasks and personalised interactions with
passengers.
A Peep Into the Future - Demand Projections By ICAO, ACI and IATA :
On 14 th Feb. 2023; ACI World has released its flagship World Airport Traffic Forecasts 2023–
2052. The projections indicate that –
• The global passenger traffic is set to reach 9.7 billion by the end of 2024, surpassing
pre-pandemic levels, and suggest a doubling by 2042 and a 2.5-fold increase by 2052.
• By the end of 2024, global passenger traffic is expected to reach 9.7 billion,
surpassing the 2019 level for the first time since the COVID-19 pandemic.
• Global passenger traffic is projected to grow at a compound annual growth rate
(CAGR) of 4.3% from 2023 to 2042 and 3.6% from 2042 to 2052.
• Global passenger numbers are forecasted to approximately double from 2024 to 2042
and to be 2.5 times higher in 2052.
• By 2024, international passenger traffic is forecasted to approach the 4 billion mark,
with domestic passenger traffic reaching 5.7 billion.
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April 2024, the global aviation regulatory body, the International Civil Aviation Organisation
(ICAO), has projected a two per cent increase in passenger traffic in first quarter 2024,
compared to 2019, noting that carriers would maintain profitability. The group noted that
demand this year was expected to rise by 3-4 per cent, reflecting a Compound Annual Growth
Rate (CAGR) of 0.5 per cent since 2019. It has been flagged that the implementation of
ICAO’s post-pandemic guidance was now equally crucial to ensuring the resilience and
sustainability of this recovery; and the goals include decarbonisation by 2050 supported
environmental sustainability, driven by ICAO-led initiatives for cleaner technologies and fuels.
The International Air Transport Association (IATA), the umbrella body for over 300 global
airlines forecast for 2024 paints a promising picture for the aviation industry, with expectations
of record airline revenue reaching $964 billion. This projected revenue signifies a substantial
rebound and resurgence for airlines, reflecting a renewed Vigor and Vitality within the
industry. The anticipation of 4.7 billion passengers flying in 2024, surpassing pre-pandemic
levels, underscores the strength of the projected recovery and the heightened interest in air
travel.
In addition to the positive outlook for airline revenues and passenger numbers, the financial
projections for the aviation industry in 2024 indicate a robust recovery. The predicted net
profits of $25.7 billion, coupled with a 2.7 per cent profit margin, underscore the industry’s
resilience and capacity to navigate the economic challenges. But, factors such as jet fuel prices
and oil costs are expected to influence the industry’s expenses and overall profitability,
highlighting the need for strategic cost management and risk mitigation strategies. Hence the
Caution is; the potential impact of global economic uncertainty and armed conflicts on the
industry’s forecasts underscores the importance of adaptive financial planning and risk
assessment. The recovery trajectory, as such, envisioned for the aviation industry in 2024
encompasses a phased and strategic approach, with domestic travel anticipated to lead the
rebound before international travel gains momentum.
Sustainability and the Passenger Experience :
Sustainability directly influences the passengers’ experience and cannot be underestimated, as
such it is becoming increasingly important to passengers and there have been many prominent
protests from climate activists in recent years, so the spotlight is well and truly on the industry
to change.
World over, consumers are becoming increasingly aware of the impact of their lifestyle choices
and showing more willing in adopting sustainable and eco-friendly routines. According to ACI
World’s ASQ Global Traveller Survey 2023 globally, 72% of travellers expect to see a green
environment at airports and 43% of respondents have heard of sustainable aviation fuels,
showing an increasing awareness and consciousness of the role that airports play in global
carbon emissions and an interest in how they are working with stakeholders to tackle emissions.
Despite this, many airports are not very good at telling their passengers what they are doing in
terms of sustainability and certainly something that airports as a sector must become better at.
Airports are aware of the urgency to decarbonise and sustainability is integral to every airport’s
strategic plan with many aiming to achieve Net Zero emissions; this refers to the aim of
negating the amount of greenhouse gases produced by human activity by reducing emissions
and implementing methods of absorbing carbon dioxide from the atmosphere. The aviation
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sector certainly isn’t alone with this target as many industries today, like retail and the food and
beverage industry, are all looking at ways to exist, sustainability. For airports, working to Net
Zero by the year 2050 means that all operations - airlines, ground handling, terminal - will
reduce greenhouse emissions close to zero, by 2050. The aviation industry has made good
progress to this target. In a report by the Air Transport Action Group, it has been found that:
• Aviation is responsible for 12% of CO2 emissions from all transport’s sources,
unlike 74% of emissions from road transport
• 2.1% of global human-induced CO2 emissions come from aviation
- As of April 2023, there are 14 airports worldwide that regularly use
sustainable aviation fuel (SAF), including Los Angeles, Oakland and
Stockholm
The above statistics demonstrate that the air transport industry is actively working to lessen
the harmful impact it has on the planet, and are looking for suitable replacements to ensure
their longevity.
Some of the ways airports are looking to reduce their carbon emissions include
diversification of intermodal travel and improving access to the airport by sustainable
transport, electrification of fleet vehicles, and transitioning to green energy sources such as
solar and wind power.
Appetite for Travel - Post COVID-19
Despite such a prolonged period of stagnation during the pandemic, there is renewed appetite
for air travel. According to the recent ACI World ASQ 2023 Global Traveller Survey, 56% of
respondents are planning to travel within the next three months compared with 51% the same
time last year. Industry experts have flagged that the domestic passenger numbers are already
surpassing the numbers of passengers that we had in 2019; and the international passengers
will recover earlier than expected, rather than 2025 as previously thought, it will recover in
2024. This means that mid-2024, we will be fully recovered to 2019 numbers. We still have
certain headwinds in front of us, but we are so happy that it is coming back on track. If we want
to double the size of the industry in the next 20 years, with more than 19 billion passengers by
2041. This means we must work on efficiency, digitalisation technology, and investing in the
current and new infrastructure, and it will be crucial for the future.”
Travel Trends – The Summer of Discontent
As said earlier, post COVID-19 passenger numbers surged quicky and suddenly in eagerness
to enjoy the magic of travel; people started giving them different names such as WOW
Factor, The summer of discontent , Revenge traveller”, etc. What was coined as ‘the
summer of discontent’ which saw operational issues at airports due to a shortage of
workforce, which was widely reported in the news, passengers have been concerned about
delays at airports, the reliability of their travel plans and whether their baggage would appear
at the other end. This led to passengers arriving at the airports earlier and taking their baggage
as hand baggage so that they could keep an eye on it. A shortage of staff places further stress
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on airport processes and capacity, leading to disruptions in services and a degraded passenger
experience. It is perhaps not surprising that passengers still experience concerns over the
airport experience with regards to long waiting times and crowded airports.
The value passengers place on experiences is increasing, and materialism is on the downward
trend. The rise in premium product sales, such as airport lounges and premium security, etc. is
a clear indication of it. Other stress-free services for seamless travel shall help in creating
cherishable memories along the way. As such, airports need to move into the experience
industry, and create unexpected experiences and ‘WOW factor’. Consumers buy from and visit
brands and stores that they have an emotional relationship with and going above and beyond
in the travel experience helps cement this emotional relationship with the passenger.
Overall, passengers are evolving at a rapid pace and airports must try and anticipate and stay
ahead of trends and forecasts. They can do this using data and analysing their passengers
constantly in order to monitor their feelings and emotions along the airport journey. Airports
must focus on delivering a superb passenger experience, it is said, if you have 1% increase in
passenger satisfaction, their spending will increase by 1.5%. So, there is a direct correlation
between investing in quality and experience and a positive return on investment and I
personally believe that a Happy Passenger spend more at airports!
‘Sky is the Limit’ is an old proverb:
In aviation parlance, under most situations, coordination is about the conditions under which
aircraft move forward and upward and vice versa; deploying instruments, equipment and
human coordination depending upon the terrain such as regular flying zone, Defence Flying
Zone, or International Flying Zone. This is in addition to the regular technical navigational
requirements. The term military aviation refers to the development and use of military aircraft,
while the term civil aviation refers to all nonmilitary aviation, such as air transportation
provided by airlines or the carrying of cargo by commercial aircraft; but once in the air Aircraft
is Aircraft and both need to respect each other; as one has thrust while other has the Human
Resource on Board. For any Nation, both are important and essential. Coordination is the
function of management which ensures that different departments and groups work in sync.
Therefore, there is unity of action among the people involve in action; be this as groups, and
departments. It also brings in the synergy and harmony of carrying out the different tasks and
activities to achieve the Nation’s Pride and Economy in a more objective manner.
People working under two different domains, i.e., Defence and Civil Organisations need
to provide a unique bridge for “Civil – Defence” cooperation in aviation. Resources in
terms of technical knowhow and expertise for enhancing airspace capacity, flight
efficiency, military mission effectiveness and civil-defence interoperability with reduced
costs in a secure Single Pan-India Sky is essential.
‘Sky is the Limit’ is an old proverb; For aviators, even sky is not the limit! Airspace plays a
vital role in enhancing the aviation of any nation. India is blessed with long and wide Air
Space. Seamless Airspace with befitting surveillance system has its own importance in
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providing real-time information for facilitating the efficient and effective coordination both in
the air and on the ground. Key objective shall remain to support the Nation for Defence and
Civil requirements in aviation. Cooperate with international organisations to improve
network performance by balancing the needs of civil aviation with those of national
security and defence will add value and help in staying up to date with the latest civildefence
developments by following the common stream of communication networks.
One key priority, i.e., flexible use of airspace and airspace management is the spirit of
civil-military collaborative decision-making, allowing airspace users to share the
designated airspace in an efficiently and effectively manner, at all times.
Networks of teams, needs to be developed for tangible solutions for improving strategic,
paratactical and tactical processes concerning health aviation for the country both in terms
of Defence and Civil.
• Establishment of a local, Regional / Sub-regional, and National Airspace
Management Support System is essential.
• Solutions both technical and administrative for civil-military aviation coordination is
essential and all concerned shall have the access to the same.
• Pan-India repository of information supporting civil-military key performance
indicators shall be drawn and effectively shared among all concerned.
• Improved Operational Air Traffic Routes and Rules shall be notified in a befitting
manner.
• Overall Enhanced Harmonization of Civil – Defence at apex level is essential.
• Automation with least human intervention in the era of Artificial Intelligence and
Robotics is possible; as such a road map shall be drawn to meet future challenges.
The Dynamic Flexible Use of Airspace has bee attempted and it is need of the hour to
deploy AI & Robotics to Automate the Process to enhance the benefits that shall aim to
improve network performance and to provide safe, efficient and accurate information
about the flow of traffic. Key Concern areas shall include -
• Introduction of performance-driven operations based on the management of airspace
configurations at network level;
• Continuous sharing of information, in real-time, between all stakeholders.
• Automation shall drive home the benefits such as -
- Increased flight efficiency.
- Reduction distances and time and resultant reduced-fuel burn.
- Improved real-time civil-defence cooperation.
- Reduction in airspace segregation needs.
- Enhanced Air Route Network.
- Overall, increase in the air traffic capacity.
- Overall, reduction in delays in general air traffic, with better information.
- Efficient and Effective ways to separate defence and civil air traffic.
- Enhanced real-time civil-defence coordination at network level.
- It will be possible to temporary control the airspace for discrete operational
requirements.
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Creative Solutions - Airports
Airports are coming up with creative solutions to mitigate greenhouse gases, and this shows
that more airports are submitting to the needs of the hour and realising the urgent need to
eliminate the pollution of harmful gases to retain their licences to operate in the future. Airports
have set an ambitious target of carbon neutrality by 2025 and has started building solar parks
which will produce up to 100% of the electricity that the airport consumes.
Legislation is key in the development of sustainable air travel and ACI World and IATA have
been enforcing net zero legislation, and encouraging airports from across the world to adhere
to it. However, the discussion of Net Zero by 2050 in aviation isn’t a new topic and has been
talked about for many years. Topics that have been gaining traction that airports are taking
more notice of, include, production of green fuels, Green-Financing, Sustainable infrastructure
and ENERports. It is believed that, under ENERports, airports can participate in the energy
transition for the whole aviation ecosystem and can move towards becoming energy hubs or
‘ENERports’ that supply the whole ecosystem that services the airports. As of now, people
know airports as a hub to connect people and airlines, but airports shall also be perceived as
an Energy Hubs that provide sustainable energy for the whole ecosystem and go beyond our
role as just facilitator of air travel.
Creative Solutions - Airlines
Yet another, most upcoming subject under Aviation Lense is the Corporate Social
Responsibility - Green-Financing Corporate social responsibility has become more important
in recent years, and now investors are requiring companies to evidence that they are integrating
sustainable business practices. Green Financing has been defined as ‘any structured financial
activity that’s been created to ensure a better environmental outcome and a more resilient
future.’ It is a ‘sign of the world economy’s accelerating transition away from the fossil fuel
era’. Green financing has entered the mainstream of aviation because there is more demand to
integrate sustainability into business practices and models.
Green-financing is popular in aviation because it rewards borrowers when they achieve ESG
targets. For instance, participating airlines who successfully achieve preventative targets of
carbon output, or increase proportion of efficient technology, can be rewarded with rent abates
or reductions in margins on their financing. This was the case with Dublin Airport Authority
(DAA) who offered low emissions discounts to airlines who operate lower emission aircraft.
The incentives come in the form of a reduction in Dublin Airport’s ultra-low cost aeronautical
charges. DAA will charge airlines who fly high emission aircraft more. Swedish airport
operator Swedavia also introduced environmental emission charges at its largest airports,
Stockholm Arlanda (ARN) and Gothenburg. Corporate social responsibility has become more
important in recent years, and now investors are requiring companies to evidence that they are
integrating sustainable business practice.
Through the innovative use of a revenue management software, Swedavia is able to
automatically calculate charges, using industry emission data sets. This enables Swedavia to
incentivise airlines to switch to sustainable aviation fuel and more efficient aircraft and
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accelerate the transition to more sustainable aviation. Calculations are kept transparent to the
airlines through easy-to-understand invoices.
IATA; introduced the idea of Green-Financing, calling it a “pool of financial resources to help
fund green technology.” This concept has been replicated by other airport groups but yet to
be recognized at global level. Once adopted; this allows the group to incur a ‘green debt’ and
help finance or refinance projects that have a positive environmental impact.
Similarly, in a review by financial service companies, they identified a pressure facing airlines
to decarbonise and expand green-financing budgets. Airlines are looking to create resources
such as:
• Green bonds: a fixed bond used to fund projects of environmental benefit
• Transition bonds: proceeds used to fund a firm’s transition that have a lesser
environmental impact (like transitioning from jet fuel to SAF)
• Sustainability-linked bonds: a fixed bond, where its aims are governed by ESG
objectives.
Airlines are making more of an effort to develop sustainably and are making said developments
more accessible and affordable. Creating green-financing options will help reduce their
inflationary costs while also supporting projects that have a good, environmental benefit and
have supporting projects that have a good, environmental benefit.
Closing Note – The Intent
On a closing note for readers; I have written this article exclusively for the ‘Indian
Aerospace & Defence’ for their upcoming event-based issue. It is purely based upon my
personal research and analysis of the industry, which I have compiled exclusively for the
target audience as a reference material for better understanding of the aviation sector
under current global perspective.
My experience of over three decades in aviation clubbed with interactions with experts
in respective domain areas of aviation, participation as lead speakers at various national
and international conferences have provided a solid understanding of the challenges
being faced by the aviation industry, as well as the opportunities that exist. There are
concerns in aviation, being a global industry, that attract geopolitical pressures;
operational efficiency; net zero targets; post-pandemic recovery and passenger behaviour
issues.
The purpose of this article is to share the concerns on a common platform to keep the
readers and participants informed on these issues and stay abreast of aviation affairs. I
am sure this will also provide us an alternative view on things that are more challenging,
and challenge misconceptions on any issue.
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