Air India deal, a huge boost for the aviation sector, say experts

The ripple effects of the 470-aircraft order placed by Air India will be felt across the aviation sector in the form of a boost in employment, opened up avenues for manufacturing and an uplift for the maintenance, repair and operations (MRO) segment, along with a possibility of driving more investments, said industry watchers.

“The Air India deal will give a significant boost to the aviation sector with both direct and indirect investments and corresponding employment kicking in. The general rule of thumb for indirect investments will be four times the direct investments,” said Jagannarayan Padmanabhan, Director, Crisil.

Doubling jobs

While US President Joe Biden has said the deal will create up to 1 million jobs across 44 States, closer home, HR industry players said there could be an uptick of 15-20 per cent in employment over the short term and job creation within the sector could double by the time the order is completed. People in the know have said the aircraft deliveries could be completed by 2030.

Ajoy Thomas, VP and Business Head at TeamLease Services, said prior to the announcement of the order, the company’s projections on talent acquisition was up to 8-10 per cent but “there could be an increase of 20 per cent in the next two quarters.”

The demand for both tech and non-tech candidates will grow manifold, including pilots, flight attendants, aerospace engineers, aircraft maintenance engineers, flight engineers and more. In addition, the expansion of the aviation sector will contribute to India’s tourism industry, creating jobs. Increasing airports, aircraft and other infrastructure could boost domestic and international travel, creating hospitality and tourism-related jobs.

During the virtual conference on Tuesday, Prime Minister Narendra Modi had said India can become an MRO hub for the entire region.

‘Positive impact’

Bharat Malkani, President, MRO Association of India, and Chairman, Max Aerospace, said Air India’s order book will have a “positive impact” on the MRO market size in India.

Compared to global standards, in which MRO of an airline accounts for approximately 15 per cent of their revenue, Indian carriers today spend closer to 18-20 per cent of their revenues on MRO, he said. “This is largely due to the high level of import volume of MRO. The ability of Indian MROs to develop further capabilities to support these aircraft and reduce imports will depend on the negotiations of the contracts for technology transfers by Air India with the OEMs accompanying this order. Regardless, Indian MROs stand to benefit from the order both directly and indirectly,” he added.