India’s Finance Minister, Nirmala Sitharaman, presented the Union Budget for the next fiscal year on February 1st. For 2023-24, the budget allocated to the aviation sector has been drastically reduced, primarily due to Air India’s reduced liabilities following its privatisation. However, the allocation for the country’s regional connectivity scheme was increased, and Sitharaman announced the reopening of more airports to improve aviation reach.
India’s aviation budget for the fiscal year 2023-24 has been reduced by more than half to ₹31.1 billion (approximately $380 million). Last year’s budget was ₹106 billion ($1.3 billion).
Similar to the previous year, Air India has played a significant role in the allocation of the overall aviation budget. Air India Asset Holdings Limited (AIAHL), a special purpose vehicle (SPV), received approximately ₹92 billion in 2022 to handle the loans and debts for the financial restructuring of Air India.
This year, the amount for AIAHL was significantly reduced to ₹11.1 billion ($135 million) as Air India was transferred to the Tata Group a year ago and overall liabilities decreased significantly.
The aviation market in India is in a relatively better position at the beginning of 2023 compared to the previous year, when it was reeling from the effects of the Omicron wave of COVID and soaring fuel prices.
The allocation for India’s regional connectivity programme, UDAN, has doubled from the previous year to ₹12.4 billion ($151 million). It was ₹6 billion ($73 million) in 2022.
The finance minister emphasised the significance of expanding the reach of aviation in India and announced the revival of fifty additional airports, heliports, water aerodromes, and advanced landing grounds to improve regional air connectivity.
However, UDAN was not the only segment to receive a budget increase. The Directorate General of Civil Aviation (DGCA), India’s aviation regulator, saw an increase to ₹740 million ($9 million), while the Bureau of Civil Aviation Security (BCAS) saw an increase to ₹3 billion ($37 million).
The announcement of new airports and heliports has been praised by those within the industry. Vinay Dube, founder and chief executive officer of Akasa Air, stated:
“The Union Budget presented by the Hon’ble Finance Minister is growth oriented and will steer India towards holistic development across all pillars. The announcement of 50 additional airports and ramping up of air transport infrastructure is a welcome move and will support the nation’s growing demand for air travel. The focus on promoting domestic tourism will provide impetus to further revival of the sector and aligns with our vision to strengthen India’s transportation system.”
India’s Economic Survey 2022-23 also paints a positive picture of the country’s aviation industry, noting that it has great potential due to rising demand from the middle class, population and tourism growth, higher disposable incomes, favourable demographics, and increased aviation infrastructure penetration.
