Aeroplane Manufacturing in India, the Flight Not Taken Yet

Aeroplane manufacturing in India is still in the cradle stage. Despite India being the third-largest aviation market, indigenous aeroplane manufacturing has not yet begun. India has scientists, engineers, and technocrats that have made the most complex space programs possible. They have engineered construction in the toughest of terrains, and have emerged as world saviour by providing low-cost coronavirus vaccine. Yet, there is no trace of an aeroplane factory in India. Why is it so?

India is the third-largest aviation market in the world. Still, indigenous aeroplane manufacturing is virtually absent. Jet engine systems share remarkable similarities to power plant gas turbines. Despite this striking similarity and available talent, why is India not producing aeroplanes? India does not seem keen to take the road to aeroplane manufacturing.

Aeroplane manufacturing

Why is Aeroplane manufacturing virtually absent in India?

Richard Collins once wrote in Flying Magazine many years ago that the cost of certifying an aircraft is so high that the only way to do it profitably is:

  1. Design and develop the aircraft
  2. Certify it
  3. Immediately declare bankruptcy
  4. Then with the debts written off, if at all the company emerges back from the ashes, it can produce a profitable product unburdened by R&D and certification expenses.

It might sound funny but is nowhere near an exaggerated claim.

Aeroplane

India does not have a dearth of available talent or resources. It has the best scientific brains which have proved their mettle in almost every emerging field. India has launched low-cost satellites not only for itself but for other countries as well. India is pioneering the development of covid vaccine production for the world. India has set to put its foot on the moon with a negligible cost as compared to NASA’s spending on such missions. The list is quite long. Yet, India imports all its commercial aeroplanes. Let us analyse, why.

The entry barrier in airplane manufacturing business

Two of the world’s leading plane makers – Boeing and Airbus – command 99% of the market space. With their strong government lobbying network and vast resources, they easily crush any new entrant trying to enter the aeroplane production space. Boeing got initial government thrust during WWII and has now grown into a megalomaniac. Airbus took birth in the 1970s with the combined support of France, Germany, and the UK. Given the enormous development cost of nearly $ 40 billion, it is not easy for any new player to rise against the tide. Today, both Boeing and Airbus have patented enough aviation technology, that just the licensing costs will crush the plane even before it starts flying.

The market economics

Other than the entry barrier, it is not wise to put in such an enormous investment for trivial returns. Indian airline companies today operate about 600 commercial aeroplanes combined. It is not a sufficient demand to justify the heavy investment that goes into aeroplane production. The cost of production for any new player comes at least about $40 billion with the R&D and certification costs factored. The price at which Indigo purchases a plane is about $0.1 billion. There is no merit in waiting for 10-15 years for this enormous investment to breakeven, the possibility of which remains bleak. Commercial markets, unlike defence manufacturing, have cut-throat competition. If you don’t keep innovating, you will be left out to dry. Besides, the associated risks are very high. Airline crashes are not easily forgotten and invite years of litigations and investigations. This enormous risk, a large investment business with paper-thin profit margins nowhere present a good deal. It is wise for any sane investor to stay away from this risky venture. There is no benefit in even government funding of such fruitless projects. It would only add to the debts and overburden the taxpayers.

The sorry situation of aircraft manufacturing companies

Airbus launched the A380 as the largest and most spacious passenger aircraft of the world. Its luxury earned it the name of ‘hotel in the sky’. The target was to sell 700 of A380s to generate some return or break even. In the 12 years of operations, Airbus could hardly sell not even 300 of these. Other than the Emirates, none of the airlines could afford the extravaganza of A380. Even the Emirates cancelled its orders later. With no more buyers, Airbus had no option but to shut its A380 production and finally it was to withdraw them from service. The huge investment of $25 billion and subsequent subsidies by French and German government could not keep the aircraft afloat. All these efforts went in the drain. When such is the condition of aeroplane producing behemoths, why would a new entrant dare to enter the territory?

The US, being a large country geographically, has an aviation culture. The airlines there operate around 6000 commercial aircraft, more than 10 times the number for India. Yet, even the major aeronautics companies there are shutting operations given the presence of Boeing. Just for a startling reference, have a look at the Wikipedia page here.

Boeing is sitting on the ashes of more than 300 companies listed here on this page.

The bloody hands of aeroplane manufacturing behemoths

The International aviation guidelines are tweaked to keep the duopoly of Boeing and Airbus alive. The aviation market is operated like a cartel closing its doors for all outsiders or new entrants. With the support of the US and European Union on the two companies respectively, the safety standards and guidelines are at the whims and fancy of the cartel.

For instance, the Canadian aeroplane manufacturer, Bombardier was slapped with an import duty of 300% by the US government when it came up with its fleet of small aeroplanes. Similarly, the Brazilian company, Embraer met a similar fate. It is still awaiting approval by FAA despite a clean record of 7 years of flying and 250 pre-orders. On the other hand, Boeing 737 Max, despite being responsible for two fatal crashes is back in the air.

The Ethiopian Airlines Flight 302 in March 2019 was an eye-opener for the world. It was the second crash in less than a year involving the Boeing 737 Max. Both crashes were a result of flawed flight control software and heavy negligence on part of the company as well as the regulators. It showed the bloody hands of the company and how it prioritized financial gains over safety. The lawsuits were silenced with the power of money and safety documents were kept hidden with the support of the federal government. Each of the families of those killed received $1.2 million to settle the lawsuit. The families still seek answers as to how did the aircraft get clearance to fly again!

India still rules the market, without large-scale manufacturing capability

India has the third-largest aviation market in the world. Indigo is the biggest buyer of Airbus A320neo jets. Despite the Covid pandemic, Indigo continued to expand its fleet size. This happened when the world’s biggest long-haul carriers like Emirates and Qatar Airways have deferred their orders. Which company can afford to let go of such a valuable customer? The market is ruled by the buyer, not the seller. Indigo keeps Airbus on its knees by controlling the prices and terms of delivery. Last year, Indigo placed an order for 430 A320neo jets in one go! Airbus was not even able to meet the demand and was reprimanded by Indigo for delayed deliveries.

To meet the demand of smaller aircraft for regional routes under UDAN, India does have the domestic capability. The government-run, Hindustan Aeronautics Ltd (HAL) has received DGCA clearance last year to manufacture HAL Do-228 to produce civil aircraft for UDAN.

Amol Yadav- the pilot trying to build his very own Yadav’s thrust aircraft

It is not that the dream of the aeroplane factory in India has not been fancied before. But the dream comes out to be very costly sometimes. A passionate pilot, Amol Yadav risked his and his family’s entire savings and mortgaged his mother’s wedding jewelry to build an aircraft on his own. It took him 7 years of toiling alone to give wings to his dream. He started building his dream aeroplane on his rooftop itself. With his grit and determination, he crossed all bureaucratic hurdles to come up with an aeroplane factory in Palghar spread over 157 acres of land. Scepticism still looms over the international aviation body guidelines for further clearance. The reasons we all know now. What looks scarier is the possibility that the debts he incurred, the money that has gone in, might never be recovered.

Aeroplane manufacturing is one such dream, that can be followed for passion and not for revenue generation. All dreams are not necessarily commercially viable.

Also Read: India Based Jet Airways Rises Smartly From Ruins

In want of indigenous Aeroplane manufacturing, what is India missing on?

Be it the market for Indian passenger aircraft development, or the huge demand of the defense sector, both are gravely under-tapped. The disadvantages of this import dependency are huge. India cannot form an independent foreign policy of its own. The dependency on foreign technology at the heart of its air force keeps it at a backward footing. Besides, the ever-rising import bill in dollar terms is another thing to deal with. 

To start with, India can claim the untapped market of small passenger planes. These can be extensively used in our domestic market itself given the impetus to short-haul flights through UDAN. With a little push from the government, this goldmine that we are sitting on can be easily put to use. We do have the resources, we do have the talent. 

Also Read: Airbus or Boeing: Whosoever Delivers early, wins Spicejet’s Order

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