India aviation reform hopes fly high as air show lands big names

Aviation executives land in Hyderabad for India's biennial air show this week with hopes high of reforms to attract investors as the country's two big airlines battle headwinds.

Although aviation is booming in India, its biggest airline IndiGo is only just recovering from massive disruptions in December, while rival Air India still faces intense scrutiny following a plane crash in June which killed 260 people.

Prime Minister Narendra Modi wants to position India as an aviation hub and "Wings India 2026" will host participants from domestic and foreign airlines, airports, Boeing BA.N and Airbus AIR.PA and air taxi companies.

Analysts and industry executives will be looking for signals from government officials at the show on how India plans to ease airspace congestion in major cities, boost manpower at the aviation regulator to improve oversight and simplify tax rules.

"Further reforms in the civil aviation sector are needed, such as around aircraft leasing, and regulatory clarity in tax matters," said Ajay Kumar, Managing Partner at KLA Legal.

Foreign airlines have long sought greater access to India, arguing that seat caps under bilateral air service agreements limit growth in the world's fastest-growing market.

Meanwhile, aircraft lessors have been saying a draft law on jet repossession is complicated as it requires them to first clear airline taxes and salaries before reclaiming their aircraft from distressed airlines.

IndiGo and Air India have both placed record orders for new aircraft, but faced delivery delays as planemakers Airbus and Boeing both battle supply chain disruptions.

INDIAN AVIATION MINISTER ON DAY ONE

Russia's United Aircraft Corporation and Dassault Aviation AM.PA will take part, the government in New Delhi said on Monday, while Brazil's Embraer EMBJ3.SA will showcase its E2 family of regional aircraft.

Indian billionaire Gautam Adani's group and Embraer on Tuesday announced a tie-up to set up a regional transport aircraft venture in India.

India's aviation minister Ram Mohan Naidu is expected to address hundreds of delegates on Wednesday, the first day of the show, while the CEOs of Etihad Airways, Thai Airways THAI.BK, IndiGo INGL.NS and Air India are also due to speak.

IndiGo is under scrutiny after a spate of mass cancellations in December due to pilot shortages. India's aviation watchdog this month fined it $2.45 million - or 0.31% of its last year's profit, and issued warnings to senior executives.

Air India, owned by Tata Group and Singapore Airlines SIAL.SI, has cut some profitable routes due to an airspace ban imposed by Pakistan on Indian carriers over diplomatic tensions.

The airline is lobbying New Delhi to convince China to let it use a sensitive military airspace zone to shorten routes.

-Abhijith Ganapavaram/Reuters