IIMB HOSTS INTERNATIONAL CONFERENCE ON THE FUTURE OF AVIATION AND AEROSPACE
Delegates and panellists from 16 countries log in to discuss the need to use the pandemic-induced lull in traffic to collaborate & revitalize the sector with new business models, tech solutions on open source platforms & reforms in regulation
In their opening remarks at the International Conference on the Future of Aviation and Aerospace, hosted in virtual mode by IIM Bangalore’s Office of Executive Education Programmes this morning, a galaxy of eminent speakers including Dr Kota Harinarayana, Former Programme Director and Chief Designer, Tejas, Light Combat Aircraft, Hari K Marar, Managing Director and CEO, BIAL, and Prof. Rishikesha T Krishnan, Director, IIM Bangalore, focused on the silver lining of the pandemic – recovery and growth in the sector in India and opportunities for growth and collaboration.
Professor Rishikesha T Krishnan, Professor of Strategy and Director, IIM Bangalore, said: “I am a long-time student of aviation and have been involved in aviation-related research studies. In 2008, I wrote a case study on the Indian aviation industry which was going through interesting times. Recently, I tried to update that case to 2019. This exercise proved to be sobering – as none of the entrants of the first wave of liberalisation of the sector are no longer in existence. This tells us that the airline industry was, is and continues to be a very challenging industry to operate in. It is only due to the support of many governments, like in the US, that they are able to keep their heads above water. However, it is interesting to see that demand exists in a big way.”
In India, Professor Rishikesha Krishnan pointed out, there has been a gradual recovery in demand post the pandemic. “It is up to the airlines and the industry to find ways to operate sustainably and successfully. Among the bright spots, in India, are the initiatives of the government to connect small towns in different parts of India to big cities. Fractional ownership is a new concept that is also interesting. Safety, by and large, is under control. Challenges include infrastructure, alternate fuel and climate change. In India, there are other aspects like manufacturing. Thanks to government programmes, we are seeing increasing interest in the aircraft manufacturing business. The new defence export policy is also a bright spot,” he added, offering a special word of thanks to Dr Kota Harinarayana, whom he described as “father of the light combat aircraft in India”.
Welcoming the delegates, Professor S Raghunath, Programme Director For the General Management Programme For Aviation and Aerospace, IIM Bangalore, and Conference Chair, talked about how the improvement in cargo revenue will not necessarily make up for the loss in passenger revenue. Given the semi-fixed nature of many airlines costs, there will be a challenge in terms of cash burn and there could be failures among medium and smaller airlines unless the government comes in to bail out their debt for equity.
He said, “We must reinvent the business model focusing on higher resilience and true grit to support parsimony and minimalism and therefore make changes in aircraft fleet composition, promoting regional transportation.” For example, Low-Cost Carriers (LCCs) are recovering faster than full-service carriers due to their reduced exposure to premium traffic, and less reliance on long haul routes and widebody aircraft. There is data that shows that non-metro to metro traffic and metro to non-metro traffic is growing faster than metro to metro traffic for LCCs in India. International demand, in particular, is likely to take some time to recover, which will put downward pressure on capacity. It is an ecosystem impact, including airports facing similar challenges as airlines. “Lesser passenger footfalls will affect the level of retail consumption and therefore revenue generation in all international airports throughout the world,” Professor Raghunath explained.
In their video message, Prof. Stéphanie Lavigne, Dean, TBS, France, and Prof. Digout Jacques, Director of Executive Education and Professor of Digital Marketing, TBS, France, described the significance of Toulouse in France in world aviation history and developing innovation in the sector and listed the offerings of Toulouse Business School that has over 5000 students, 200 faculty and collaborations with prestigious schools across the world. “Delegates of the Aerospace MBA offered with IIMB get to leverage our fantastic locational advantage,” they added.
‘Prepare, Stimulate and Sustain”: BIAL’s Hari Marar
In his keynote address, Hari K Marar, Managing Director and CEO, BIAL, highlighted the exponential pace of change, where the pandemic has added a layer of complexity, in exacerbating challenges in capacity and capability. “We had only been playing catch up as far as capacity was concerned. But the pandemic-induced lull in traffic has given us the opportunity to sit back and take stock, plan and collaborate to revitalize the aviation sector to ensure that we really realize our true potential.”
Focusing on the model of ‘Prepare, Stimulate and Sustain’, Hari Marar spoke of ways to enhance infrastructure, airspace, people and digital capacity. Calling for special financing vehicles to find expansion and special skill centres to get people ready from a talent perspective, he said it was incumbent on developers to keep costs down even during expansion. “Technology is a game changer when it comes to the way people travel,” he observed, adding that schemes like digi-yatra and biometric immigration clearance must be embraced. “Multiple regulatory agencies ion aviation are bottlenecks. The time has come to consolidate and create a single body to avoid working in silos and at cross purposes,” Marar said, adding that preferential rates for aviation should be seen as a necessity to stimulate the sector. Open skies, as a policy, he argued, should be the default arrangement between countries. Appealing to everyone in the ecosystem to embrace the principles of sustainability, he listed the sustainability efforts made at BIAL.
Panel on lessons for the future
The International Virtual Conference of the Future of Aviation and Aerospace 2021 featured five panels, anchored by several C-suite executives from Aviation and Aerospace companies and faculty from IIM Bangalore.
The first panel on ‘COVID and its challenges and lessons for the future’, was chaired by Prof. Christophe Benaroya, Professor of Marketing and Head of Aerospace & Mobility Center of Excellence, TBS, France and featured Amber Dubey, Joint Secretary, Ministry of Civil Aviation, Govt. of India, Dr. Kota Harinarayana, Former Programme Director and Chief Designer, Tejas, Light Combat Aircraft, Chandra Shekhar Y, Sr. Director – Global Sourcing Strategy and Industrial Cooperation, GE Aviation, and Michel Merluzeaum, Director of Market Analysis & Strategy, Commercial Defence Markets, AIR (Air Insight Research).
‘India’s edge, the 90-seater aircraft segment’: Dr Kota Harinarayana
Dr Kota Harinarayana, Padma Shri awardee (2002), preferred to focus on the silver lining of the pandemic – recovery and growth. “IMF has announced that the Indian economy will be growing at over 11 per cent – the highest in the world. The aviation sector in India is sure to benefit from this growth as potential in India is very high. FDI into aviation has been growing. This shows what the world thinks about the aviation sector in India.” Moving on aircraft manufacturing in the country, he listed a few initiatives and said NAL has got permission to design 90-seater aircrafts and by 2026 these aircraft are expected to be operational to connect hilly, small towns and give a fillip to tourism as well. “This is a great opportunity for international collaboration for OEMs,” he observed. On military aviation, he spoke of HAL’s recent large order of 83 Tejas aircraft received from the IAF. “Start-ups in the area of unmanned air vehicles are doing encouraging work in agriculture, defence, etc.”
Describing the effect of the pandemic on the aerospace supply chain, Chandra Shekhar Y, Sr. Director – Global Sourcing Strategy and Industrial Cooperation, GE Aviation, he said that while international traffic is yet to recover, freight traffic had gone up significantly. “In 2018 and 2019, there was a huge order backlog among OEMs. But the pandemic created an excess in inventory. Most OEMs are now rationalizing their supply chains. We can expect to see strong M&A activities and buyouts. Digitalization has affected every arm of the sector. The industry will also face the challenge of handling emissions once we come out of the pandemic. We can expect more hybrid and green technologies in the future,” he explained.
Agreeing with the views of Dr Kota Harinarayana, Amber Dubey, Joint Secretary, Ministry of Civil Aviation, Govt. of India, said the pandemic showed how the Indian aviation and aerospace sector adapted, thrived and created new opportunities for itself. “On the passenger front, non-fliers came into the flying arena with the introduction of low pricing bands. On the cargo side, extremely hardworking, poorly paid and silent people in the airport handled massive cargo during the pandemic. Not one of them complained,” he said, adding that government approvals were also fast-tracked.
Michel Merluzeaum, Director of Market Analysis & Strategy, Commercial Defence Markets, AIR (Air Insight Research), said international market recovery in the sector would reflect only round 2024-25.
The panel moderator, Prof. Christophe Benaroya, Professor of Marketing and Head of Aerospace & Mobility Center of Excellence, TBS, France, said: “We are moving towards a safer, cleaner and more efficient model beyond the major shock of the pandemic.”
Tech solutions for safe travel
Chaired by Satyaki Raghunath, Chief Strategy & Development Officer, BIAL, and comprising Sourav Sinha, CIO, Indigo Airlines, and Maneesh Jaikrishna, Vice President – Indian Subcontinent, Dubai, Eastern & Southern Africa, SITA, the panel focused on stimulating demand in air travel using technology. They agreed that technology strategy, in the cabin and on the ground, would continue to focus on innovation and transformation while airlines would continue to leverage data and tech for operations. “Grow fast and reduce cost is the motto. Contact-less travel initiatives will increase. There will greater emphasis on business process and efficiency. The last mile in employee organizations will be empowered,” said Sourav Sinha, adding that airlines must move from the paradigm of customer satisfaction to one that ensures customer delight.
“There is an increasing pressure on the industry to become environmentally conscious and sustainable,” said Maneesh Jaikrishna, Vice President – Indian Subcontinent, Dubai, Eastern & Southern Africa, SITA , observing that there would be a four-pronged focus on health, safety, cost efficiency and environmental impact. “The pandemic has taught us not to take Nature for granted. Technology now acts as an enabler for responsive and responsible operations and for enhancing customer confidence. It can be enhanced and extended to all aspects of the customer experience as well,” he added.
On how to move from propriety solutions to open source ones that allow for collaborations, the panellists agreed that there is a need to integrate instead of working in silos. “While we may all want to own the customer, what we really need to do is to own the customer experience collaboratively,” said Sourav Sinha.
Chaired by Dr Jitamitra Desai, faculty in the Decision Sciences area at IIM Bangalore, the panel on manpower and skilling, comprising Sajit T, CCHRO, BIAL, and Avinash Kohli, Executive Director – Leadership, Learning and Organizational Capability – Non-US Markets, Boeing, discussed how aviation, as a sector, came to the rescue of persons across the world during the pandemic with repatriation and cargo flights. “It also threw up a unique and special situation that despite digitization, there is still an element of human touch when it comes to ensuring customer confidence,” observed Sajit, adding that BIAL has done its best to prevent job losses, during the pandemic, by using the principles of ‘Adapt, Accept, Advance’. “Employee wellbeing is our focus. All businesses must be far more empathetic. Upskilling is the new normal with regard to talent.”
Avinash Kohli, Executive Director – Leadership, Learning and Organizational Capability – Non-US Markets, Boeing, said though there was a drop in passenger numbers, not many airlines had gone bankrupt, partly due to government support, which went to show that when there is recovery there will be huge demand. “By 2023, we expect see pre-pandemic levels in air passenger traffic, despite the popularity of zoom,” he said, noting that the pandemic has opened up access to talent across the world with the shift to remote working. “Global organizations need not be limited by geographical boundaries any longer.” The way people learn and develop has changed due on-demand learning programs, online. The way people engage in a virtual environment has also changed (“no water cooler conversations and best buddies at work”), so organizations need to rethink programs on collaboration and employee engagement. “Organizations must find the balance between flexibility and engagement without compromising productivity,” he said.
MRO: Opportunities and Challenges
Chaired by Professor G Shainesh, from the Marketing area at IIM Bangalore, the panel included Pierre Dickeli, Senior Vice President, Safran, and Luigi Celmi, CEO, Lufthansa Technik Services India – both experienced India hands. “The stars are aligned for India to leverage opportunities in the defence and civilian aviation space,” said Prof. Shainesh. “In Bangalore, just before COVID, we started our AOG (aircraft on ground) desk to find aircraft composition parts services. We also started a new service to support cargo operations,” said Luigi Celmi of Lufthansa. “It might sound extreme, but airlines worldwide are fighting for survival. If it were not for government support, in the form of loans and investments, we would have found it hard. We are also focusing on change in innovation and efficiency. GST reduction from 18 per cent to 5 per cent, by the Government of India, is a big help. But we couldn’t celebrate because we were grappling with the lockdown! On a more serious note, this signals that the Government of India is serious on boosting this sector,” he opined.
Pierre Dickeli, Senior Vice President, Safran, spoke about MRO in India and Safran’s 60-year story in the country. “Safran has started a manufacturing facility in Hyderabad, in keeping with the ‘Make in India’ strategy. We have nearly 500 engines flying every day over India, so we need an MRO facility here. We have enjoyed superb support from the PMO, the Ministry of Finance, and the Ministry of Civil Aviation in terms of reduction of GST. Rentals in the airport areas have been reduced. Things are changing for the good for MROs in India, which is a growth market.”
Responding to a question on specific areas that support growth in the MRO market in India, both Celmi and Dickeli said India’s civil aviation and military fleets are growing, providing an opportunity for MROs in the country. “The government is showing its willingness to strongly support initiatives to bring technologies and knowhow to India. The ability to repair and manufacture parts in India gives a big push to developing MRO here,” Dickeli said. “Traditional airline hubs – Dubai, Singapore etc – are struggling so there is an opportunity for India. Short-term labour intensive tasks provide an opportunity for India. Unprecedented tax holidays provide the incentive,” Celmi explained.
On MRO opportunities in defence aviation in India, Dickeli said the Make in India process would lead to orders for OEMs possibly growing into MROs in the country.
Responding to a question on the availability of capability in the sector, Celmi and Dickeli said there was no shortage of skilled professionals. “The skills in India are good. They only need a last layer of training and skilling that will come with experience,” Dickeli added.
AI, ML & Big Data
Chaired by Professor S Raghunath, the panel on using AI to enhance operations and customer service comprised Uma Maheshwar D, Chief Consulting Engineer, GE Aviation-India, Dr. Kallappa Pattada, Senior Manager, Boeing Research & Technology, Anshul Gupta, Vice President, Accenture Technology, and Amit Pathak, General Manager, Pratt & Whitney India.
“The last 100 years in aviation was around aerodynamics and propulsion systems. In the next 100 years, we will see disruption through digital,” said Uma Maheshwar. “The aviation industry has been using AI, ML & Big Data over the last few decades to enhance operational efficiency, safety and business profitability. And, to imagine how the industry would have navigated the COVID situation without digital is impossible! Air travel will become more personalized and contact-less, and operations will become more intelligent. The biggest driver for the future is sustainability – aircraft will look different and fuel systems will look different. The future of flight cannot be designed without digital, and Bangalore and India will be at the centre of it all.”
Dr. Kallappa Pattada said, “There hasn’t been a paradigm shift in long-distance civil aviation flights. AI & ML can and will change all this. From design to sales and service, data transforms every process. AI is now used for pilot training and assessment. Though the aviation industry is responsible for less than 2 per cent of greenhouse gases, we have signed up for a lot of things when it comes to emissions, and AI helps us in our commitment to sustainability.” Offering examples of how AI and Big Data was used by Boeing to change the way flights operate during and after the pandemic, he said Boeing is committed to combine AI and SME for best results.
“It’s not all gloom and doom,” declared Anshul Gupta, Lead Travel Industry, Accenture Technology, preferring to focus on opportunities. “There is no dearth of data; several functionalities use it. Data transformed customer experience and loyalty. Data is now transforming business. But there is potential to do plenty more. Gartner says only 1 in 10 organizations are able to get protype models into production because of challenges in data volume, scope and applicability.” Focusing on how players like Changi, JetBlue, Qantas, Transavia and JAL + Airports are making a difference using AI, Anshul said AI can transform more than operations and customer experience. “The ‘more’ that can be done is in the area of sustainability because sustainability is the future,” he added.
Offering the example of the engine lease systems challenge for start-ups launched by Pratt & Whitney, Amit Pathak, General Manager, Pratt & Whitney India, said: “India brings an innovation advantage. In this contest, two of the three finalists were from India and we are working with them to develop solutions.”
IIMB & the aviation connection
“The Executive Education Programmes Office, IIM Bangalore, in partnership with Toulouse Business School, Toulouse, France, has been offering the General Management Programme on Aviation and Aerospace since 2015. As part of this partnership, IIMB and TBS organize the International Conference on Future of Aviation and Aerospace as an annual event to bring together industry experts, researchers and scholars to deepen the understanding of the current state and future of the sector,” said Madan Mohan Raj, Chief Programme Officer, Executive Education Programmes, IIM Bangalore, and Coordinator of the conference.
In the prevailing circumstances, for the health and safety of panellists and delegates, the conference was hosted on a virtual platform this year. Like last year, BIAL is a key sponsor of this conference.