Turbulent aviation sector expects policy push

A new airline is waiting in the wings while an old timer is struggling to keep flying as the Indian aviation sector is racing towards a new year. This bittersweet condition is going to be the tagline for the sector in 2015 too.

The start of the new year would be cheerful with Vistara, the joint venture of Tatas and Singapore Airlines', hitting the skies on January 9 when the sector is not on its high with SpiceJet, launched in 2005, facing one of the worst crises.

However, the runway for SpiceJet is not that bumpy as it appears with its first promoter Ajay Singh, who is considered close to ruling BJP, playing the ‘Santa’ by planning to invest in the ailing airline along with some foreign equity investors.

One will have to wait for some more time to see whether Singh return as promoter after the exit of Kalanidhi Maran-led Sun Group from the airline.

Despite its aggressive marketing to fill seats, SpiceJet could not avoid trouble and were forced to take measures like restructuring the fleet and cancelling thousands of flights. It even faced the ignominy of oil companies refusing fuel due to non-payment.

The good news from the passing year is the increase in the number of fliers, who did not lose time in grabbing the numerous discount sales launched by the airlines, especially by SpiceJet.

Between January and November this year, airlines flew 6.09 crore passengers, which is an increase of 51 lakh from the same period in 2013. However, this increase or breather the airlines got due to fall in jet fuel prices did not provide much succour to its account books as the price wars shrunk the margins.

Airlines have recorded a cumulative loss of Rs 9,737.47 crore for 2013-14 and it is unlikely to have a complete reversal this fiscal too.

A report by IATA this year also brought cheers to the sector as it said India would leap forward to become the third biggest aviation market from the current ninth position by 2031 riding on a three-fold increase in the number of passengers at 367 million.

The Civil Aviation Ministry officials say they are trying to make the business easy in the country. They are drafting a new policy and the sector is looking at the government would take up reform measures scrapping a rule that restrict airlines, which have not completed five years of domestic operations and 20 aircraft in its fleet, from foreign operations.

Industry watchers are also keen to see how the authorities fare in overturning the downgrade by the United States’ Federal Aviation Administration (FAA). India expects that the FAA will upgrade it into Category 1 by March but the US agency is in no hurry.

The downgrade has affected the US operations of Air India and Jet Airways as their aircraft had to undergo additional safety checks and stringent scrutiny before entering American airspace. It is to be seen how the sector comes out of the slump in business, as competition is getting stiffer.

Aviation experts feel that the frequent flash sale that was witnessed in 2014 is not the option for them to further their business.

The industry expects a pro-active, pro-business stand from the government. Otherwise, they feel, ‘turbulence’ will remain the key word for the industry for one more year.
DH News Service