Indian aviation in the red but gearing for record growth

Calling India 'the most important aviation market in the years to come' Scindia said it is time for India to look at the manufacturing of aerospace products

Indian airlines are projected to record a consolidated loss of $1.6 - $1.8 billion in the next financial year, aviation consultancy CAPA India said on Monday. The full-service carriers are expected to incur a loss of $1.1 to $1.2 billion, while the low-cost carriers can report losses in the range of $0.5-$0.6 billion owing to the high fuel prices and low yields due to significant capacity addition.

According to CAPA India, all Indian airlines have collectively placed orders for 1200 aircraft as of March 2023, with Indigo and Air India topping of the list with 500 and 470 aircraft orders, respectively. Indian airlines are estimated to have a net induction of about 132 planes in the next fiscal, which will take the country’s total fleet to 816 aircraft from 684 in March 2023.

What remains a cause of concern, however, is that over 100 planes (15 per cent of the total fleet) of various Indian carriers are grounded due to supply chain and non-supply chain issues.

Robust demand

Speaking on day one at the three-day CAPA India Aviation Summit 2023, Civil Aviation Minister Jyotiraditya Scindia said the Indian civil aviation sector is seeing sustained robust demand, after making an almost V-shaped recovery from an all-time low during the pandemic.

The soaring passenger traffic, with the latest record being around 4.56 lakh passengers per day, was “not a blip”, rather the demand is robust and the next high season starting in October could break previous records, he projected.

CAPA India forecasted domestic traffic to rise 20 per cent year-on-year to 160 million in 2024, and international traffic to rise by around 22 per cent to 75 million. Over the past six years, India’s domestic passenger traffic has grown at a compound annual growth rate (CAGR) of around 14.5 per cent, while international passenger traffic has increased by a CAGR of around 6.5 per cent. Scindia said the growth potential is even higher as the sector’s penetration is currently at just 4-5 per cent of India’s population base.

Calling India “the most important aviation market in the years to come” the minister said it is time for India to look at the manufacturing of aerospace products.

“Now we do not have enough airplanes to fly our passengers,” Scindia noted, adding that domestic airlines are together projected to have a fleet of around 2,000 planes in the next five to seven years.

Leasing rules changed

He also informed that government has tweaked the airplane leasing program to enable airlines to add more aircraft to meet passenger demand, including more "wet leasing" for domestic and international routes.

According to him, as many as 15 Flying Training Organisations (FTOs) are expected to be set up by first quarter of next fiscal year, taking the total number of FTOs to 50. Consultations are ongoing to amend both the Aircraft Act 1934 and Aircraft Rules 1937 to further improve the ease of doing business, he added.

Air India prunes flights to the US

Air India will reduce the frequency of flights on certain US routes owing to crew shortage issues, its chief Campbell Wilson said on the side-lines of the event. This will be in place for the coming two to three months, he added. Wilson said the airline has 100 pilots for Boeing 777 planes to be released in the next two to three months, along with 1,400 cabin crew currently in training.

SpiceJet to restructure its balance sheet

SpiceJet chief Ajay Singh, in a session, said the airline is significantly restructuring its balance sheet and will aggressively push for fleet expansion. “It is in our DNA. We just refuse to die” he said, adding that the cargo business (SpiceXpress) has helped the airline pay off its liabilities. The airline is expected to add a significant number of dedicated cargo aircraft, he added.

Aloke Singh, CEO, Air India Express revealed that the Air Asia- Air India Express merger is expected to conclude by the end of the next fiscal.

On the other hand, Jet Airways, which was to launch in October 2022, is all set to relaunch soon after the ownership reader is complete. Jet 2.0 is on, it is not going to be a copy-paste, said Sanjiv Kapoor, CEO-Designate, Jet Airways in a session.