India is swiftly expanding its global presence as an aviation and defence engineering hub. The country is now considered the third largest domestic civil aviation market in the world. It is expected that by the year 2024, India will overtake the UK to become the third-largest air passenger market. But there are many factors which are proving to be major hurdles in this regard. Exorbitant costs and low returns, recurring technical snags have placed the Indian aviation industry in a very uncertain position. The most palpable sign of it is the closure of business by Jet Airways, once India’s biggest airline by passengers and second-largest for several years. Jet Airways, which closed its operations, has INR 15,000 cr outstanding dues. This is no unprecedented event; even Air India has debt repayment worth INR 9000 cr. Go Air has landed at least 10 to 48 planes due to lack of network to fly them. Also, SpiceJet and IndiGo aircraft have maintenance issues.
One of the most important reasons why the aviation industry is struggling is due to the high jet fuel prices. Jet fuel prices constitute about 40% of costs for an Indian carrier and are taxed higher than anywhere else in the world. Aviation turbine fuel has increased by 9% between January and March-end. On top of this low-ticket pricing combined In India’s price-sensitive market had led airlines into deep losses and will continue to hamper the growth of the airline industry.
Airlines in India have been making futile appeals to the government for a reduction in taxes on fuel. Due to this, the jet fuel is 35-40% more expensive in India than in the rest of the world. If the price of jet fuel reduces, airlines will be able to earn profit even at current revenue levels. The government should come to the rescue of the airline industry to bring them out of this difficult situation by relaxing the complicated regulations like RDG. The present form of RDG increases the cost and creates inefficiencies.
The current strength of pilots in India is 7,963. In the coming years, India has to hire 17,164 more. It is predicted that due to new orders for planes, there will be shortfall in commander pilots, a part of which will be filled by more expensive non-native pilots which will lead to a rise in the wage bill. Indigo in February announced to cut 30 daily flights from its schedule due to shortage of crew. Because of this Indigo is hiring 100 non-native commanders. The foreboding for the future is that losses will continue to grow while debts will keep on piling up. India’s carriers, afflicted with long-standing issues and persistent problems is staring at a grim future unless the government addresses these issues plaguing the airline industry.