Fragile wings, cloudy skies
To the uninitiated observer, the recent announcement of India’s civil aviation regulator that domestic airlines had registered growth of 2.62 percent in the first five months of 2019 in comparison to 2018 may suggest cloudless skies. The reality though is that India’s aviation sector is a bird flying with at least one damaged wing. The causes are many and include bad policy, slipshod regulation and slippery entrepreneurs. Sadly now, many of these ills are coming home to roost.
This week, the promoter of the now-grounded Jet Airways, Naresh Goyal, was asked by the Delhi High Court to deposit Rs 18,000 crore ($2.63 billion) that the airline owes to banks and others if he wanted to travel out of India—the final humiliation for a man who had once soared majestically over the world’s skies.
In April, the airline ceased operations after 26 years, and three months later there is little hope its creditors will ever get paid.
Goyal and his wife wanted to travel via Dubai to London, where another former airline owner, Vijay Mallya of Kingfisher that ceased operations in 2012, is a fugitive from justice, having fled Indian shores in 2014 after his airline failed to pay banks, other lenders and staff.
While Indian authorities have been battling the legal system in the United Kingdom to bring Mallya back to face his creditors and the law, he has managed to stave off these efforts for the entire five years of Narendra Modi’s first term as prime minister and now a couple of months into the second.
Last month, Modi’s government, in its first budget after reelection, announced it would fast-track plans to disinvest shares in the national carrier, Air India, which carries a debt of Rs 58,000 crore (nearly $8 billion) and has been kept afloat for years with taxpayer money. An earlier effort to disinvest met a farcical end when not a single bidder came forward to take over the chronically troubled airline, which has been all but driven into the ground by its owner.
India’s largest carrier, Indigo, which in April had a dominant market share of 49.1 percent, is plagued by internal troubles, with its two promoters battling each other over a host of issues, including acquisitions. It has also seen reduced profits. Another private airline, Spicejet, which had changed hands a few years ago, was reacquired by the original promoter in 2015 after it had run up huge losses.
In many ways, the plight of Air India and the demise of Jet Airways and Kingfisher Airlines are emblematic of India’s aviation woes.
Until Indian skies were opened to the private sector in the early 1990s, the two state-run airlines, Air India and Indian Airlines, ruled the roost. One operated on international sectors, the other had a monopoly on domestic routes. Both were inefficient, overstaffed and badly run. Both survived only because the government picked up the tab.
While the two carriers were already wounded by the time Manmohan Singh became prime minister in 2004, the first five years of his rule proved catastrophic. In an ill-conceived image makeover exercise, Indian Airlines was renamed Indian. Even before the paint of the new logo had dried on aircraft, Indian was merged with Air India and ceased to exist. Large numbers of new planes were ordered and costs mounted.
India’s domestic aviation story is one of sharp paradoxes. The sector has grown at about 16 percent annually in the past decade, from carrying 14 million passengers in 2010-11 to nearly 140 million in 2018. Yet, the Centre for Asia Pacific Aviation predicts consolidated industry losses of between $430 million and $460 million this year.
As if dodgy promoters weren’t bad enough, the sector bears the burden of other pressures, some common to the industry globally but many that are quintessentially Indian. These include an official edict to ensure regional connectivity at uneconomical rates and the high cost (in comparison to airports in the region) of Aviation Turbine Fuel, inflated by taxes levied both by the Centre and state governments.
Someone wise once said, “Flying starts from the ground. The more grounded you are, the higher you fly.”
That’s a thought Indian civil aviation would do well to embrace.
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This article is part of a new series of the Asian Editors Circle, a weekly commentary by editors from the Asia News Network (ANN) published by members of the regional media group. The ANN is an alliance of 24 news media titles across the region.
