Looming Crisis: What Indian Aviation Industry Needs To Do Differently

Currently, Canceled Flights, Dissatisfied Frequent Flyers And Reprimands From The Regulators Have Become The Norm For Indian Airlines Such As Vistara, Air India, Indigo. To Navigate These Challenges, What Does The Sector Need To Do Better?

- SHRABONA GHOSH

Too fast, too soon, the Indian aviation sector post-COVID-19 has sought a tremendous spike. Unfortunately, the airlines were not geared up for this especially the grounding of aircraft in need of spares and engines - this is a worldwide phenomenon and is a result of disruption of the production and manufacturing processes during the pandemic. In its mid-year outlook in 2023, aviation consultancy firm CAPA India predicted that by the end of March 2024 - the Indian aviation industry may see 200 grounded aircraft- a precursor to a larger crisis. This will result in high operating expenses towards the cost of grounding, increase in lease rentals due to additional aircraft being taken on lease to offset the grounded capacity, rising lease rates and lower fuel efficiency (due to replacement with older aircraft taken on spot lease), which will adversely impact an airline's cost structure. However, healthy yields, high passenger load factor (PLF) and partial compensation available from engine OEMS would help absorb the impact to an extent.

Currently, canceled flights, dissatisfied frequent flyers and reprimanding from the regulators have become the norm for Indian airlines. To navigate these challenges, what does the sector need to do differently? Do we tend to look at this industry through the prism of more mature aviation markets and need to take a step back?

EVALUATING THE VISTARA CRISIS

There is uncertainty in the air. The Tata Group stands on the cusp of a major aviation merger consolidating AirIndia, Vistara, AirAsiaIndia and AirIndia Express, this move can either make or break the Tata Groups aviation business. In the last few weeks, Vistara has been under the public ire and its image has been severely battered.

Vistara is in the current situation due to a host of reasons, from rationalization of pilots payment with Air India to poor roastering, the causes are plenty.