This year, India’s airlines heaved a sigh of relief as jet fuel prices continued to be benign due to global softening of crude and domestic air traffic grew in healthy double digits. These twin factors helped airlines recoup some of their historical operational losses besides helping them get more bums on seats.
But the relief, though welcome, would likely be quite inadequate to keep the airlines smiling in the coming months as the much-needed policy and fiscal incentives continue to elude them.
Let me throw in some numbers here to illustrate how external factors, but not the Indian government, are helping in reducing airlines’ losses. Industry losses are expected to be $500-550 million for the year ending March 2016, which means a daily loss of close to $1.4 million by all the airlines combined. These are estimates by global aviation consultancy CAPA and are lower than the same agency’s estimates of $680-750 million made earlier in 2015.
India is poised to become the world’s third largest aviation market in about a decade and perhaps it will attain this milestone despite little help from the mandarins in Rajiv Gandhi Bhawan, the nerve centre of aviation policy making in Lutyens’ Delhi. But how will a large aviation market sustain itself if majority of the players in it continue to bleed, either due to legacy issues (which is a major factor in state-owned Air India’s continued bleeding) or due to lack of fiscal incentives?
28/12/15 Sindhu Bhattacharya/First Post
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But the relief, though welcome, would likely be quite inadequate to keep the airlines smiling in the coming months as the much-needed policy and fiscal incentives continue to elude them.
Let me throw in some numbers here to illustrate how external factors, but not the Indian government, are helping in reducing airlines’ losses. Industry losses are expected to be $500-550 million for the year ending March 2016, which means a daily loss of close to $1.4 million by all the airlines combined. These are estimates by global aviation consultancy CAPA and are lower than the same agency’s estimates of $680-750 million made earlier in 2015.
India is poised to become the world’s third largest aviation market in about a decade and perhaps it will attain this milestone despite little help from the mandarins in Rajiv Gandhi Bhawan, the nerve centre of aviation policy making in Lutyens’ Delhi. But how will a large aviation market sustain itself if majority of the players in it continue to bleed, either due to legacy issues (which is a major factor in state-owned Air India’s continued bleeding) or due to lack of fiscal incentives?
28/12/15 Sindhu Bhattacharya/First Post
