Thursday, December 13, 2018

Crisis in Indian aviation

There has been a double-digit growth in the Indian air passenger traffic for the past several years and the country is projected to become the third largest aviation market by 2022 after the US and China. The growth in air traffic has led major aircraft manufacturers such as Boeing and Airbus, global aviation bodies like the International Air Transport Association and the Airports Council International and other agencies, to project heightened demand for aeroplanes, airports and related infrastructure in India. Rating agencies estimate that Indian airlines will increase their capacity by 15-17 per cent in this fiscal alone. These growth projections are being tom-tommed as great achievements of the Indian aviation sector. In a recent report, rating agency ICRA said: "The key driver for the industry capacity growth continues to be the sizeable order backlog – approximately 1,033 aircraft of various sizes and configurations are on order by Indian airlines." Airbus and Boeing have also made similar projections. However, some basic common-sense questions arise: Where will these additional planes be parked? How will airspace congestion be managed? How or where will these growing number of aircraft be repaired or serviced? Will they operate to remote regions or Tier-II or Tier-III cities?
On the other hand, the existing number of aircraft operated by Indian airlines in the domestic airspace are experiencing very high passenger load factors. This ranges between 80-95 per cent, which normally speaking would deliver a high rate of revenue per passenger flown every kilometre to the Indian carriers. Instead, IndiGo reported a loss of Rs 652 crore in the quarter ended September 2018, compared with a profit of Rs 551 crore a year ago, while its competitor SpiceJet has reported a loss of Rs 389 crore during the same quarter. Troubled Jet Airways reported a loss of Rs 1.297 crore and accumulated losses of nearly Rs 2,500 crore in the first half of the current fiscal. Hit by the mounting losses, the Naresh Goyal-promoted airline is struggling for survival and has been in talks with several investors. On the Air India front, the government, after putting off its divestment, is in the process of finding ways to take care of its huge debt.
While the financial mess in the airlines has been much debated, the massive crisis in the field of airport infrastructure has not been in focus. Civil Aviation Ministry data shows that many airports owned and operated by Airports Authority of India (AAI) are running in deficit. Only 15 airports located in the major cities are in profits. It is a matter of relief for the government that the profits earned by these 15 airports are more than the total losses of the remaining 92 airports. There are a total of 126 airports in the country. Of these, the airports in Delhi, Mumbai, Bengaluru and Hyderabad are operated under private-public partnership (PPP).
The Airports Authority of India operates the remaining 123 airports. Of these, only 15 airports including those in Chennai, Kolkata, Ahmedabad and Lucknow are among those which are making profits. The remaining 92 airports even at major cities like Indore, Bhopal, Mangalore and Raipur are in deficit. The highest profit of Rs 455.4 crore in 2017-18 was made by the Chennai airport. However, this profit is less than 25 per cent from last year's profit. Kolkata airport is in the second in terms of profits. Mangalore airport has faced the biggest loss of Rs 74 crore in the last fiscal followed by Safdarjung airport of Delhi at second place with a loss of Rs 71 crore.
12/12/18 Amitabha Roychowdhury/Millennium Post