Thursday, May 02, 2019

Air travel is set to remain turbulent

India’s commercial air travel market, touted not so long ago as the world’s fastest growing, has fallen upon hard times and things aren’t going to get better soon.
Jet Airways has closed down with absolutely nobody coming forward with a proper bid to take it over. Before that the government failed to privatise the hugely loss making Air India. It continues to fly only on the political will of its owner.
All the three segments that make up India’s civil aviation sector are in trouble. With the demise of Jet Airways (strictly speaking it is currently comatose), the full service can is being carried by loss making Air India and Vistara, the Tatas and Singapore Airlines joint venture, which is yet to make any money.
At the other end of the market is the potential in small towns and cities which the government attempted to bring on to the aviation map of India through its UDAN scheme. It capped fares at ₹2,500 for a certain number of seats on one-hour flights with subsidy to meet the deficit of the carriers coming forward to operate. But two years into the scheme, eight small airlines stopped functioning, the can being carried largely by budget carriers like IndiGo, Alliance Air (Air India subsidiary) and SpiceJet. Again, how long can these go on?
Squeezed from both ends, the bread and butter no-frills budget service providers along with the developed network are also gasping for breath.
When an entire industry is in trouble policy makers have to sit down and answer two questions: How important is the industry in the public interest and how can the policy regime be changed for it to become viable and continue on its own feet?
01/05/19 Subi Roy/Business Line