Plumes of uncertainty, hopes of connectivity dot Indian aviation space
New Delhi: From shuttering of a 27-year-old airline to repeated grounding of planes to ailing Air India, headwinds blew across the once-fastest growing domestic civil aviation space in 2019 while a spike in regional air connectivity served as a silver lining in relatively cloudy skies.
If Jet Airways going bankrupt left hundreds of people jobless and shattered decades-old supply chain network, frequent Pratt & Whitney (P&W) engine woes for Airbus 320 neo aircraft continued to pose safety concerns even as aviation watchdog DGCA came out with stringent directions.
Global ban on Boeing 737 MAX aircraft in the wake of two fatal accidents came as a blow to many airlines worldwide, including SpiceJet, which has largely pinned hopes on these fuel-efficient planes for its ambitious expansion plans.
In 2020, the Centre expects sale of Air India and privatise more airports while AirAsia India is likely to get green nod for international flights. Besides, Vistara and IndiGo are anticipated to increase the number of overseas flights.
On the airlines side, differences between IndiGo's co-founders and co-promoters -- Rakesh Gangwal and Rahul Bhatia -- came to the fore in July. The promoters' spat, which is far from over, also brought the alleged corporate governance lapses and other issues under the regulatory scanner.
After surging over 18 per cent in 2018, domestic air passenger growth sputtered to a five-year low in April 2019 before flying back into double-digit expansion of 11.86 per cent in November.
At the same time, domestic passenger traffic grew at the lowest in the last five years till October with April seeing 4.5 per cent degrowth.
On the contrary, when the domestic economy expanded by a healthy 7.15 per cent in the January- December period of 2018, the domestic air passenger volume surged a robust 18.60 per cent.
Under the regional air connectivity scheme or UDAN, as many as 134 routes commenced operations between January and October while some 335 routes were awarded during the year, covering 33 airports, comprising 20 un-served, three under-served and 10 water aerodromes.
Speaking at a business event in Mumbai in December, Civil Aviation Secretary Pradeep Singh Kharola said if the economy has to reach the $5-trillion mark, some sectors would have to grow in double digits and that aviation sector is the one which has the potential to grow.
His observations only seem more apt when one looks back into the performance of aviation sector in the year gone by vis- -vis economic growth.
Jet Airways, whose closure left 20,000-odd unpaid employees in the lurch, also became the first domestic airline to undergo insolvency proceedings.
The demise of Jet Airways, which used to operate over 600 flights on national and international routes per day, resulted in around 20 per cent capacity deficit, resulting in skyrocketing fares.
The government also temporarily allotted hundreds of airport slots owned by it to other carriers, with an aim to contain soaring airfares in the peak holiday season. Even though SpiceJet and IndiGo started flights on many ex-Jet Airways' routes, it was not enough to meet domestic air passenger demand.
SpiceJet also took Boeing 737 planes that were earlier leased by Jet Airways.
In the wake of frequent glitches in P&W engine-powered A320 neos, IndiGo ordered CFM engines for its 280 A320/321 neo planes.
During the year, IndiGo also placed an order for 300 Airbus aircraft, its largest ever worth an estimated $33 billion to replace old planes in its fleet and operate non-stop flights to long-haul destinations such as London and Tokyo.
In March 2019, aviation regulators -- including the DGCA -- banned 737 MAX aircraft after two of these planes met with accidents within a span of five months, killing around 350 people, allegedly due to faulty software systems.
SpiceJet had to ground 13 737 MAX planes in March.
Nevertheless, competition among the airlines remained fierce, causing fares to remain comparatively low. IndiGo and SpiceJet, India's two biggest airlines, reported Rs 1,062 crore and Rs 463 crore in the second quarter of 2019-20.
With airfares remaining low even during the festive season around Diwali, 2019-20 is likely to remain a tough year for Indian airlines revenue-wise, according to market analysts.
AirAsia India -- a joint venture between Tatas and AirAsia Investment Ltd, which is a subsidiary of Malaysian airline group AirAsia Berhad -- is likely to get approval for flying overseas in 2020.
Vistara -- which connected Indian cities to international destinations such as Singapore, Dubai, Bangkok and Colombo in 2019 -- is also expected to start flights to distant destinations such as London and Tokyo once it starts getting deliveries of wide-body 787-9 Dreamliner aircraft from Boeing in February 2020.
While disinvestment-bound Air India's net loss in 2018-19 was around Rs 8,556 crore, its current total debt is over Rs 60,000 crore.
The fate of the Maharaja continues to be uncertain with Minister of State for Civil Aviation Hardeep Singh Puri even saying that the airline would go out of business if it is not privatised.
The new year is also expected to see movement forward in construction of new airports at Jewar in Uttar Pradesh and Navi Mumbai in Maharashtra. The Airports Authority of India (AAI), in September, recommended privatisation of airports at Amritsar, Varanasi, Bhubaneswar, Indore, Raipur and Trichy. Privatisation of these aerodromes is likely to be completed in 2020.
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