The Indian government’s new budget, released on February 28, brought little relief for the country’s ailing air transport sector, although the industry awaits a possible announcement of some reduction in high aviation fuel taxes. In particular, the budget documents made no mention of hoped-for fiscal support for India’s emerging regional airline industry.
Economy of India
The withdrawal of Kingfisher Airlines’ domestic airport slots and international flying rights by India’s Ministry of Civil Aviation on February 25 could make a phased restart of the carrier even more challenging. Meanwhile, authorities have de-registered 13 of the 37 aircraft parked in India, but airports haven’t allowed lessors to claim their assets until Kingfisher pays pending dues totaling $72 million.
“[Kingfisher has] to give some guarantee [to pay], said Airports Authority of India chairman V.P. Agrawal. “Bank checks worth $21 million…bounced. A legal issue is going on.”
India’s fastest growing and most successful airline–budget carrier IndiGo–has become the first victim of an October ruling by the country’s aircraft acquisition committee governing the number and kind of aircraft imported by airlines to encourage regional connectivity to smaller towns. In November the committee, led by civil aviation minister Ajit Singh, cleared for import only five of the 16 Airbus A320-series aircraft Indigo wanted to acquire.
Mahindra Aerospace, currently India’s only manufacturer of light aircraft for private/utility use, is preparing to open its new 270,000-sq-ft facility near Bangalore. This will be used for manufacturing metal components, aircraft assemblies and aerostructures, according to executive director and global CEO Arvind Mehra.
Business for general aviation providers in India is generally slow as the economy shows signs of slackening, yet 60-year-old Mumbai-based Air Works Engineering is looking at innovative ways to expand its business in India and abroad.
Striking pilots and engineers of India’s Kingfisher Airlines have accepted a three-month portion of their eight months of unpaid salaries and agreed to return to work, even as management struggles to get its suspended Scheduled Operator’s Permit reinstated. Still, civil aviation minister Ajit Singh warned that paying salaries alone would not guarantee that Kingfisher would fly again. “I think the Kingfisher problem is much bigger; even if they pay the salaries today, are they going to take off and fly? I don`t think so,” he said.
The western Indian state of Gujarat has what amounts to its first regional airline with the launch of Deccan Shuttles by G.R. Gopinath, who founded India’s first low-cost airline, Air Deccan, before selling it to Kingfisher Airlines. Scheduled operations started on August 27 using a pair of nine-seat Cessna 208B Grand Caravans. The turboprop singles ply the Ahmedabad-Surat-Bhavnagar and Ahmedabad-Kandla routes, marking the first-ever direct air service between provincial cities in this large state.
India’s Directorate General of Civil Aviation (DGCA) expects to complete its second safety audit of that nation’s airlines by next month. The audits began with a look at Kingfisher Airlines and Air India Express because of ongoing labor issues at those airlines. The DGCA expects the first of these reports to be released soon.
Concerns over the safety oversight of financially struggling Kingfisher Airlines continue, even as the fleet–once 64 aircraft strong–has now shrunk to six A320s and five ATR 72s. The fleet reduction, driven largely by non-payment of leases, comes as a portion of the company’s pilots took strike action on August 18 to protest more than six months of back wages owed them by Kingfisher.
As highly taxed fuel, mounting debt and aggressive ticket pricing stifle the fledgling airline industry in India, the government seems ready to renege on its promise to allow foreign direct investment (FDI) in the country’s carriers. Current rules do not permit foreign airlines to invest in domestic carriers, although non-aviation-related investors can hold up to a 49-percent stake.