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.
India lost 9 percent of its airline seat capacity as a result of Kingfisher suspending operations since October 1, 2012, when its 66-aircraft fleet was grounded, according to Dinesh Keskar, Boeing’s senior sales vice president for Asia Pacific and India.
Mumbai-based Jet Airways last month announced the planned induction of five leased ATR 72-600s into its fleet. Scheduled to launch service with the first of the new 68-seat turboprops by the end of last year, Jet Airways said it expects to accept all five Gecas-sourced airplanes by the end of this March. The airline’s domestic expansion strategy centers on serving more so-called Tier II and Tier III destinations, according to Jet Airways COO Sudheer Raghavan.
Policy-making paralysis over much-needed reforms and liquidity concerns raised by the grounding of Kingfisher Airlines has deterred investors, vendors, lessors and suppliers from doing business in India’s air transport sector, according to delegates attending last month’s Asia-Pacific Airlines Association Assembly of Presidents in Kuala Lumpur. Association calculations show that average profits among Indian airlines amount to just $1 per passenger.
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.
In a reversal from an earlier policy, which gave state-owned Air India preference over bilateral aviation agreements for international routes, the Indian government will now open access to private airlines.
Even though the year ended with doom and gloom, the Indian air transport sector couldn’t have asked for a better beginning to 2012 with its largest budget carrier, IndiGo, signing a memorandum of understanding for the biggest commercial aviation deal in history valued at approximately $15.6 billion. The deal, which was subsequently firmed up, called for 180 of Airbus’ A320 family narrowbodies. This topped an earlier order by the carrier for 100 aircraft and seemed a clear indication that the Indian market is back on track after suffering severe losses during 2008- 2009.
If a major international airshow can be accepted as an accurate snapshot of the prevailing condition of the world’s aerospace and defense industries, then the picture presented by Farnborough 2002 (held July 22 to 28) clearly showed both as having seen better days. That said, the sell-out event’s 1,200 exhibitors also gave the strong impression that they expect a rosier future, albeit after one or two more years of market stagnation.
India appears to have ruled out any early prospect of increased international competition among its airlines. The move will disappoint recent start-up operators looking for a relaxation of current policy that bars Indian carriers with less than five years’ experience from international routes.
The meteoric development of India’s airline industry continues unabated as Air India extends its nonstop network to all corners of the globe with Boeing’s longest-range airliner. On February 8, Air India placed its fourth 777-200LR on a new direct route between Delhi and New York JFK Airport, and expected the imminent arrival of airplane No. 5 as we approached the start of this year’s Singapore show.