Air Transport Leaders Sound Alarm over India’s Future

 - September 5, 2018, 11:27 AM

As Indian airlines’ operational costs rise and fares fall following an increase in fuel prices by 50 percent over the past year, industry leaders such as International Air Transport Association director general Alexandre de Juniac continue to express serious concern about their financial health. In Delhi on September 4 to attend the International Aviation Summit, co-hosted by the Ministry of Civil Aviation, IATA, and Airports Authority of India, de Juniac called the current trajectory of Indian carriers “unsustainable.”

“[Fuel] comprised 34 percent of India’s airlines' operational costs against an average of 24 percent for global airlines in January,” he said. “Any increase in fuel price is highly sensitive for India in particular more than in other countries due to its prevalent taxes and lack of competition at airports for fuel supply and fees and more taxes at different stages of fuel delivery.” He repeatedly urged the government to view the issue during the summit. “We are not just talking about this to India, but to European and the Australian governments as well,” he added. “Airlines have done their job by controlling costs; now if governments can…that will be a huge positive.”

Growth forecasts for India indicate a tripling of passenger demand by 2037, when IATA projects some 500 million people to fly to, from, or within India.

“The main problem is how to cope with growth on the supply side,” warned the IATA director. “The key is to integrate all aircraft being delivered into the system. India has some 1,000 aircraft on order in the next eight to ten years and major airports with infrastructure falling back, and already running out of parking and slots to offer airlines.”

Industry officials warn that the shortfall could stall the approximate 18 percent annual growth over the past few years. Airports Council International director general Angela Gittens called on regulators to offer a “proportionate, clear, and consistent regulatory framework” to encourage private investment in the country’s air transport infrastructure. “The scale of current and forecast demand at Indian airports requires significant investment to maintain and enhance infrastructure as well as passenger service capacity at an appropriate level of quality,” she said.

Given the scarcity of investment, developers will need to control costs while building airports. “When the average airfare is around $75 and airlines have to integrate development fees into the fare, we need to rethink building grandiose airports,” said IndiGo COO Wolfgang Prock-Schauer. “We must think of how to best make use of existing infrastructure.”