As airlines in India suffer severe losses despite high passenger loads, relief has come by way of an extension of the Directorate General of Civil Aviation's (DGCA) mandatory deadline for installing GPS-Aided Geo Augmented Navigation (Gagan) equipment on all India-registered aircraft from January 1, 2019, to June 2020.
A dip in international aviation turbine fuel prices by 14.5 percent has also provided a reprieve. “While we welcome the respite, we hope the prices could be line with the $52 a barrel global price,” said Sanjay Kumar, chief commercial officer of budget carrier AirAsia India. Heavily taxed fuel comprises about 40 percent of total airline operating costs in India.
The compulsory use of Indian satellite-based augmentation system (SBAS) called Gagan has faced vociferous opposition from airlines for the past two years. Estimates place costs at about $200,000 for equipment and training per aircraft and an additional cost of keeping aircraft on the ground for 10 to 14 days for retrofits. Airlines that have seen a deteriorating financial position include Jet Airways, which has delayed salaries and defaulted on payment of interest and principal installment owed to some banks by December 31, 2018, due to “a temporary cash flow mismatch,” it said.
The International Air Transport Association has indicated that individual airlines should have the freedom to assess whether or not to invest in SBAS based on their operational needs. An IATA spokesperson told AIN that states that decide to implement SBAS should not make it mandatory, and airlines should not suffer the penalty of unjustified restrictions to their operations due to the lack of SBAS equipment. "Costs related to SBAS should not be imposed directly or indirectly on airspace users who are not using this technology,” he said.
Still, as airlines struggle with cost overruns and continue to question Gagan’s benefits, IndiGo plans to equip all of its more than 200 aircraft by 2020, an airline spokesperson told AIN.
Gagan will prove effective at small airports whose instrument landing systems cover only one end of the runway and when ground-based operations feel the effects of natural calamities including floods. “Airlines need to be given a higher subsidy than the 5 percent on route charges offered to use Gagan,” he added.
Meanwhile, the industry awaits full preparedness for Gagan by the Airports Authority of India (AAI). The authority has yet to design procedures for maintenance and flight paths on the simulator; flight trials would likely to take another eight months. Meanwhile, a lack of experts stands to delay verification, resulting in a likely further extension of the 2020 deadline.
Domestic carriers will continue to depend on low fuel prices to improve profitability for years, an analyst told AIN on condition of anonymity. “The Indian market is not yet mature,” he said. “Fuel will remain an important factor for a long while until airlines bring sanity into their fare pricing.”