Is there any airline that is operating profitably and safely in India? Apparently not.
The financial troubles of Kingfisher Airlines are already well-known; the fact that most of the other airlines – Jet, SpiceJet, GoAir and Air India Express – are struggling to make profits in the current challenging environment of high fuel costs, high operating costs and below-cost ticket prices is also public knowledge.
Now, it seems the only profit-making airline — IndiGo — isn’t immune from problems either: according to The Economic Times, the Directorate General of Civil Aviation (DGCA), in a financial audit report, has pulled up the country’s only profit-making airline, IndiGo, forflouting safety norms on several occasions.
The report, claimed to have been accessed by the newspaper, said that some of these breaches were serious and could lead to a regulatory review of the airline’s expansion plans. In addition, the airline was also criticised for the way in which it handled safety incidents, suggesting that some incidents were downplayed.
India currently has one of the highest operating cost environments for airlines anywhere in the world. AFP
Surprisingly, the report was not critical of cash-strappedKingfisher Airlines, although it expressed concern that the airline’s financial woes could lead to cutting expenditure on maintenance.
Of course, that seems to be in contrast to what The Times of India reported late last week: claiming similar access to another DGCA report, it said the civil aviation regulator was concerned about the safety of Kingfisher Airlines’ operations and suggested there was a case for shutting down the airline’s operations (that part, however, was denied by the DGCA later.)
Leaving aside the conflicting assessment of Kingfisher Airlines (which seems to be lurching towards bankruptcy), it seems no airline is completely safe to fly in India, if the DGCA is to be believed.
It’s not beyond the realm of possibility to assume that airlines might be tempted into cutting corners to save on costs, but don’t blame just the airlines for that — they’re doing all they can to survive.
Apart from the fact that airlines like Kingfisher and Jet have flawed business models, a large part of the blame could be apportioned to the government , which has delayed in reforming the sector despite the ongoing crisis at Kingfisher Airlines.
India currently has one of the highest operating cost environments for airlines anywhere in the world. Worse, costs continue to rise: Delhi Airport recently announced it would introduce a 340 percent hike in airport charges from 1 April, spread across two years.
Indeed, the attempt at privatising airports seems to have backfired because airport charges have been steadily rising for airlines in recent years, adding to their costs. India might have airlines offering cheap tickets, but there is nothing low cost about operating an airline in India.
High aviation fuel costs have added to the problem. Jet fuel, like petrol, is not subsidised by the government and bears the brunt of high prices/taxes to enable oil marketing companies to sell diesel, kerosene and cooking fuel (domestic LPG) at subsidised prices.
Direct investment by foreign airlines could perhaps help, but that proposal has also stalled after the furious uproar that followed the proposal to introduce FDI in retail.
In addition, politicians seem loathe to take any hard decisions on struggling state-run carrier Air India (which is the main culprit of below-cost pricing of tickets), which is also affecting the industry.
At the moment, there is no single, sensible idea for reform is currently on the table. Late last week, Civil Aviation Minister Ajit Singh said the government would not cancel licenses of cash-strapped carriers on safety concerns, according to media reports. Nice words, but it doesn’t help matters any.
As long as airlines continue to gasp financially, they will find it difficult to make investments in safety equipment and procedures, as well as train more crew. An easier operating environment (along with changes to business models) is part of the long-term solution, but for now, no one is talking about either of those things.
A sector expected to generate 2.6 million jobs over the next decade and requiring investment of more than Rs 1 trillion over the next 15 years is slowly losing its breath.
The way things are going, no airline will be able to fly profitably — or safely — in India.
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