India's aviation sector struggling to soar

Published February 12, 2014
Opening up the sector to foreign investment has seen the industry get a fresh lease of life. Jet Airways, for instance, sold a 24 per cent stake to Gulf carrier Etihad. - File Photo
Opening up the sector to foreign investment has seen the industry get a fresh lease of life. Jet Airways, for instance, sold a 24 per cent stake to Gulf carrier Etihad. - File Photo

NEW DELHI: India's aviation sector is starting to shake off the doldrums with the launch of two new airlines, at least one this year, in a rapidly expanding market.

Hampering that recovery though will be the downgrade of India's aviation safety rating last month by the United States, which prevents its carriers from launching new flights to the US, or having code- share deals with American partners.

Last week, Singapore delivered another blow to the industry when it too announced that it is stepping up inspections of Indian carriers.

Others, notably the European Union, said the US move was of "significant interest".

"Aviation is growing in India and has to be robustly and efficiently managed. It is disgraceful because (the government) was given warning but did not pay heed it," said Jitendra Bhargava, former executive director of state-owned Air India. "You need adequate manpower (for safety) commensurate with the growth of industry."

The downgrade from the US Federal Aviation Administration, from category one to category two, means India's safety oversight regime does not meet global standards, putting it on a par with countries such as Bangladesh and Zimbabwe.

The India aviation sector has seen a boom in the last decade as economic growth fuelled the growth of its middle class. It is now the ninth-largest market handling 121 million domestic and 41 million international passengers annually. More than 85 international airlines fly to India and five Indian carriers connect it to over 40 countries.

In April, Tata Group, in partnership with Malaysia's AirAsia, will launch a new budget carrier and Singapore Airlines has tied up with Tata for a full-service carrier.

But the regulatory framework has not kept pace with growth. The aviation ministry, for instance, announced it is appointing 75 additional full-time safety inspectors as it scrambles to fix the problems.

According to the Centre for Asia Pacific Aviation (Capa), a research group, India's Directorate General of Civil Aviation (DGCA), with a workforce of 400, has 528 positions vacant.

"It won't be easy to get all that technical expertise and the DGCA has to offer enough to get the expertise," said Rajan Mehra, former India head of Qatar Airways, now with the US-based Universal Weather and Aviation, a private jet operator.

"I don't think Indian airlines are unsafe," he said. "But there are fewer safety inspectors, so the DGCA has been asking airlines to do their own safety checks - that is a little tricky."

Countries in similar positions have taken time to recover. Israel took four years to earn its ratings back, Indonesia six years and the Philippines is still trying after being downgraded five years ago. Mexico did it in four months.

Capa predicted it "could take India a long time to restore its rating" and the harmful implications could endure well beyond that time. Indeed, Indian airlines like Jet Airways will have to put expansion plans to the US on hold.

Indian carriers have been struggling with high operating costs and interest rates and, in 2012, had a collective debt of US$20 billion. But opening up the sector to foreign investment has seen the industry get a fresh lease of life. Jet Airways, for instance, sold a 24 per cent stake to Gulf carrier Etihad.

"This (downgrade) is maybe a blessing in disguise," said Bhargava. "It will make the (civil aviation) ministry act."

– By arrangement with the ANN/The Straits Times –

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

United stance
Updated 13 Nov, 2024

United stance

It would've been better if the OIC-Arab League summit had announced practical measures to punish Israel.
Unscheduled visit
13 Nov, 2024

Unscheduled visit

Unusual IMF visit shows the lender will closely watch implementation of programme goals to prevent it from derailing.
Bara’s businesswomen
13 Nov, 2024

Bara’s businesswomen

Bara’s brave women have proven that with the right support, societal barriers can be overcome.
System failure
Updated 12 Nov, 2024

System failure

Relevant institutions often treat right to internet connectivity with the same disdain as they do civil and political rights.
Narrowing the gap
12 Nov, 2024

Narrowing the gap

PERHAPS a pat on the back is in order for the ECP. Together with Nadra, it has made visible efforts to reduce...
Back on their feet
12 Nov, 2024

Back on their feet

A STIRRING comeback in the series has ended Pakistan’s 22-year wait for victory against world champions Australia....