India is home to the world’s fastest-growing aviation market. Unfortunately, the Indian aviation market is running in the red. That is to say, losing money. One only needs to look at our previous coverage of Jet Airways’ poor financial position to realise this, however, the problem isn’t confined to the one airline. This is despite the number of passengers growing by 15-20% per year for the last four years. Jet Airways has reportedly been failing to pay aircraft lessors, while IndiGo recently declared its first quarterly loss since 2015. Almost 150 million passengers were carried by Indian Airlines last year, yet the problem is not going away. Why? Simple Flying explains.
Officials Deny Problems
What certainly doesn’t help is that the problem has previously been denied internally. When we first reported that Jet Airways was struggling, the CEO of the company told the press that the airline was not experiencing difficulties. He did, however, tell: “Despite the high growth environment, the aviation industry is currently passing through a tough phase given a depreciating rupee and the mismatch between high fuel prices and low fares. Jet Airways has been in existence for over 25 years and through the years has been successful in combating such business volatility.”
While high fuel prices have been affecting airlines globally, it is highly unlikely that this is the sole reason for the struggles of the country’s industry. The low fares are a huge problem for airlines though, and this is fueled by the Government. The Indian Prime Minister is keen on connecting many smaller towns in India with short-haul flights. The problem is, that an unsustainable $35 cap on fares has been placed on all of these flights. As such, many airlines are uninterested in this scheme.
Even the Flag Carrier of India, Air India is struggling to stay financially viable. The airline, being propped up by Indian taxpayers, is bleeding money. In fact, this is part of the industry’s problem. The airline has too many staff, yet runs inefficiently. Tied into this, the airline offers cheap fairs with no financial reasoning behind them. As such, other airlines are forced to offer ridiculously cheap fares to be able to compete in the market.
It is going to take a large change in leadership and attitudes within the Indian aviation industry to make it profitable again. However, with Delta reportedly interested in investing in Jet Airways, the future could look slightly brighter.
Do you think the Indian aviation industry can become profitable? Let us know in the comments down below!