Thursday, June 13, 2024

Indian Carriers Need to Read the Writing in the Sky

By Bikram Vohra

Bikram Vohra, Consulting Editor

Go First could be the 11th Indian carrier in the past decade to run out of fuel and shut doors. A victim of the Pratt and Whitney supply chain issues and the subsequent inability of the power plant manufacturer to maintain its schedule vis a vis the PW1000G engines that power the A320neo fleet, Go First mothballed itself till February next year. As much as 40% of the fleet was grounded by default anyway.

A November 22 deadline for a rescue act passed with no one coming forward. In a surprise move in late December three entities leapt forward in what could be seen as a vulturous move or a tactical business manoeuvre. Spicejet, Sky One from Sharjah and Investment Corp Afrik have shown interest in bidding for the cornered carrier and asked for an extension that is most likely to be granted. As the share value zipped up by 20% in the immediate afterglow of the rescue operation, even if it is successful, it does underscore the vulnerability of Indian carriers and why they go belly up.

At the start of 2023, India’s aviation network comprised 7 independent commercial airlines, 692 aircraft and combined revenues crossing USD 11.5 billion. The far target of 200 million passengers was still within the realm of possibility.

But the sizzle often defeats the purpose when it conceals the burnt parts of the steak.

In the hurtle to be the spearhead of global aviation’s resurrection and currently employing verbal superlatives to our potential, the quality of service could well be getting compromised, and the passenger taken for granted.

Spicejet bids for Go First and yet, “enjoys” the dubious distinction of having the worst on time record with a 60% average delay factor. Its credibility is up for grabs as flight after flight sticks to what is known as staggering delay announcements…like we have no idea when. While monolith Indigo keeps a high-on-time rating (though even that slipped a bit in September) its lean towards inflated fares and gouging hardly earns it much affection. Associated more with air rage than the others, its toffee-nosed staff on ground and in the air are largely seen as cold and distant. They are hugely pushy and almost rude yet neither Spice nor Indigo care who sits in the Emergency Exit rows. Last week at age 75 years a passenger known to me sat on both carriers in exactly those seats. Alone. Against the rules.

The pressure of pushing the envelope is getting to the system. Safety shortcuts are often camouflaged as acceptable snags and with aircraft having so much back up hull accidents are thankfully infrequent but that should not lull one into a false sense of confidence. As Minimum Equipment Lists lengthen and ‘Go’ items intensify, maintenance levels already bruised by turnaround time demands are further compromised by rush jobs.

This MRO pressure will increase if supply chain issues worsen. By March 2024 if things do not improve as high as 200 Boeing 737 and A320 family aircraft could be grounded in India flying the sector into massive turbulence. According to a report by CAPA (Centre for Aviation is the world’s leading resource for global aviation news, analysis, and research) India’s fleet is largely narrow body oriented and therefore more likely to be hurt since it is the engines on these aircraft that are lagging. Over the months Indigo would ground as many as 90 aircraft with Spice and Air India putting 25 to 30 apiece into cottonwool. Akasa deliveries could well be delayed and Go first is frosted. This report goes on to submit that the aviation sector might operate with a fleet size close to 790 aircraft by March 2024, out of which only 588 are expected to be operational. As such not only does this make a mockery of the highly vaunted orders placed for new aircraft but reduces the projected target of 200 million uplift to 170 million and a possible dropping to 150 million as fleets shrink when they should be getting bigger. This is not fiction but a very real spectre for Indian aviation especially since there is no indication of things improving on the supply chain front.

In 2023, 500 bird-aircraft collisions occurred, and domestic airlines reported 406 malfunctions. IndiGo led this procession with 233 cases, followed by Air India and SpiceJet. Bird Aircraft Strike Hazard or BASH is a major safety risk, yet little is done to detract birds from runway approaches. By August there were 338 technical snags reported. Bleak as this is supply chain delays on spare parts do place undue and dangerous pressure on engineering. And that is a recipe for disaster.

 There is also a shortage of trained pilots which has led to the unsavoury desertion we saw at Akasa Air as over 40 pilots trotted off to join Air India in what they saw as a better deal. They did not even honour the contractual obligation of serving the notice period.

While Air India in its new avatar grapples for altitude the older fleet is still a bit shabby and worn thin. Vistara seems to be the one airline that wins all round praise for being a decent flying option.

The more onerous the flight experience and the limitations imposed on passengers the less likely will the uplift follow the buoyancy that is being predicted.

Let’s talk a little about why the gap in affection between the end-user and the carrier is widening.

The Indian aviation industry is characterised by intense competition, with numerous airlines competing aggressively for market share. This competition has led to pricing pressures and thin profit margins, presenting significant challenges for airlines striving to maintain profitability.

Airlines are confronted with substantial operating costs, including those related to fuel, labour, maintenance, and airport fees. Fluctuating fuel prices have a notable impact on profitability, and the inability to pass these costs on to consumers through ticket prices further strains the financial health of the airline.

Government regulations and policies exert a substantial impact on the aviation sector. Taxation, infrastructure constraints, bureaucratic hurdles, and restrictive policies create formidable challenges for airlines operating in India.

India’s aviation infrastructure, encompassing airports and air traffic control systems, has struggled to keep pace with the rapid expansion of air travel. This has resulted in congestion at airports and in airspace, leading to delays, inefficiencies, and increased operating costs for airlines.

To address these issues and pave the way for sustainable growth and success in the Indian aviation sector, it is imperative for management to consider strategic measures aimed at mitigating the impact of intense competition, high operating costs, regulatory hurdles, and infrastructure limitations. By focusing on these key areas, airlines can enhance their resilience and adaptability in the face of industry challenges, ultimately positioning themselves for long-term viability and success.

These factors have led to so many collapses.

Heritage Aviation Pvt Ltd and Turbo Megha Airways Pvt Ltd closed in 2022. Three carriers — Zexus Air Services Pvt Ltd, Deccan Charters Pvt Ltd and Air Odisha Aviation Pvt Ltd flew into history. South India-based Air Costa folded in 2017. Jet Airways, once India’s second-biggest carrier and previously majority owned by former billionaire Naresh Goyal, has been struggling to resuscitate itself after halting operations in 2019. Airlines that pull shutters include Vayudoot (1981-1997), ModiLuft (1993-1996), Damania Airways (1993-1997), NEPC Airlines (1993-1997), Jet Airways (1993-2019), Kingfisher Airlines (2005-2012), Air Deccan (2003-2007), and Paramount Airways (2005-201.

Despite the drawbacks and the rising disaffection that will become a factor as the network intensifies India’s aviation sector will see spikes because there is such a massive human potential. But if we do not address certain aspects of this disaffection, it can become an issue, the train might well be a more likable and friendly solution.

While airlines do struggle with wafer-thin profit margins and the monster of fuel price hikes none of them can afford to see the passenger per se as an object of nuisance value. Increasingly, flying is becoming a chore with little pleasure and as roads and rails improve exponentially flying might find itself friendless by its own accord.

Bikram Vohra is the Consulting Editor of Indian Aerospace & Defence

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