The year 2013 will provide a good setting for domestic airlines to look at reviving their fortunes and improving their image, nationally and internationally.
This follows the Central Government changing the rules in 2012 and allowing foreign airlines to invest in domestic carriers. The move could not have come at a better time, as most Indian banks are reluctant to invest in domestic airlines.
Already, at least three Indian carriers – Jet Airways, Kingfisher and low-cost airline SpiceJet – are said to be in stake sale talks with various foreign carriers. There are indications that Jet Airways could be the first off the blocks.
In another positive move this year, the Government decided to become liberal in granting permission to Indian carriers to fly abroad.
Hence, Air India was permitted to operate daily flights from Delhi to Rome-Madrid-Barcelona and Moscow and also operate flights between Mumbai and Nairobi, while Jet Airways was permitted to operate a daily flight between Delhi and Frankfurt and Mumbai and Ho Chi Minh City and daily flights from Delhi to Paris, Düsseldorf, Barcelona and Beijing and from Mumbai to Zurich.
In addition, SpiceJet was permitted not only to operate a daily flight between Pune and Bangkok but also on the Delhi-Dhaka-Yangon sector. It has also been allowed to fly three times a week to Lucknow and four times a week from Varanasi to Al Najaf in Iraq.
The year also saw Air India finally inducting the Boeing 787 aircraft, popularly known as the Dreamliner, into its fleet. The airline is hoping that the aircraft will be a game changer and turn its fortunes – both financially and in terms of passengers’ perceptions.
Kingfisher woes
The year 2012 was, however, a bad one for Kingfisher Airlines. After curtailing operations in the early part of the year, the airline suspended its operations on October 1. And on October 20, the airline watchdog, the Directorate General of Civil Aviation (DGCA), suspended its operating licence.
Kingfisher approached DGCA at the end of the year, seeking permission to restart its operations, a process that could take six-to-eight weeks from the time of approval.
In effect, what this means is that the airline’s licence will expire on December 31, 2012 and the earliest that it can take to the skies again is sometime in mid-February 2013, if not later. Kingfisher also saw agitations and strikes by its employees because of non-payment of salaries.
It, however, was not the only airline that had to face such protests.
Air India, too, saw the longest pilot agitation in its history – 58 days, primarily on the issue of who should be allowed to fly the Boeing 787 aircraft – Air India pilots or both Indian and Air India.
Passenger dip
In more bad news for the sector, after a gap of almost five years, the number of passengers carried by domestic airlines showed a decline from the first quarter of 2012. Many feel that this was because airlines stopped irrational pricing or offering tickets at below their cost price.
Hence, with the cost of air travel heading northward, there was a decline in the number of passengers flying. The industry is taking various steps including offering lower fares to those who book well in advance. At the moment, it remains unclear whether this will have the desired effect.
The Government’s other attempts at making the cost of flying more affordable, especially from Delhi and Mumbai, also met with moderate success. The Government called for abolishing the development fee being charged from these two airports.
But, in the case of Mumbai, the Airports Economic Regulatory Authority, which regulates charges at major airports, decided to extend the period of the levy for another seven years, till 2021.
New airports
Worried at the slow growth in infrastructure development, including at airports, the Government decided to give an in-principle nod for 15 new greenfield airports in joint venture or public-private partnership mode, including those in Goa, Navi Mumbai and Kannur. Work on some of these, including on the Navi Mumbai and Kannur airports, is expected to begin before March 31, 2013.
The Delhi airport modernisation project was in the news with the Comptroller and Auditor General pointing out in its report that the GMR-led consortium of Delhi International Airport Ltd, which modernised Delhi airport, was given land at a highly concessional lease rental.