A bright future
The distress faced by some players has caused repercussions in the entire industry. "The future looks very promising as per us. Air fares increased by 40 – 50 per cent on account of 1) increase in fuel charges and 2) KF inventory going off (KF enjoyed a market share of 19 per cent till last year). The consumer finally reconciled to the increased fares and drop in traffic which is only going to be 2 – 3 per cent in YoY. Also with international routes opening up for all airlines, GDS and LCC, the fleet utilization became better leading to profits," affirms Sanjay Bhasin, MD, Goibibo.com.
Spicejet received stupendous response to its scheme of selling a million flight tickets in any major route in India for just 2013 rupees. "The aviation industry has been under constant stress due to the turbulence caused by multiple strikes and closing down of a leading airline's service, thus impacting the overall airline inventory available for the traveller. Factors like demand-supply mismatch, hike in ATF and airport charges coupled with a high tourist demand during the peak summer holiday season caused the fares to rise by 20-30 per cent in the domestic sectors last year. The airlines are gauging that, and have started the year with promotions offering deep discounted inventory to fill up seats during the lean period of Feb-Mar. We expect other airlines to follow suit aggressively and run discounts that will offer respite to the consumer. Having said that, LCCs flying from India to international destinations like IndiGo, Spicejet and AirAsia are also contributing towards making international travel more affordable and bringing it at par with domestic travel in India," opines Vikram Malhi, country head, Expedia India.
Desirable policies
Needless to say, the aviation industry can benefit greatly from assistance from the right quarters. "Based on the latest IATA Airline Industry Forecast, India is expected to see the second fastest compound annual growth rate over the period at 13.1 per cent for domestic passenger, thus making it the fourth largest domestic market in 2016. For international freight, India is expected to be the fourth fastest-growing (CAGR 6 per cent) from 2011 to 2016, making it the ninth largest international freight market in 2016. But the Indian aviation industry is struggling. While steps taken by the Indian government to allow FDI in Indian carriers is a welcome development on its own is not the panacea to solving the industry's problems. Among the things that are needed are policies to reduce the excessive tax burden currently placed on the aviation industry, lower external costs and ensuring adequate infrastructure to meet the growing demand," emphasises Albert Tjoeng, assistant director, corporate communications, Asia Pacific at International Air Transport Association.
On the bureaucratic front, better regulation might be the need of the hour. "It is high time that we have our regulator who looks at almost every aspect of the business and attains growth. General aviation requires separate independent self service airports only for private jet and helicopters. To enhance the quality of service for this sector, the infrastructure is extremely essential and FBOs will just deliver that. The policy framework when it comes to issues like taxation and fuel surcharge needs to be re-looked," suggests Rajeev Wadhwa, chairman and CEO – Baron Aviation.
Cautiously optimistic
"Depreciation of rupee, crude oil price volatility, high operating costs and prohibitive taxes continue to plague the sector. The outlook for the airline industry in short-term remains that of cautious optimism. There have been encouraging signals from the ministry and one hopes that pending reforms, especially on the taxation front and regional airports would be fast tracked in 2013," concludes Amber Dubey, partner and head-aviation at global consultancy KPMG. Thus, optimism is certainly in order, but with copious amounts of well-exercised caution.
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