Clipped from: https://www.thehindubusinessline.com/opinion/editorial/the-constant-churn-in-the-indian-airspace-is-unhealthy/article66827335.ece
The domestic airspace is better off with a few strong and efficient players
Go First’s decision to file for voluntary insolvency is seen by some as a smart move by the Wadias to keep the airline alive, by gaining an immediate moratorium on dues and warding off repossession of aircraft. But its abrupt departure is costing air travellers dear. Passengers have been left scrambling both for refunds and alternative flights with the airline suddenly deciding to call off pre-booked flights on over 180 routes. Rivals have made hay, with airfares on routes vacated by Go First shooting up by 17 to 43 per cent.
This is not the first time that a faltering airline in India is leaving passengers in the lurch. When Jet Airways landed up in the insolvency court in 2019, passenger refunds were left to the devices of the resolution process, which disallowed claims over ₹15,000. India’s aviation sector seems to be in constant churn, with every downturn causing an airline or two to go belly up, even as boom times usher in new hopefuls. This isn’t just disruptive for passengers’ travel plans but also their safety, as tottering airlines try to stay float by flogging their aircraft and cutting corners on maintenance.
The aviation industry even globally has high mortality rates, with operators making slim margins that dwindle to nothing when adversity hits. In India, the sector is even more challenging because of rigidities in cost structure and ad-hoc policymaking. High ATF prices and losses incurred on Category 2 and 3 routes impose a structural burden on airlines’ cost structures. Players have faced a particularly torrid time in the last three years, as policymakers have experimented with caps on both capacities deployed and airfares, to deal with the Covid fallout. To ostensibly help passengers, caps on airfares were introduced at a time when airlines were already struggling with low passenger loads, to be finally removed only in August 2022. This combination of factors had weakened the finances of even leading players in the sector. For Go First, the woes escalated as repeated failures in its Pratt & Whitney engines grounded nearly half its fleet, forcing it to idle capacities just as air travel was taking off post-Covid.
The frequent entry and exit of players into the Indian airspace is unhealthy not just for passengers, but also for stakeholders such as banks and aircraft lessors who have now grown wary of funding this sector, despite its huge potential. Given that the domestic airspace is better off with a few strong and efficient players, both the sector regulator (Director General of Civil Aviation) and the Centre need to rethink their policies so as to keep out non-serious contenders. Instead of permitting a revolving door to exist, significant entry barriers in the form of high capital requirements and related experience, must be erected for new players seeking an entry. The DGCA must play a more proactive role in shielding passengers from consequences of business failures, by levying stiff penalties on airlines for safety violations and cancellations.