Indian Aviation – Government Doing All What It Shouldn’t

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The Indian Aviation industry continues to reel under the effects and after-effects of the pandemic, with little or no help from the government. All domestic airlines continue to operate under losses.

IndiGo Airlines has reported a net loss of INR 5,806.43 crores ($ 780.64 million) for FY2021 – compare this to the previous year when the company had made a loss of INR 233.68 crores ($ 31.42 million). The revenue of Indigo during FY 2021 fell 58% on an annual basis to INR 15,677.6 crores ($ 2.1 billion).

Similarly, SpiceJet, the other primary low-cost carrier, reported a loss of INR 998.30 crores ($ 134.21 million) on total revenue of INR 6,120.79 crores ($ 822.90 million) – compare this with the previous year FY2020, when SpiceJet reported a loss of INR 934.76 crores ($ 125.67 million) on revenue of INR 13,206.30 crores ($ 1.77 billion).

According to a report in Economic Times, Air India, the national carrier, is expected to lose about  INR 10,000 crores ($ 1.34 billion) in FY2021. Though the company has not yet declared its financial results this year, the cash loss due to operations is estimated to be INR 8,000 crores ($ 1.07 billion) — the balance resulting from depreciation costs.

Is the Indian Government Helping the Industry?

In short, the answer to this question is a big NO. The ministry appears to be in a state of confusion with no clear roadmap of the recovery. Ad-hoc notifications are issued periodically banning international flights. Each time the period of restrictions is for one month. The much-touted ‘Vande Bharat Mission’ flights last year have outlived their utility. Now there are no more ‘stuck Indian citizens’ to be brought back, but the ministry is keen to continue in this mode. Many countries, including the US, are not happy with the way India continues operating these flights.

On the domestic front, airlines schedules and sales prices of tickets remain regulated by the government.

Willie Walsh, Director General, IATA, in a press briefing on July 28 said –

The global figures that we’ve shown you hide the fact that in India, for example, the domestic market is highly regulated at the moment, with the government imposing both capacity and pricing restrictions, which is slowing down the recovery. Without those restrictions, I’ve no doubt that the domestic position in India would be significantly ahead. He further added that “Politicians are quick to impose measures but slow to remove them.”

For facilitating travel, the government is yet to work out a COVID Travel Pass. So far, India has shown reluctance to join the International IATA Travel Passport program.

There is absolutely no effort to normalize the travel and tourism industry. The tourism industry suffered a job loss of 3.8 crores (380 million) employees in 2020, 70% of the workforce. According to a report in the Economic Times, the tourism industry suffered a monetary loss of over  INR 5,00,000 crores ($ 67.22 billion) during the same year.

Hopes now rest with the new Civil Aviation Minister, Jyotiraditya Scindia, to take exemplary steps to save these industries from further losses.

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