Airlines anywhere in the world are highly susceptible to business cycles. This is something that Messrs Vijay Mallya and Naresh Goyal have been very much aware of since they entered the airlines business. To think that they entered the sector with their eyes closed would not only be naive but also insulting their business acumen. So, faced with a crisis, it is churlish on their part to explain away their current condition solely by policy terms. Our airlines, which have launched a high-decibel campaign against their regulatory environment, are even more linked to business cycles than most other countries. The Rs 10,000 crore losses they piled up in 2008-09 amount to a fifth of the money that went down the tube for the industry worldwide. Eye-popping for a country that flies a mere 2 per cent of the global air traffic. Jet Airways, Kingfisher Airlines and the State-owned Air India flew 40 per cent empty in April 2009. One airline can, therefore, cease to exist and the Indian aviation industry will still have spare seats. Ferocious capacity building over the last five years ignored the fact the Indian market can sustain not more than two national airlines. The government has deep enough pockets to keep a bleeding Air India afloat; the choice is more stark for private airlines.
Private airlines have a point when they complain taxes on fuel and airport fees bump up the cost of flying in India by as much as 70 per cent. The latest threat to stop services for a day, however, is a tamasha that the nation can do without, even if it comes against the backdrop of the government finalising a bailout for Air India. As its owner, the government can choose to throw money at the Maharaja. But as policy maker, the government must hear the private airlines to align governance with the interests of the industry. And as regulator of aviation, it has to ensure minimal disruption on August 18.
Indian aviation faces challenges from a deteriorating external environment as well as the teething problems of a young industry. The largest stakeholder in all aspects of the business, the Indian State, needs to ensure it remains a viable proposition. The country’s last aviation policy was drafted in 1993, the capital and infrastructure needs of the industry have multiplied since then. The initial burst of aviation reforms during 2004-07 has run its course; the desperation inherent in the private airlines’ threat to stop services should serve as a cry for more. Some consolidation is inevitable. But it is not in the interests of the 40-odd million Indian flyers if the sector buckles under a mountain of debt and losses. A workable solution between the private players and the government is the need of the hour.