The airline industry, the world over, is prone to spectacular booms and busts. That India is no exception is borne out by this week’s talks between its two biggest airlines — Jet Airways and Kingfisher Airlines — to synergise operations in order to stem their financial haemorrhage. The two carriers ferry six out of every 10 Indians who fly, and lose Rs 13 crore every day in the process. Partly because of runaway jet fuel prices — fuel accounts for slightly over half the cost of running an airline — and partly because of the bruising competition that results in every third aircraft seat going empty. But what has thrown Jet and Kingfisher into bed together now is a crisis playing out halfway across the world. The bloodbath on Wall Street has frozen credit here, and Indian oil companies — having to dip into reserves to buy crude — are calling in their credit lines with airlines. Also the government, fighting bigger fires, is not exactly sympathetic to the aviation industry’s call for a Rs 4,000-odd crore lifeline. Ergo: consolidate.
Which may not be good news at all for the Indian flyer. Fares have doubled in the past year and passenger traffic has plummeted by a third since January. As the two big guys cut overlapping flights and take off their price warrior helmets, expect fares to climb even further. Particularly since states are unlikely to lower taxes on jet fuel (as high as 39 per cent) in a hurry. Price apart, competition in the Indian sky has vastly improved the flying experience and any
contrarian move holds out the prospect of lower service quality.
Indian aviation is delicately poised for takeoff, and could do with a little help from the government. Creaky airport infrastructure and lack of an industry regulator ramp up the cost of flying, and these need to be addressed pronto. Left to themselves, market forces will drive consolidation in the industry, which, as the international experience shows — a boom-bust cycle every three years — neither helps the customer nor, in the long run, aviation. We will be setting the clock back if any of the 24 million Indians who flew on business or for pleasure last year are compelled to take the train.