Indian aviation industry still at risk, has not learnt lessons from two airline fails: CAPA

Aviation consultancy Centre for Asia Pacific Aviation (CAPA) said that Indian aviation industry has always presented higher risks than other major markets even during the pre-Covid era. This is due to a failure to solve structural issues since 2004, and this coupled with Covid-19 has resulted in seismic shifts in the industry.

While the Indian aviation industry is struggling to bounce back after running into heavy losses due to the pandemic, aviation consultancy Centre for Asia Pacific Aviation (CAPA) said that Indian aviation industry has always presented higher risks than other major markets even during the pre-Covid era. This is due to a failure to solve structural issues since 2004, and this coupled with Covid-19 has resulted in seismic shifts in the industry. It also said Indian operators and all stakeholders are responsible for the absence of risk management.

Domestic air traffic fell to about 30 million passengers during April and December 2020, from 108 million passengers compared to the year earlier, owing to the Covid-19 pandemic and the restrictions. (HT FILE)

According to the consultancy, risks remain high as the industry has not learnt key lessons from two major airline failures — Jet Airways and Kingfisher — in the last decade.

“Systems have not been implemented in the aftermath of these events to prevent further airline failures. All stakeholders are responsible for the absence of preventive risk management,” CAPA said.

Domestic air traffic fell to about 30 million passengers during April and December 2020, from 108 million passengers compared to the year earlier. Civil aviation minister Hardeep Singh Puri on Thursday informed the lower House that airlines incurred a loss of ₹16,000 crore during that period, while airports lost ₹3,000.

Kapil Kaul, chief executive officer, CAPA Indian subcontinent and Middle East, said a three-step process is required to reset the sector. “We are currently having a status quo approach. We need to engage in a highly coordinated and collaborative manner with all stakeholders across the industry and government to develop and execute a robust risk mitigation strategy with a clear approach and responsibilities.”

Talking about the issues in the webinar hosted by CAPA, former chief executive officer (CEO) of Adani airports Sidharth Kapur said, “Covid-19 has made aviation even more complex than it already was. There is a critical need for aviation operators to formalise a structured risk management framework starting with the appointment of chief risk officers.”