Airline industry survives 2011 with no collapse

The carriers have all been hit by a double whammy. Not only have prices of aviation turbine fuel gone up over the past few months, a falling rupee has also increased their other dollar-denominated cost.

The one remarkable statistic about aviation in 2011 is that despite everything that happened, air travel actually grew. According to the Directorate General of Civil Aviation (DGCA), scheduled domestic airlines carried 5.5 million passengers between January and November 2011, a not insignificant growth of 17.6 per cent over the corresponding period last year. And given how people are jetting off for New Years, I am very sure that the year-end numbers might be even higher.

This is the year that Air India almost fell into a coma, thanks to heavy losses and a critical - although, personally I feel a bit unfair in some places - report by the Comptroller and Auditor General of India. Actually, in most other years, the Air India scandal would have taken up more column centimeters in newspapers than it did in 2011, but that was thanks to the overwhelming allegations in the 2G corruption case.

And then there is Kingfisher, whose continued flying some feel is a miracle in itself. More than half their fleet is grounded, debts are piled sky-high and people are leaving them in droves. But, in all honesty, Kingfisher is not alone. Jet Airways pays most of their creditors on time, but are also saddled with immense debts. Both airlines have also decided to tackle the market in completely different ways: Kingfisher will add more business class seats as Jet removes them.

Yet none of them have been that successful, thanks to flyers choosing a third option- Indigo. Indigo is now the second-largest airline in India after the Jet Airways group (Jet Airways + JetLite) and on a standalone basis is neck and neck with Jet Airways for top spot with a 19.8 per cent market share as of November 2011. Indigo also should be awarded for bringing out the best TV advertisement for an airline this year-their new campaign for their international services launched in September is unique. The campaign was created by W+K and is one of the standout campaigns for the year in my honest opinion.

On the whole, fares have gone up but the airlines have all been hit by a double whammy. Not only have prices for aviation turbine fuel gone up over the past few months, as the rupee collapses against the US dollar, airlines whose lease rentals, aircraft consumables as well as heavy maintenance is dollar denominated have suffered from increasing costs.  Despite these problems fares have not really gone up, thanks to the competition levels. So much so that one newspaper report said that airlines on average lose $25 (Rs 1300) per passenger per flight.

But the year is ending with a new man at the helm of the Civil Aviation ministry. Unlike Vayalar Ravi, the Kerala MP who preceded him, Ajit Singh is not known as a socialist. Supposedly, this has already led to a thawing of relations between Air India and the global airline alliance, the Star Alliance, which Air India was supposed to join put before it was put on indefinite hold, thanks to Air India's financial crisis. And according to rumours emanating from Rajiv Gandhi Bhawan, the Civil Aviation ministry headquarters, there could well be more international flight rights doled out next year.

On the airport front, this year was the first year of completed operations for Delhi's swanky new Terminal 3. Other crucial airport projects are heavily delayed-particularly those in Chennai and Kolkata. Mumbai airport's new terminal is also delayed, which has meant that Delhi is now the largest airport in India and will remain that way thanks to Mumbai's slum-locked nature. Unfortunately, the government has not decided to notify the Navi Mumbai airport project, and with good air connectivity being vital for the growth of a city, Mumbai's politicians and administrators should really push forward.