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Indian aviation sector in 2011: Losses, pilots exodus, fuel surcharge play spoilsport

For the Indian civil aviation sector, year 2011 has been one of unrest. The once lucrative sector has witnessed a large exodus of pilots and crew members leaving the country for greener pastures.

For the Indian civil aviation sector , year 2011 has been one of unrest. The once lucrative sector has witnessed a large exodus of pilots and crew members leaving the country for greener pastures.

As the country celebrates 100 years of aviation in India, large scale malpractices were detected at flying academies spread across the country where fake licenses were issued to pilots. The scam raised serious doubts about safety in the aviation industry . About 23 people were arrested which included pilots, senior employees of the aviation regulator Directorate General of Civil Aviation (DGCA) and middlemen involved in the scam.

Despite a 17 per cent growth in passenger traffic, India's civil aviation industry was hit by rising jet fuel prices and interest costs, which ate into the margins of carriers. High taxes on jet fuel and equally high airport charges were the major heads of cost for the Indian carriers, with the global airlines' body International Air Transport Association (IATA) estimating that fuel costs accounted for 45 per cent of the total costs, compared with 30 per cent for global carriers.

Last month, carriers facing financial trouble approached Prime Minister Manmohan Singh seeking his intervention to at least get aviation fuel and loans at cheaper rates. The industry has accumulated losses of nearly Rs 15,000 crore in 2010-11, up from Rs 7,038 crore in 2009-10. Leading the pack is national carrier Air India followed by private sector carrier Kingfisher Airlines. The losses notched up these two giants played spoilsport for the Indian aviation sector in 2011.

The only reprieve was low-cost IndiGo that posted profits during the current tough times. It also announced a buy-order for 180 aircraft from European manufacturer Airbus worth as much as $15.6 billion, touted as the largest aircraft order in aviation history.

During the year, Vijay Mallya-led Kingfisher , which had acquired Air Deccan with much fanfare in 2007, shut down the budget operations to concentrate as the full-service carrier, while its market standing dropped to fifth from third in October.

In a bid to consolidate their position, Indian carriers undertook several steps to cut costs and rationalise their networks to match demand for air travel. While Jet Airways decided to move ahead with plans to have a single no-frills banner instead of running both JetLite and JetKonnect, Kingfisher decided to do away with its low-fare segment , Kingfisher Red, and continue with its full-service brand.

Flights of Air India and Kingfisher were also disrupted for a few days during the year as state-led oil companies stopped supplies demanding daily cash payments for lifting of jet fuel. Air India continued to reel under a huge debt with estimated debt now at Rs 43,777.01 crore towards purchase of new aircraft and working capital loans. Air India suffered a loss of Rs 6,994 crore during 2010-11. The carrier's operations were hit by a nine-day strike by its pilots in April-May over the payment of salary and allowances. The strike disrupted its flight schedules.

This apart, the Air India management faced three strikes, mainly due to late payment of salaries and the issue of the merger of Indian Airlines with Air India, which stranded thousands of passengers and pushed up its losses.

Courtesy: Mail Today