Indian aviation facing most uncertain phase
The Centre for Asia Pacific Aviation (CAPA)’s annual outlook for fiscal 2012- 13 states that Indian aviation was facing its most uncertain phase in more than a decade.
June 10, 2012
The Centre for Asia Pacific Aviation (CAPA)’s annual outlook for fiscal 2012- 13 states that Indian aviation was facing its most uncertain phase in more than a decade. After reporting estimated record losses of just over US$2 billion in the year ended 31 March 2012, the country’s carriers were facing “an equally challenging year ahead”. “Weak balance sheets, increasing costs, regulatory uncertainty, a sluggish Indian economy and a difficult global environment will continue to pile the pressure on airlines, especially the poorer performing carriers,” CAPA said. Though CAPA has estimated that there will be 7-8 per cent domestic capacity growth in the coming year, it has cautioned that the government of India might have to temporarily shut down Air India for two-three months due to human resources issues. Commenting on the performance of the carriers, in the 12 months ending March 2013, Air India will once again be the worst performer in the industry and report a loss of INR70 billion (US$1.3 billion). Kingfisher Airlines is projected to lose INR12-14 billion (US$220-260 million). However, the remaining four private carriers combined could post a modest profit of approximately INR11 billion (US$200 million). CAPA has also pointed out that Air India could face a temporary shutdown due to human resources issues. The main hurdle that Air India has to overcome emanate from the merger between Air India and Indian Airlines. “The integration of human resources has been ineptly handled and almost willfully ignored, with nobody within the airline senior management or at the level of the government having taken responsibility,” comments CAPA, adding “this has been a constant source of tension within employee ranks and after years of neglect a committee was established in 2011 to look into staff grievances. The committee submitted its report to the Ministry of Civil Aviation in early 2012. In the absence of any strategy of its own to deal with the issues at hand, the Government is left with virtually no option but to implement the report’s recommendations.”