Tumultuous year for Indian aviation

Dec 28 2012, 12:25 IST
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It was not a smooth sailing for the Indian aviation industry in 2012. (Reuters) It was not a smooth sailing for the Indian aviation industry in 2012. (Reuters)
SummaryIt was not a smooth sailing for the Indian aviation industry in 2012.

It was not a smooth sailing for the Indian aviation industry in 2012 as it saw the grounding of Kingfisher Airlines and financial trouble hitting Air India and other carriers besides a prestigious USD 500 million airport upgrade contract bagged by a leading Indian infra firm being terminated by the Maldives government.

To provide some succour to the ailing Indian carriers, the government came up with some pro-industry policies like allowing foreign airlines to invest in their Indian counterparts, but to no avail.

Even steps to check high air fares did not have the desired impact and affordable ticket prices remained a distant dream. This also led to a fall in domestic air traffic, with the passengers carried by Indian airlines dropping 2.94 per cent between January-November compared to 2011.

A negative development was the "unilateral" termination of the prestigious Male airport expansion and modernisation project contract awarded to major infrastructure firm GMR, by the Maldives government. The contract was awarded to the Indian company by the previous regime there in 2010.

The FDI liberalisation move saw no takers, though there were hopes that 2013 would witness some interested foreign airlines picking up equity in Indian carriers, some of whom were in talks on the issue.

Commenting on the FDI decision, IATA chief Tony Tyler said, "As long as high taxes prevail, high airport costs and high cost of operations exist, you are not going to get a lot of people to invest in airlines."

While welcoming the move, he said, "Unless conditions in India are improved for the airlines, you are not going to see a flood of foreign carriers coming into the industry. Foreign capital needs a return just as anywhere else."

The year also saw the government coming to the aid of Air India by promising additional equity of Rs 30,231 crore in tranches between 2012 and 2021 provided the airline fulfils the tasks set out for it in a time-bound manner as per its Turnaround and Financial Restructuring Plans.

While a strike by pilots disrupted Air India operations for 58-days, Kingfisher Airlines' engineers and pilots also struck work over non-payment of several months' salary dues.

This led the airline to declare a lockout, grounding its entire operations. Soon thereafter, aviation regulator DGCA suspended its flying permit, which in any case expires on December 31.

The Vijay Mallya-owned carrier has now submitted an interim revival plan to resume

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