Rewind 2021: Indian aviation industry was able to breathe a little easier
India’s aviation industry was able to breathe a little easier in 2021 as domestic flight operations hit pre-pandemic levels, although international services continued to remain reduced due to Covid-related travel restrictions .
The sale of Air India to the Tata Group and the arrival of the new airline Akasa Air backed by Rakesh Jhunjhunwala in 2021 are likely to introduce more competition and change the dynamics of the Indian aviation sector in the years to to come.
While the Ministry of Civil Aviation (MoCA) removed all capacity restrictions on scheduled domestic flights on October 18, the lower and upper limits on domestic air fares remain in place.
Both – capacity restriction and fare limits – were imposed by the MoCA from May 25, 2020, when regular domestic flights resumed after a two-month suspension due to COVID-19.
Although the MoCA announced on November 26 that scheduled international flights would resume from December 15, the decision was put on hold on December 1 following the spread of the Omicron variant of the coronavirus.
Regular international flights have been suspended in India since March 23, 2020. Currently, special passenger flights are operated between India and around 32 countries on the basis of air bubble agreements signed with them.
The American aircraft manufacturer Boeing having carried out all the necessary software corrections in the 737 Max aircraft to the satisfaction of the Indian aviation regulator, the General Directorate of Civil Aviation (DGCA), the ban on commercial flight operations of the plane was lifted after 27 months.
All Max planes were grounded in India by the DGCA on March 13, 2019, three days after an Ethiopian Airlines 737 Max plane crashed near Addis Ababa, which left 157 people dead, including four Indians.
Akasa Air – the new airline backed by leading investor Jhunjhunwala and aviation veterans Aditya Ghosh and Vinay Dube – has obtained the Certificate of No Objection (NOC) from MoCA to launch commercial flight operations in the first half of August.
The DGCA having given the green light to Max planes at the end of August, Akasa Air signed an agreement with Boeing on November 26 for the purchase of 72 Max planes.
Aviation consulting firm CAPA said last month that disruption to India’s aviation industry due to Akasa Air may be felt from 2024-25 “once it reaches scale and achieves a competitive cost base “.
SpiceJet reported a net loss of Rs 935 crore and Rs 998 crore in 2019-2020 and 2020-21, respectively. In the first six months of the current fiscal year, the airline recorded a net loss of Rs 1,290 crore.
Sections of SpiceJet employees went on strike outside Delhi airport on September 3 and November 2 to protest the drop in wages and its irregular disbursement.
SpiceJet chairman and chief executive Ajay Singh told PTI in October that employees were receiving their full pay on time and all compensation issues had been resolved.
SpiceJet is the only airline in India that currently has Max planes – 13 of them – in its fleet. In November, the low-cost carrier said it had reached an agreement with Boeing to settle outstanding claims relating to the grounding of the 737 Max aircraft and its return to service.
CAPA said the risks to SpiceJet would remain “high without a serious recapitalization” and that “long-term stability” could be achieved with a recap.
After much effort over the years, the Narendra Modi government finally managed to sell heavily indebted Air India in 2021 to a private entity.
On October 8, the Center announced that Talace Private Limited – a wholly owned subsidiary of Tata Sons – had defeated a consortium led by Ajay Singh by offering Rs 18,000 crore to win the Air India bid.
Air India should be definitively handed over to the Tata group in the first quarter of 2022.
The Tata Group already owns and operates two airlines – Vistara and Air Asia – in India. It is not known whether Vistara would merge with Air India or not.
Likewise, it is not clear whether Air India Express – the wholly owned subsidiary of Air India which operates only narrow-body aircraft – will or will not be merged with low-cost carrier AirAsia India.
On July 8, Jyotiraditya Scindia took office as Minister of Civil Aviation replacing Hardeep Singh Puri. Under his responsibility, the MoCA has given a great boost to the drone industry.
On September 15, the MoCA approved a PLI program for drones and drone components with an allocation of Rs 120 crore spread over three fiscal years. The PLI program emerged as an extension of liberalized drone rules, 2021, released by the MoCA on August 25.
India’s drone industry will have a total turnover of up to Rs 15,000 crore by 2026, as the government has given a major boost to the sector with the PLI program and liberalized rules, Scindia said on September 16. .
The National Company Law Tribunal (NCLT) approved the Jalan Kalrock Consortium’s resolution plan for Jet Airways in June, two years after the once-well-known full-service carrier initiated insolvency proceedings.
Earlier this month, the winning Jet Airways consortium said it wanted to inject funds into the airline and approached the NCLT to speed up the implementation of the resolution plan approved by the insolvency court in June of this year.
The consortium, in a statement, also said it plans to restart domestic operations no earlier than 2022 as a full-service carrier.