Flying Away

It's been a tough year for Indian carriers so far. The going is likely to be tougher in the months ahead. Is india's aviation boom coming to a standstill or is there a turnaround in sight? By K.S. Narayanan 

 

 

 

 

First, the passengers had to rely only on national carriers for air travel. When private airlines were allowed, there were no aircraft available. As more aircraft were bought, there were not enough pilots to fly. When pilots were taken on board, many of them turned out to be fake.

 

World over, aviators have firm belief in the Murphy’s law: Anything that can go wrong will go wrong. In the story of Indian civil aviation, the epigram has been stretched far too much. The result: an utterly chaotic state of affairs where nothing is going right. A complete breakdown caused by unregulated fall has ensured a bumpy flight where passengers feel harassed and employees are permanently at loggerheads with the government.

 

Every year for the past three years, around this time, thousands of passengers flying domestic and international routes are put through an ordeal at 125 airports across the country, courtesy strikes by pilots of national carrier Air India (AI). Three years back in May 2010, the AI agitation cost the carrier Rs. 100 crore. A year later – in 2011 – pilots of erstwhile Indian Airlines (IA) went on a 10 day strike demanding flying allowance parity with erstwhile AI colleagues that resulted in a Rs. 350-crore loss to the airline. Now this tourist season, it is the erstwhile AI pilots who have decided to go on strike to retain exclusive rights on long-haul international routes. The five-day strike has already cost the airline Rs. 190 crore. The clockwork precision of the strikes – every year at the onset of summer months - makes one pause. Are these strikes regularly organised only to favour other private carriers? Arun Kumar Malhotra of Air Corporations Employees Union (ACEU) points out that it cannot be a coincidence that when the summer tourist rush peaks and bookings soar, Air India operations encounter turbulence.

 

The latest strike is centred on the AI pilots demand that they would not accept pilots of the erstwhile IA being sent for training on Boeing 787 Dreamliners, or for that matter, any other aircraft flown by the striking pilots. Their other bizarre demands include that only pre-merger AI pilots will fly to western nations, among others. Such 'autocratic' demands have rattled even the opposition. "Where in the world do employees decide their own terms of employment and those of their colleagues?" asks former aviation minister Rajiv Pratap Rudy. 

 

The AI mess aside, other private airlines are no better. Suffering heavy losses, the fact that Vijay Mallya owned Kingfisher Airlines has grounded over three-fourths of its fleet, is rolling-back international operations, and not paying employee salaries is common knowledge. Jet Airways is also undergoing a cash crunch. India's airlines have accumulated losses of $8.5 billion over the last six years alone. Small surprise that many have begun counting days for the industry's survival. 

 

Worse, the turbulence has put a spoke in the wheels of India's aviation boom. Commercial airlines, which recorded an explosive growth over the past decade (the number of passengers on domestic trips grew from 14 million a year in 2000 to 50 million passengers last year), are being battered with the stick of high fuel costs and sundry tax surcharges. Passenger traffic continues to rise even today but the growth is nowhere near reaching its expected potential – at least not in the near future. Worse, the recent spate of strikes in Air India and Kingfisher have narrowed supply in the market. Coupled with high inflation, and economic pressures – this has pushed the price of domestic travel up significantly, particularly during the last two quarters. A back of the envelope calculation for the last two years shows that air fares have increased manifold – sometimes by over 100 per cent in certain sectors (see table 1). Caught between arbitrary fare fixations and inconvenient airport facilities and fees, passengers are hapless. 

 

Does this all mean that the aviation boom for India's middle class has ended? Amber Dubey, Partner and Head – Aviation at global consultancy firm KPMG does not agree. "No. What we might see is a temporary slowdown. In the short run, fares are likely to increase and the middle class passenger may feel the pinch.It may take some time for them to get used to the increased charges, à la the price hike in auto-fuels. Once that happens, demand is likely to pick up again," he explains.

 

Not everyone is as optimistic as Dubey though. Apart from rising air fares, falling security standards and infrastructure impediments faced by Indian aviation are worrying questions facing the industry. Sources point out to TSI that the first casualty of airlines' falling revenues is the safety and security of passengers. A recent safety audit by the Directorate General of Civil Aviation (DGCA) leaked to the media in January indicated that all major airlinesin India were compromising on safety to cut costs. Problems included failure to maintain crucial data needed for safe flights, inadequate software needed to monitor the flight data recorder and failure to investigate incidents seriously.

 

If that was not enough, last month aviation authorities released a report saying that there had been a threefold jump in the number of pilots and cabin crew members reporting drunk for work. Further, investigation by authorities last year uncovered a racket of fake pilot licenses being issued by a string of questionable flight schools, often run by former pilots. These fake pilots – now working with different airlines – reportedly have picked up their commercial licenses by flying only a fraction of the stipulated 200 hours. To top it all even DGCA's Air Safety Director came under the scanner for reportedly issuing fake licenses to his relatives and to those of aviation ministry officials and senior pilots.

 

“Air travelling has become a nightmare. It has become a million dollar question whether you reach your destination safe, secure and in time,” bemoans K Muralidhar a frequent traveller within the country. One can hardly blame him. Any passenger would get such jitters seeing drunk pilots reporting to duty and almost a pilot a day being caught with a fake flying license gained by fudging mark sheets and inflating flying hours. The moot question for Indian fliers is that can the authorities make Indian skies secure from such unscrupulous elements? Aviation infrastructure is also worrying industry-watchers. A key issue is the serious shortage of air traffic controllers (ATCs). "The number of ATCshave grown from 1,200 in 2008 to 1,800 in 2011, while the number of flights operated by new airlines have grown manifold,” points out D.S. Raghavan, President of Air Traffic Controllers Guild of India. Besides, an ATC – who controlled 200 flights in a specified period of time a decade ago – now controls more than 1,000 flights in that time. "Air traffic in India is a fraction of what it is in developed nations. Yet, we don't have the infrastructure and personnel to keep pace," a senior ATC told TSI, adding that the nation has a shortage of 300 ATCs. 

 

The recent AI strike and the resulting chaos comes close on the heels of the turn-around plan (TAP) approved by the Cabinet Committee on Economic Affairs (CCEA). As part of the plan, the government has agreed to infuse over Rs. 30,000 crore in the cash-strapped Air India over the next nine years. Many feel that the package is tantamount to throwing good money after bad. Chennai based aviation expert Capt. A. Ranganathan smirks, "National carrier looks to the dole factor for its survival while other private airlines looks upto load factor." Kapil Kaul, South Asia CEO of Centre for Asia Pacific Aviation, an industry think-tank, calls for an intervention similar to the one with fraud-hit Satyam – with a professional management coming in. "AI needs to be privatised, with government maintaining 26 per cent shareholding," he advices.

 

Civil Aviation minister Ajit Singh has admitted that the merger of IA and AI five years ago hasn't worked. But only cosmetic changes – as is the case now – will not deliver positive results. Without bold steps at this juncture, pilots will continue to hold the national carrier hostage. Once the AI mess is behind them, only then can the government begin looking towards the other ills – lack of modern infrastructure, shortage of trained manpower, and staggering taxes – plaguing the sector. After all, merely allowing 49 per cent FDI in the airline sector without addressing these problems would be a self-defeating exercise. If India wants to emerge as the world's third largest aviation market by 2020, fast-track reforms powered by a no-nonsense government is the only solution in sight. 

 

With inputs from Mayank Singh

 

 

---