Next steps for aviation

Opening international traffic will improve prospects

The Union Minister for Civil Aviation, Jyotiraditya Scindia, tweeted on Tuesday that pandemic-related controls on international flights to and from India will cease from March 27. This is long-delayed, and it is welcome that the government has finally moved on it. The “air bubble” arrangements, which were initially supposed to limit travel to India from areas with controlled cases or flights with humanitarian requirements, had for months ceased to be relevant. All they were doing was preventing passengers to and from India from changing flights at major aviation hubs, thereby driving up the price of tickets. Two years into the pandemic, the tourism and hospitality sector has been devastated and is still not close to approaching its pre-pandemic output. The civil aviation sector in particular may lose as much as Rs 26,000 crore in the coming year, according to ICRA, a ratings firm. Thus, reducing the cost and increasing the convenience of flying into India is essential.

Even the domestic-focused carriers, such as SpiceJet and IndiGo, have between 20 and 25 per cent of their available seat kilometres (ASK) devoted to international operations. The latter intends to increase this capacity to 40 per cent of the total in coming years. For full-service airlines like Air India, the equivalent was closer to 70 per cent. Shares of traded airlines jumped sharply early on Wednesday as a response to the minister’s announcements. Both IndiGo and SpiceJet shot up by over 4 per cent in the morning. Vistara, the joint venture between the Tata group and Singapore Airlines, also had plans to start direct flights to the US in addition to its relatively new flights to Paris and London, but that will depend upon how soon the Boeing 787 jets it wants can arrive.

But it is not just the existing airlines that will be impacted by this move. The past few years have seen enormous interest from investors in the sector, in spite of it being in the doldrums due to the pandemic. Including the purchase by Tata Sons of Air India from the government, there are three new entrants in the sector. The Jet Airways brand is to be revived by a consortium, and investor Rakesh Jhunjhunwala is promoting a new airline called Akasa. There are many questions still to be answered about what a mature civil aviation sector in India would look like. How will the three Tata-linked airlines — Vistara, Air India, and the Indian version of AirAsia — play well together? Can Air India restore trust in its brand and service? Are the members of the Jet Airways consortium capable of starting up the airline from pretty much zero, and what place will Akasa occupy in the low-cost to full-service continuum? How will existing airlines take IndiGo’s expansion into international travel, and will that company’s famed low-cost aircraft management survive the addition of jets designed for international travel? What is certain, however, is that the emergence from pandemic-era restrictions will allow for these questions to be answered sooner rather than later. The government — no longer an active player in the business after the sale of Air India — must now return to playing a supportive role and aid in the creation of stable, growth-enhancing competition in the sector.