Indian aviation's flight has turned choppy

India's civil aviation industry faced turbulent weather in 2014 even as two new airlines with foreign collaborators joined the five scheduled operators to trigger a price war that squeezed margins further, with falling fuel costs giving some respite in later months.

The Tatas-promoted AirAsia, in collaboration with the Malaysian budget carrier and Delhi-basedentrepreneur Arun Bhatia's Telstra TradePlace, took wings in June as a regional carrier, while Vistara, again a Tatas venture with Singapore Airlines, secured air operator permit.

This apart, AirCosta, led by Andhra Pradesh-based industrialist L P Bhaskar Rao, saw its first full-year operation.
But these new entrants apart, the aviation industry was saddled with high interest cost in 2014, which stretched the bottom lines further, with high fuel cost adding to its woes for the bulk of the year save from mid-November when the global crude prices started to plummet.

As a result, growth did not translate into higher profits for most carriers.

Between January and October, the latest month for which data is available, state-run Air India andprivate airlines ferried 55 million passengers, which was a healthy growth of 8.61 per cent over the 50 million in the like period of the previous year.

Yet, as per industry estimates, the carriers are expected to log a collective loss of more than $2 billion in the current calendar year. The passenger load factor, which is a key indicator of operational efficiency, varied between a low of 63.3 per cent and a high of 85.9 percent.

"We are trying to review the policies to make it easy for the sector. We have a draft policy and we are considering a couple of reforms to help the industry. But there is much to do and we in the government know it," according to Civil Aviation Minister P Ashok Gajapati Raju.

But experts said mere talk will not help. "Good days 'Acchhe Din" appear far away. The Indian aviation industry is in ICU. It needs an urgent shock therapy," said Amber Dubey, partner and India head at KPMG.

The year started with the sector's regulatory regime hitting an unexpected air pocket - the US FederalAviation Administration (FAA) downgraded the industry on grounds of safety.

Jet Airways merging its budget arm JetLite to become a full service carrier. Some others had to consolidate their operations due to financial strain.But all was not bad news in 2014.

By: Rohit Vaid