Turbulence Ahead As India’s Aviation Sector Hits An Air Pocket

The unilateral decision on February 13 ended up reducing 40 flights a day leading to slashing some 7,000 available seats. Stakeholders and air travellers were up in arms. Though travellers have been offered the option of taking their money back and rebooking their flight until April 15, 2024, this kind of decision reducing the number of flight seats to and from Mumbai, India's business nerve centre, not only makes air tickets costlier, it brings chaos to people's lives.

The Ministry of Civil Aviation justified the move. "The government realised that it needs to step in to strike a balance between the needs of the airport's operators and airlines while ensuring passengers have a fulfilling experience while flying from Mumbai Airport,” the Ministry said in its clarification.

Not everyone is convinced, however. “The decision to reduce the number of flights by the government has been taken in haste, it was not taken considering the inconvenience, travellers would face,” said Star Consulting CEO Harsh Vardhan, who doesn't buy the ministry's official reason that the Mumbai airport had okayed extra flight slots leading to congestion.

“The reason the government cited for the reduction in flights is that extra slots were given to the airlines, (however) slot allocation is done by airports only after that is approved by the government,” he said.

Bouncing back from the Covid outbreak, the number of air travellers has been rising rapidly in India. The number of domestic passengers in FY 2023-24 is expected to cross the pre-pandemic level and reach 155 million in FY 2023-24, according to the Centre for Asia Pacific Aviation. CAPA forecasts this may reach 500 million passengers by 2030.

This upward trend is reflected in the month-on-month increase in the number of passengers. But airport infrastructure has failed to keep pace with it, resulting in chaos at major airports during peak season, and sometimes even in the lean season.

Airports Bursting At Seams

Undoubtably, the number of airports has doubled from 74 to 148 due to the government's efforts to improve airports and infrastructure across the country. But operators haven't been able to improve related infrastructure.

The Mumbai Airport is expected to handle its highest-ever annual traffic of 51 million passengers in FY 2024 against the capacity of 55 million passengers. With the estimate set to almost reach the threshold, this is a big challenge for the airport.

On the other hand, Delhi Airport is expected to handle 74 million passengers by the end of 2023-24. Last year, it had 65.32 million passengers. Of the projected 155 million domestic and 68 million international passengers in the country, more than 133 million passengers originate from these two airports.

Both of them are under different phases of development and expansion work. The Delhi Airport expansion is expected to be completed by March this year, as stated in its petition before the Delhi High Court against allowing flights at Hindon IAF station. The timeline for the Mumbai Airport is not clear and work is still going on, inconveniencing passengers and aircraft movement.

Relief Only With Jewar and Navi Mumbai Airports

Airport infrastructure in Delhi and Mumbai is stretched. The situation may let up only when the Jewar Airport near Delhi and the Navi Mumbai Airport in Mumbai are operational.

Jewar airport when completed is estimated to be capable of handling 6.5 million passengers in the very first year of operations, which may begin as early as December 2024 if work proceeds as planned. Navi Mumbai Airport is expected to handle 20 million passengers per annum in the first year and is scheduled to open in March 2025. At full capacity, the two new airports in Delhi and Mumbai, are expected to handle 70 million and 90 million passengers per annum respectively. Until then, travellers have no choice but to put up with the chaos and the long queues.

The other airports, such as Bengaluru, Chennai and Hyderabad, are also overburdened, and undergoing expansion work in varying stages, affecting landing and take-offs, leading to delays, congestion and finally the airlines' on-time performance.

On-Time Performance

Data from Cirium, the aviation analytics website, shows that not even one airline from India is among the top performers for on-time flights in the last three quarters of calendar year 2023. This is despite their having a decent fleet size. The DGCA data has flagged this as well, saying the on-time performance of domestic carriers has gotten worse over the past few years.

Has UDAN Worked?

The centre launched the Regional Connectivity Scheme-Ude Desh Ka Aam Nagrik (UDAN) in 2016 to connect Tier-2 and Tier-3 cities. As a policy, it was expected to change regional aviation with citizens flying in in large numbers via unserved and underserved airports.

After a good start, the scheme fell flat and airline operators either did not start operations or stopped it after they found the scheme unviable.

In August, the Comptroller and Auditor General of India (CAG) presented a report on regional connectivity and its failed objective. The CAG report observed up to UDAN-3, 403 of 774 awarded routes had not begun operations. Of the 371 routes, which saw operations start, only 112 routes completed the full concession period of three years.

As of March 2023, of these 112 routes, only 54 could sustain. Operations in the remaining 58 routes were discontinued after the concession period. The government then launched the UDAN 5.2 scheme in July 2023.

The scheme seems to have lost its charm, which is evident from budget allocations. As per the Interim Budget 2024-25, UDAN will get Rs 502 crore in FY25, lower than the revised estimate of Rs 850 crore for FY24 and the initial estimate of Rs 1,244 crore.

“UDAN scheme is good as an idea, its implementation has to be realigned. This will be resolved once the issue of cost economics and fleet types in the sector is sorted out,"said former Air Sahara CEO UK Bose.

The Grounded Aircraft Problem

Indian carriers are likely to face a crisis that may hit domestic aviation hard in the coming months. According to an industry estimate, a quarter of the sector’s fleet would be grounded by March this year as spares for them are in short supply. Aviation consulting firm CAPA has forecast that 200 aircraft will be grounded in India by March 2024.

The government said in the Lok Sabha on December 21 last year that some 140 aircraft had to be grounded in the country as their engine manufacturer had not been able to supply spares. Civil Aviation Minister Jyotiraditya Scindia said, “95 per cent of the aircraft on the ground in India today are in their current position due to engine supplier Pratt and Whitney facing supply chain issues.”

The Minister added, “We have been in direct touch with Pratt and Whitney and conveyed to them that this situation is unacceptable because air traffic in India is growing exponentially.”

By March end, India would have around 686 aircraft from 655 in December 2023 as fleet expansion is also taking place simultaneously.

“Our aviation ecosystem is in a stage where we cannot let supply chain issues be more severe, as this would derail the glorious growth we have been seeing. This (spares problem) needs to be dealt with urgency and great priority,” said Kapil Kaul, the Chief Executive and Director, CAPA.

Obviously, more grounded planes will lead to more flight cancellations and delays, putting pressure on seats available. Strangely, this crisis has arisen just when domestic aviation looked to be stabilising.