The Outlook…
With the global economic recovery on the horizon,
the aviation industry in India is poised for a spectacular takeoff.
Unprecedented changes are anticipated in the aviation sector as
the domestic passenger segment is expected to
register annual growth rates of over 50% . Even the international
passenger segment is slated to grow at 25% annually as per industry
forecasts.
The looming crisis
Notwithstanding these glowing projections, the current situation in the
industry continues to alarm policy makers, regulators and industry
leaders alike. Presently, flights to
India can be effortlessly found on the
internet as popular web portals compete aggressively to sell cheap
tickets to consumers who are increasingly becoming price sensitive.
This has exerted severe pressure on the margins enjoyed by air
carriers. Adding to the woes of the industry is the abysmal airport
infrastructure visible in the acute shortage of parking bays, takeoff /
landing slots& air traffic control facilities.
The recent hike in the price of Aviation Turbine
Fuel (ATF) has further added to the anguish of the airlines as it has
the potential to take the industry on a downward spiral that can prove
fatal. Rising fuel costs will lead to a steep rise in the price of air
tickets that would result in a significant reduction in passenger
traffic. As a consequence, airlines may reduce the frequency of flights
in the non-lucrative routes severely impairing India’s well developed
airline network. As destinations begin to lose connectivity, passengers
will either respond by reducing their frequency of air travel or choose
to travel by train or buses. Such a scenario will have disastrous
consequences for the entire aviation sector in India. Foreign
investments will dry up and fresh domestic investment will be hard to
find; taking the industry to a point of no return.
The Response
In response to the crisis, the industry has
embarked on a cost-cutting spree and that too with a vengeance. Most
full service carriers have chosen to outsource ancillary functions like
ground handling, reservation, aircraft maintenance, catering, training,
accounting, IT infrastructure, loyalty programme management to reduce
their operational costs. Air lines are now paying more attention to the
air cargo segment and develop its revenue potential by maintaining a
dedicated fleet of aircraft for handling air cargo. To cut down their
labour costs, airlines have also resorted to hiring contract labour for
cabin crew, ticketing and check-in functions and retired personnel from
Air force and PSU’s have been engaged at senior management positions as
part of the cost –cutting exercise.
The government on its part is acutely conscious of
the crisis and has stepped in to avert an implosion in the aviation
space. By keeping the tax on jet fuel at a low rate of four percent for
smaller planes, it has offered an olive branch for regional carriers
that typically use smaller aircrafts. It wants to aggressive promote
regional aviation and has chosen not to cut the tax rate on aviation
fuel for full service carriers which currently hovers at around 30-40%.
The Ministry of Civil Aviation has advised air
-carriers to consume less engine power and reduce their operations on
routes attracting lower load factors. The government is also
contemplating several fiscal and monetary incentives to make India a
major hub for Air craft Manufacturing and MRO (Maintenance and Repair
Operations) in Asia. It is expected that these strategic moves will
give the much needed fillip to the industry and propel it to a new
trajectory of growth.
Resource : http://www.buzzle.com/articles/aviation-in-india-the-
current-scenario.html
Article Source: http://www.
articlesbase.com/flights-articles/aviation-in-india-the-current-
scenario-1890370.html About the Author
Experienced content writer and editor, Jack Olivor
has been working with www.southalltravel.co.uk for 1 year. He is
consultant and expert advisor on flights to India and writing various
tips and advices on holidays and travel industry. Visit
http://jackolivor.blogspot.com/ for more information about him.
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