Indian Aviation Attempts A New Flight Path Amid HR Issues, Technical Glitches

A new airline is set to take to the skies. An old carrier is on track to make a comeback. And the existing ones are grappling with employee issues to mid-air malfunctions.

That pretty much sums up the story of India’s aviation sector at the moment.

Billionaire investor Rakesh Jhunjhunwala-backed Akasa Air has secured the sector regulator’s approval on July 7 and is set to launch its operation by the end of this month, according to CAPA. The airline is expecting a fleet size of 18 by the end of March 2023 and will add 12-14 planes every year thereafter, CAPA said.

Jet Airways (India) Ltd., too, is getting ready for a relaunch with a brand-new promoter.

But not all are cheering amid the expansion buzz.

On July 2, many employees of Interglobe Aviation Ltd., the operator of India’s largest airline IndiGo, took mass leave on the issue of employee remuneration.

That caused the airline’s on-time performance to take a beating for a day. Nearly 55% of its flights got delayed on that day. The airline said it is in process of addressing some of the issues related to employee remuneration and asserted that its flight operations continue to be normal.

Certain media reports pointed to walk-in interviews by Air India on that day in New Delhi. But BQ Prime was able to confirm from Tata Group executives that there were no walk-in interviews on that day in the city.

IndiGo’s cabin crew and pilots are displeased with continuing pay cuts introduced during the Covid-19 pandemic. Even after a partial rollback, their current compensation is less than what it was pre-pandemic days.

The airline, with a market share of nearly 60%, is also facing human resource management challenges. The airline’s technicians have complained, as reported by the Mint, that the company was not following standard maintenance procedure, putting passengers’ safety at risk.

“IndiGo is in constant dialogue with its employees to take care of any issues or grievances. The aviation industry has undergone a difficult phase over the last 24+ months. As business recovers, we are in the process of addressing some of the issues related to employee remuneration. This is an ongoing activity, and we will continue to take employee feedback in the process,” a company spokesperson said in an emailed response to BQ Prime.

“With regards to the maintenance procedures, such allegations are completely baseless and are being spread with malicious intent. IndiGo follows the highest standards of aircraft maintenance and adheres to all regulatory norms.”

“Our operations continue to be normal, while we add several new destinations to our network,” the spokesperson said.

IndiGo’s rival Air India, now part of the Tata group, has its own sets of issues to contend with.

According to aviation industry experts, winning back the airlines was the easy part, but the complete image makeover is going to be a major uphill task for Tata Sons. Air India’s market share, according to data published by the Directorate General of Civil Aviation, has been constantly declining since July 2021.

An email to Air India spokesperson remained unanswered.

Separately, SpiceJet, having a market share close to 10%, has been battling multiple technical glitches lately, forcing the regulator DGCA to issue a show-cause notice earlier this month. The airline’s mounting losses have been a key overhang for a long time.

Expansion Buzz Amid Existential Challenges

Boeing’s commercial market outlook released on Sunday estimates that as opposed to annual fleet growth of 2.8% globally, South Asia’s going to be 6.2% for the next 20 years. The annual traffic growth in South Asia at 6.8% will be twice the global average during the same period. India is a predominant player in the South Asian region.

An increase in air connectivity to major non-metro cities is considered to be the next big growth driver for the sector in the coming years, given the rapidly growing passenger traffic in the new routes. Many airlines have added newer routes to their schedule after the Airports Authority of India awarded 948 valid routes to airlines.

The number of air passengers is set to cross the 50-crore mark in the next 15 years, according to Invest India—a government website for investment promotion into India. It was less than 8 crore in 2010.

Sample these facts to get a sense of how things are set to change in the sector:

• There are 710 aircraft in the country at the moment. The fleet size is expected to touch 2500 by 2038, according to a government website. It is expected that more than 100 aircraft will join every year and existing and private airlines expand their operations.

• According to Invest India, “in 2010, 79 million people travelled to/from/or within India. By 2017 that doubled to 158 million, and this number is expected to treble to 520 million by 2037.”

• By 2024, the country will add additional 100 airports under the UDAN scheme from the current 120 airports, said Invest India.

• The country would require an additional 1,500 to 2,000 pilots every year to cater to the growing number of aircraft that will be added to the fleet. Currently, there are 17,726 registered pilots in India.

The Challenges Remain

The biggest challenge facing the aviation sector is the spurt in the price of aviation turbine fuel. The fuel is estimated to account for nearly 40% of the operating cost of an airline. Jet fuel prices have gone up more than 60% so far in 2022. Given this, will the airlines be able to pass on the entire burden to price-sensitive customers?

Another issue is if the aviation industry has space for more low-cost carriers.

New entrant Akasa Air said it is entering the domestic market dominated by the low-cost carriers. According to the CAPA-Centre for Aviation, “LCCs currently account for nearly 80% of India’s domestic capacity.”

And finally, sourcing quality manpower. It’s becoming a challenge as airlines will require significantly high numbers of trained commercial pilots every year.