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2021 vision: What will change for Indian aviation?

If Covid is conquered and normalcy returns, the sector should see a lot of action, from the Air India and airport privatisation, to the Tatas’ interests in the sector, to Jet Airways trying a phoenix act. What could be in store in the year ahead? Read on to find out

December 25, 2020 / 06:00 PM IST

There probably has never been a year as turbulent as 2020 for aviation. Last December, as the industry headed into 2020, the hot topics being discussed were the promoters tussle, pilot shortage and neo engines. The year shaped up in such a way that the tussles took a back seat (at least publicly), pilots were available in abundance — with many in West Asia losing their jobs — and the neo engines stabilised — even if they hadn’t, airlines weren’t using the full fleet anyways.

While 2021 was all about the raging pandemic and a new normal, 2021 may be all about vaccines and their success, for Indian aviation.

Privatisation of Air India

The pandemic couldn’t have come at a worse time for the disinvestment programme. With the government pushing for a 100 percent divestment of its stake in both Air India and Air India Express, many bidders were expected when the process started in January. Alas, the world economy started tanking and the situation became grim soon after.

Multiple extensions later, there finally are bidders who have submitted their Expressions of Interest (EoI). Early January, one would know their seriousness and how the negotiations will proceed. The virtual data room, which the airline will throw open for potential suitors, will be a goldmine of data for everyone. Air India is likely to post losses of Rs 8,000 crore in the current fiscal year. That’s the kind of money Kingfisher Airlines owes banks.

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Recovery

The Indian aviation market was on its way to becoming the third-largest aviation market in the world. But 2020 put the brakes on that, though the march hasn’t completely been disrupted. Every other market has been impacted but the domestic recovery in India has been better than most, though not as solid as predicted by the Minister for Civil Aviation.

While IATA has predicted a full recovery to pre-Covid levels only by 2024, the domestic market in India is showing signs of a better recovery cycle. Passenger numbers are not the only parameter one should look at; the critical factor is airline recovery. As India headed into a lockdown, questions were raised on the viability of airlines and their ability to weather the pandemic. Luckily, 2020 did not see any airline go down. But will they be as lucky in 2021?

Tata group airlines

While both Vistara and AirAsia India continue to accumulate losses, a third and fourth airline (Air India and Air India Express) in the stable could complicate matters. The legacy of JRD Tata and Ratan Tata’s special interest in aviation are no credentials to get into a market that is more fiercely competitive and cut-throat than it ever was.

With or without Air India, the airlines from the Tata group will have to chart their path in a better manner. AirAsia India has started inducting more aircraft and launching more routes since the time it came out of the shadow of its Malaysian parent. Will the divorce from AirAsia Group be formalised this year? The airline business cannot be a three-legged race for the Tatas and 2021 will be decisive to break out and decide how aggressive it should be in the years ahead.

Airport expansion and privatization

The pandemic put a spoke in the Adani group’s takeover of airports won during the privatisation exercise. More airports are up for grabs as the battle to control the maximum number of Indian passengers heats up between GMR and Adani. Multiple airports in the country operated by the Airports Authority of India (AAI) are undergoing expansion of both aprons and terminals to cater to the growing traffic. The lower level of traffic during the pandemic gave a breather but with traffic rebounding, the expansion is a much-needed if delayed exercise.

The sector will be keenly watching what happens to the perennially delayed Navi Mumbai airport. Will the Adani takeover help speed up the process or will Jewar, which was a late entrant but has been fast off the block, become operational before Navi Mumbai?

B737 MAX

Both Jet Airways and Spicejet had placed mega orders for the B737MAX. First, the aircraft was grounded after two horrific crashes and then Jet Airways was itself grounded as it ran out of cash. The FAA has cleared the MAX for operations, with airlines in North and South America flying them again. Across the world, regulators want to be very sure that all due processes are followed and there is additional simulator training for pilots before the plane can fly again. Spicejet had 13 in its fleet, which are grounded at airports across the country.

When will India allow the B737MAX to fly again? Spicejet has been in the news for the compensation it has budgeted in its results each quarter. But these funds may come as a life saver for the airline and the new planes could well mean it can compete better. Will passengers view the MAX as safe to fly? In a country where very few can distinguish between Airbus and Boeing, knowing the MAX is a challenge but passengers are likely to take time to get over their anxiety.

An airline comeback?

While airlines the world over are trying to stay afloat, Jet Airways, which suspended operations in 2019, is trying to make a comeback. History suggests that an Indian airline that suspended operations has never returned to flying, but with new rules in place, will Jet Airways defy history?
Ameya Joshi runs the aviation analysis website Network Thoughts.
TAGS: #aviation
first published: Dec 25, 2020 06:00 pm

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