From a January to forget to a December to remember, Indian aviation has swung sharply this year. The year started on a sombre note with the fear of an Omicron-led wave of COVID-19 impacting businesses, but the tide turned quickly and there has been no looking back since then for Indian aviation.
Domestic passenger traffic finally breached the pre-COVID-19 average, having recorded 4.35 lakh passengers on December 24, 2022. While traffic has been on the ascendancy, the operational fleet count has been descending -- thanks partially to the engine issues which led to groundings at IndiGo and Go FIRST. But the year has seen many highs and few lows. However, one thing that left everyone guessing the entire year was a mega order from the Tata Group.
Year dominated by the Tatas
From taking over Air India in January and looking at running it, growing it, and planning for future expansion, the group, with its new management team, has been doing a balancing act. The year saw the group make decisions on the future of its aviation business. It saw a decision and nod from the Competition Commission of India (CCI) for the merger of AirAsia India with itself and an agreement with Singapore Airlines Group to merge Vistara with Air India and have Singapore Airlines as an equity partner in the combined entity.
While two announcements were made on the fleet front, everyone has been waiting for the mega order since mid-year. Will the order be announced in the last week of the year or get pushed to the next year?
Changes in top management
Air India, Vistara, IndiGo and Jet Airways got new CEOs this year. Apart from this, a number of changes were seen at the CXO level with the appointment of new CCOs at Vistara, IndiGo, Air India and Go FIRST. Such a large churn is not a regular affair in India.
Two up, One down
Rakesh Jhunjhunwala-backed Akasa Air took to the skies this August. In an unfortunate twist to the tale, Jhunjhunwala expired just a week after the launch of the airline. Akasa Air started on a positive note to take on IndiGo but has since been stuck with the global supply chain issues leading to aircraft which are not in the same configuration or with the same amenities.
Another regional airline took to the skies — IndiaOne Air — during the year.
On the other hand, Hyderabad-based TruJet went down. The capacity was too insignificant to get noticed at the national level but that meant that a few city pairs and some airports lost connectivity completely.
Second spot up for grabs all along
The second spot in Indian aviation has been well-contested for a very long time. In the eleven months so far, five airlines have occupied the second spot. While IndiGo remained dominant with over 50 percent market share in all months, for other airlines cracking the 10 percent mark has been a challenge in most months.
Congestion is back but capacity is constrained
As December started on a high note, airports came under pressure for service levels. Social media was flooded with complaints of people spending hours in lines -- from entry to security and immigration. While new records were being made for passenger counts, the challenge was capacity deployment. IndiGo and Go FIRST faced a lot of groundings due to engine issues leading to many planes dotting the ramp at airports.
One way to look at it is that the capacity deployment issues saved the day for the airports, which were absolutely not in a position to handle more flights.
Evacuation
Within a month of the handover of Air India to the Tata group, Russia invaded Ukraine. Yet again, it was “Evacuation time” for India, as was seen many times in the past. But there was no government airline this time which could fly near Ukraine. Except Vistara, every airline flew to airports around Ukraine to evacuate Indian nationals.
The success of “Operation Ganga” ended the argument, at least for now, of the need for a government-owned Air India.
All-time-high revenue and passengers for IndiGo, but where is the profit?
IndiGo reported its highest-ever revenue and capacity in Q1 FY23. Things will only get better from here on, not just for IndiGo but also for other airlines. There was fear of a fare war, which initially did start after the fare caps were disbanded. However, IndiGo, for one, has decided to hold fares even if it comes at the cost of compromise in load factors.
Finally, a weaker rupee and high oil prices meant that even the best-ever revenue performance did not guarantee a breakeven, leave aside a profit.
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