Airports in a bind over grounded aircraft

The Indian commercial civil aviation sector has over 700 aircraft registered.

Even as players in the aviation sector attempt to expand and widen their reach, close to 15 percent of India’s commercial aviation fleet remains grounded!

If you are flying out of some of the major airports in the country, you might notice that most of the bays are occupied by aircraft belonging to IndiGo, SpiceJet and Go First airlines, grounded for various reasons. You might also see aircraft belonging to Kingfisher Airlines and Jet Airways and a few other aircraft that are even older and in various states of disrepair.

The Indian commercial civil aviation sector has over 700 aircraft registered, data from the Directorate General of Civil Aviation (DGCA) showed. Over a 100 of these are grounded. This includes the entire fleet of 54 aircraft of Go First and 40 aircraft of IndiGo which are grounded due to engine trouble. Add to that the grounded planes of SpiceJet and the number crosses the three digit mark.

How does it matter to the airports?

Airports earn revenue from a mix of passengers, retail, landing and route navigation charges and parking. This involves frequent turnaround to ensure that the same infrastructure is used multiple times a day, be it aerobridges or bays or check-in counters. With grounded planes occupying bays, airlines wanting to add flights are constrained.

The non-availability of bays severely constrains the ability of the airports to allocate additional flights to any airlines. Planes moved from the bays are simply shifted to a remote part of the airport. The costs are unjustifiable from an airport perspective. Multiple parties have claims over the assets at airports - starting with the lessors, the Airports Authority of India (AAI), fuel companies, service providers and the airports themselves. Any attempt to change the status quo leads to multiple parties approaching the court and then the airport operator being forced to the court as well. This leads to additional burden in terms of time and expenditure on the airport operator. Not to mention the fact that the bays remain occupied and it takes a lot of effort to shift idle planes without damaging them.

Airlines which are operating successfully, such as IndiGo and SpiceJet will eventually pay for the occupied bays. In IndiGo’s case that may well be compensated by the engine manufacturer Pratt & Whitney However, that may not be the case for Go First. The airline, which filed for voluntary bankruptcy in May, has not shown any signs of flying again, just yet. Each passing day, without suitors, makes it difficult to invest in maintenance of planes. If the lessors manage to obtain a favourable order to take away their planes - the bays will be vacated. That may not happen unless one of the stakeholders challenges the order disallowing the movement of aircraft outside the country on account of recovery of dues.

Why is close to 15 percent of the fleet grounded right now?

Go First's bankruptcy led to all of its 54 planes being grounded. IndiGo’s 40 or so planes are awaiting replacement engines from Pratt & Whitney. SpiceJet has been trying to operationalise more aircraft but continues to have grounded planes, wanting engineering work or parts.

While SpiceJet's return to operations will see some aircraft being off ground, IndiGo's dependency on engines means that their aircraft won't be back in the air very soon. As for Go First, a lot depends on how the courts, lessors and resolution professionals work out a solution.

There is a high possibility that aircraft will remain grounded for Go FIRST leading to both - bays being occupied and payments not being made for the same, impacting airports big time.

Tail Note

The next phase of airport privatisation has been in the pipeline for a long time now. The last phase saw heavy investments by the Adani group. The next phase is rumoured to have clubbing of airports where the smaller airports will be hit hard if an airline goes down, worse if planes are grounded at these small airports.

Will this impact the privatisation or will it go ahead but at a lower investment from private players? The answer could lie on how the current ones remain grounded. From both airlines and passengers perspective, the earlier the planes are back online - the better!