Double the debt

The report, "Aviation Agenda for The Next Indian Government" finds that sector losses for year ending March 2009 hit US$ 1.75 billion, double the year previous. Despite the fact Indian airlines contribute just 2% of world air traffic, Indian losses account for 20% of global airline debt, estimated at US$ 8.5 billion International Air Transport Association.

"Critical stage"

Kapil Kaul, Indian head of Center for Asia Pacific Aviation comments, "The industry now is at a very critical stage". Over expansion in an attempt to grab market share, high fuel costs and increased competition have left the ailing industry requiring drastic treatment.

Passenger nosedive

April saw domestic passenger numbers fall by an astonishing 591,000, a 15% drop on last year. All a far cry from past double-digit growth and projections of 25% annual growth through to 2010. Credit crunch and financial uncertainty has driven travelers back to the the more reliable railways.

Government intervention

Kaul recommends that Government help reduce operational costs, namely jet fuel taxes, "It needs to quickly restructure and the new Government has to help them reduce high structural costs". In addition, Kaul concludes that foreign airlines be allowed to take equity stakes in domestic carriers.

Industry rationalization

Air India has accumulated debts of US$ 800 million and Jet Airways reported third quarter losses of US$ 44 million, rationalization through merger, acquisition or bankruptcy is inevitable. Remedying the situation will be painful, how painful depends on whether Congress listen to the reports conclusions and chose to intervene. The industry must hope that their call is finally heard.