NEW DELHI: In the last few months, almost every airline in the country is facing some sort of crisis. After having a wonderful sail for two-three years, the aviation industry was hit severely last year when international crude prices went up and the value of domestic currency depreciated against the US dollar.
Excessive parking and landing charges, loads of debt and fare wars have also hit the performance of airlines.
The impact of the two macro factors was so big on the sector that every player witnessed their profits plummeting and losses mounting.
The first airline to fall on bad times was the Naresh Goyal-promoted Jet Airways.
While there was the talk of many players being interested in buying a stake in the airline as its debt continued to pile up with the airline having no money for day-to-day operations, the major blow came when in early January it announced that it was defaulting on loan repayment.
In the days that followed, the airline had to ground two-thirds of its aircraft as it did not have the money to pay lessors, defaulted on more repayments and delayed salaries of its staffs.
While talks have been underway for the past two months to implement a plan to rescue the airline, disagreements between different parties have kept the airline in misery.
The problems with IndiGo and SpiceJet are not as complex as Jet’s. Besides facing a pilot crunch, IndiGo has been struggling with rising costs, particularly fuel and finance costs.
SpiceJet, which has been affected by the recent grounding of Boeing 737 MAX planes, is facing issues with capacity addition. The two airlines are reportedly working aggressively to solve the issues by themselves.
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As for Air India, there is no count on the number of issues faced by the state-run carrier.
After a failed disinvestment exercise last year, the Maharaja continues to survive on taxpayer’s money.
Mounting troubles
The combined loss of three airlines, IndiGo, SpiceJet and Jet, was over Rs 2,300 crore in the second quarter of the 2019 financial year.
Experts said losses and inability of carriers to hike airfares due to intense competition were first signs of disruption the sector would face in the near future.