Hope for aviation turnaround

New Delhi, Dec. 30: The aviation sector may see its fortunes reviving in the coming year after weathering a tumultuous 2012, marked by the virtual shutdown of Kingfisher Airlines, policy gaps and a tough operating environment that was characterised by rising jet fuel prices, airport charges and debt.

The industry reeled under a combined debt load of $20 billion and annual losses of $2 billion. Apart from IndiGo, all the six big airlines made losses.

However, analysts said 2013 might be the year of turnaround.

"The government has initiated a series of measures including foreign direct investment (FDI) in aviation, direct import of aviation turbine fuel (ATF), lifting the freeze on international expansions of private airlines and financial assistance to the national carrier. Looking at these changes, 2013 looks bright as growth is projected with the increase expected in the passenger demand and traffic," Ankur Bhatia, executive director, Bird Group, said.

Jet Airways and Kingfisher Airlines are in talks with gulf-based Etihad Airlines for investments. According to the Centre for Asia Pacific Aviation, Jet Airways would be the most viable option for FDI (foreign direct investment).

Low-cost carrier SpiceJet also said prospective investors, mainly airline companies and financial investors, had exhibited interest.

Air India has regained its market share, which stands at 20.7 per cent at present, making it the second largest airline.

Fresh allocation of bilaterals, aggressive fare schemes, a significantly improved on-time performance and a steady induction of Boeing 787 Dreamliners have helped the national carrier to raise its chances of survival.

With Planning Commission advocating rationalisation of jet fuel prices and review of the tax structure, airlines can hope to face a lower cost regime. The Plan panel has said that either jet fuel should be included in the unified goods and services tax regime or it be accorded a "declared good status" that carries lower and uniform tax rate.

Airport infrastructure, too, has improved. The government is modernising the Calcutta and Chennai airports, while a new terminal building is Mumbai for international flights is expected to be operational by August 2013; the Bangalore airport is also being upgraded.


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