Despite the current upswing, unless airlines in India craft their future growth strategy with care and caution the industry as a whole cannot really hope to be out of the woods

Summarising the state of affairs in the Indian airline industry for the year gone by, Praful Patel observed: “2009 has been an eventful and tumultuous year for the civil aviation sector worldwide. We can draw satisfaction from the fact that the worst is over. Things are turning for the better, which is borne out by the rebound in air traffic figures from October 2009 onwards. I sincerely hope that things will stabilise in 2010 and flying will once again be the preferred choice of travel for people.”

Prima facie, the optimism on the part of the Civil Aviation Minister is, to an extent, justifiable. The civil aviation industry was on a constant slide down the slippery slopes of disaster since mid-2008 when the global economic meltdown overwhelmed the leading economies, plunging airlines the world over into an unprecedented crisis. However, with the symptoms of revival in the global as well as Indian economy beginning to appear, the airline industry, at least in India, appears to be staging a comeback.

Statistics for the period October to December 2009, available with the Directorate General of Civil Aviation (DGCA), indicate a healthy surge in passenger traffic especially on routes to or linking the metros. As per the DGCA, compared to October 2008, there was a 25 per cent increase in the number of passengers carried in October 2009 by all of India’s airlines together. Performance in November was even more encouraging with the percentage rise touching 31.

Apart from the resurgence in the economy, though somewhat incipient at this stage, the favourable trend in the industry is attributable to a number of other factors. Most importantly, airlines, especially the full service carriers, are no longer inclined to be dependent on business class travel and have come to accept the reality and viability of the low cost, low fare business model that was non-existent in the Indian civil aviation scene six years ago. Today, nearly 75 per cent of capacity is dedicated to this model, thereby widening customer base and shifting focus away from the narrow elitist high-end segment of customer base. The infrastructure, which is still woefully inadequate vis-à-vis demand, has improved marginally. Airlines continue to struggle against other odds, like primitive air traffic management leading to congestion, high taxes on Aviation Turbine Fuel and archaic policies that often serve as impediments to progress for airlines.

Such hurdles notwithstanding, airlines are striving to improve connectivity and on-time performance. More by default than design, the airlines would stand to gain on account of the country’s dismal rail services that seem to be getting worse with deteriorating on-time performance, shoddy maintenance of passenger coaches, disconcerting record of operational safety and emerging threat from Naxal insurgency that now affects 40 per cent of the districts in the country. In some sectors, this factor alone could divert a substantial number of rail travellers to air travel so long as the fares are within reasonable and affordable limits.