Flight Plan

2022 holds promise for the airline sector

| | Updated on: Jan 09, 2022
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Omicron might dent growth, but the long-term outlook seems promising

Poonam Verma

Covid-19 impacted Indian aviation quite badly, and the onset of Omicron has only exacerbated the situation.

However, the State governments and the Centre have already initiated steps to combat the disease. Before Omicron hit, the Ministry of Civil Aviation (MoCA), had said the industry is returning to pre-Covid levels and airlines have reached 90 per cent of the pre-pandemic peak traffic in November 2021. The Centre for Asia Pacific Aviation (CAPA) India, in a report titled India Airline Outlook 2022, has indicated that 2022 is expected to see a surge of 52 per cent in domestic and 60 per cent in international air traffic. In my opinion, the key factors that will determine the pace of recovery will be the successful implementation of government initiatives, new private investment and opening up of regional airports. 2022 holds a lot of promise. We will see Tata Sons finally taking over Air India; Jet Airways resuming its operations, and there is every likelihood of Akasa Air taking to the sky. The privatisation of Air India will help infuse technology, capital, and the private sector’s management practices into the system. Adding new airlines will help in reducing market monopoly, which in turn will benefit consumers. A major driver of growth for the aviation industry over the past few years has been UdeDesh ka Aam Nagrik (UDAN). It enhanced the regional air connectivity from unserved andunderserved airports by making air travel affordable to the masses, andhelped tap the potential of airports in driving revenue. The years 2019-2020 have seen an increase in passenger demand from Tier-II cities. MOCA presently has set a target ofoperationalising as many as 100 unserved and underserved airports by 2025 under UDAN.Out of that, 61 airports have already been operationalised. At this stage, when the Indian aviation industry is finally showing signs of recovery, the industry cannot afford further casualties like the high price of aviation turbine fuel.The aviation minister has stated that with the current tax structure of the fuel, India cannot have a robust civil aviation sector. He, therefore, urged States and Union Territories to reduce tax, as it will help provide a fillip to the industry.Covid-19 has given the Indian aviation industry an opportunity to re-imagine its future. For now, as passenger traffic nears pre-pandemic levels and with ambitious targets set by the government, it appears that 2022 may prove to be a defining period for the sector. Omicron might affect the growth a bit, but 2022 will be key in determining the long-term outlook for Indian aviation.

(The author isPartner, J Sagar Associates)

Published on January 09, 2022

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