Flight Plan

What will 2020 bring for Indian aviation?

Ashwini Phadnis | Updated on January 07, 2020

While analysts see more financial pain, private carriers look to expand their fleet and services. Ashwini Phadnis reports

After an event-packed 2019, what happens in the Indian aviation sector in 2020 will largely depend on how the path-breaking developments over the last year pan out during the new year.

Among the big-ticket changes introduced in 2019 was the government laying down the roadmap for leasing of aircraft in India. If carried forward, this will mean that airlines in India will be able to control one major component of their costs: fluctuations in foreign exchange, which affect what Indian carriers have to pay for leasing their aircraft — as they will be able to lease their aircraft in INR.

The tragic crashing of two MAX aircraft led to the worldwide grounding of this variety of aircraft. There could be some action on this front, with manufacturer Boeing pushing for the early re-entry of the aircraft. However, the aviation industry remains divided on whether the plane should be certified and allowed to fly again or not. In India, SpiceJet and Jet Airways operated this variety of aircraft till it was grounded.

Another event that impacted Indian aviation was the discontinuation of Jet Airways’ operations after 25 years of successful functioning.

Though news of the airline finding a new buyer keeps trickling in, there is little to show that the airline will take to the skies again anytime soon.

According to Siddhanta Sharma, President & CEO, InterGlobe Air Transport, “Although the transitory vacuum created in the domestic capacity due to Jet stopping operations was filled in swiftly by the local airlines, the one created on the international side will be slow to fill and, to some extent, may be rationalised at lower capacity levels.”

This does not spell good news for Indian carriers. Couple this with issues with some variants of the Pratt and Whitney engines powering the Airbus Neo 320 aircraft operated by IndiGo and GoAir — which impacted the industry’s capacity and passenger growth — and it should not come as a surprise that ICRA is expecting FY2020 to witness a muted domestic capacity growth, as measured by available seat kilometre (ASKM), of around 3 per cent in FY2020.

The domestic passenger traffic growth for FY2020 is also expected to be lower at 4.5 per cent, after five years of double-digit growth. ICRA further adds in its report that excluding Air India, the rest of the industry is expected to report a net loss of around ₹1,500 crore in FY2020 with a total debt of around ₹7,000 crore as on March 31, 2020.

According to Kinjal Shah, Vice-President & Co-Head - Corporate Sector Ratings, ICRA, “As the competitive intensity remains high, pressure on yields is expected to continue. Thus, despite the expected passenger growth over the medium term and the ongoing cost rationalisation initiatives of airlines, the financial health of the industry will continue to deteriorate.”

Little is known about what will happen to Air India and no one can say with certainty whether the government will sell its share in the loss-making airline or whether it will continue to operate in an atmosphere of uncertainty for another year. However, undeterred by all this not so promising news, private Indian carriers are getting set for welcoming new aircraft and expanding their routes and destinations.

More comfort, more choices

Not only are the domestic carriers bringing in newer aircraft like the Boeing 787-9 but they are also going to provide more comfort in the air and new destinations to choose from, in the new year.

The new kid on the block, Vistara, is getting new aircraft from the Airbus A320 family. The airline is hoping to have 42 aircraft by the end of March this year, including Boeing 787-9 and the Airbus A 321. “By the end of fiscal 2021, we plan to add another 12 aircraft to support the expansion of both our domestic and international operations,” says Leslie Thng, Chief Executive Officer, Vistara.

The airline is also planning to further “densify” its domestic network to multiply frequency on existing routes and adding new routes and destinations.

IndiGo’s focus in 2020 will be on strengthening point-to-point connectivity and growing its domestic network through new destinations and additional frequencies, says William Boulter, Chief Commercial Officer, IndiGo.

“We are excited to receive more A-321 aircraft in 2020, which will be a step towards decongesting the metro airports, while providing a better in-flight experience to our passengers,” he adds.

On average, IndiGo is expecting to receive three aircraft every month during the year which, Boulter says, will not only help strengthen connectivity but also assist in expanding the airline’s operations to newer domestic and international markets.

While the other players — GoAir and SpiceJet — did not share their plans for 2020, they too will have to expand their fleets and routes if they have to keep pace with airlines like Vistara and IndiGo. For fliers, another plus during 2020 is going to be that the new aircraft are going to come with enhanced facilities. So, Vistara aircraft will have cabin features like in-seat AC power outlets, USB charging ports and Personal Electronic Device holders.

“Our Boeing 787-9 and Airbus A-321 neo (New Engine Option) will come with new in-flight entertainment systems at par with global standards and will offer more choice to customers on our medium and long-haul flights,” Thng says.

IndiGo is looking at changes like better cushioned seats as well as offering a range of in-flight amenities for sale (a high-quality blanket, for example) and a recently introduced wide choice of meals and snacks.

“The Airbus 321 also has less seat density than our domestic Airbus A 320s, meaning that each seat row has an additional 2” of space,” Boulter adds.

Published on January 07, 2020

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