Irfan Hossain, 2007-2-10-101 Business Communication, BUS 231 () Journal 1, 31 May 2009

Indian Airlines Caught In Air Pocket The aviation industry was once the vibrant symbol of Indias economic progress. But present scenario is different from its heyday, it is now going through a rough ride of big losses, high debt and fall in demand. The addressed problems are mainly due to over expansion, rise in jet fuel cost, and cut throat competition. A recent report has highlighted the fact that the aviation industry is in need of great help from the new government. The report also figured out that the industry is in a very critical state and likely to suffer a loss of 1.75 billion dollars, which is literally double compared to the previous year. Frightening figures not just end there, total loss incurred by the industry also accounts for one fifth of the total 8.5 billion global airlines industry loss. Surprising fact is the Indian airlines only account for two percent of the total air traffic. The slump in the industry is due to a steady fall of passengers over the years. Recent figures are a far cry from the government estimated figure of 25% annual growth. Industry once enjoyed double digit growth fueled by cheap fares and consumer affluence among the middle class. But rise in jet fuel has pushed passengers back to trains. There also has been a fall in business and leisure travel due to after effects of global financial crisis, thus affecting the industry directly. Industry experts have suggested a few remedies, such as reducing jet fuel taxes and also allowing domestic airlines to go international for the revenue boost. The report also states that the foreign airlines should be allowed to buy equity in the ailing domestic airlines. Access to fresh capital might help the domestic airlines to recoup from this state. State airline Air India is under bleak condition, it made a loss of 800 million in the past year and a staggering debt of 4 billion lies on its shoulders. Even the merger with domestic carrier Indian has not brought any prosperity. Even the 2 major private airline groups, Jet Airways and Kingfisher Airlines have hefty debts and big losses. Experts assume that no-frills airline model could be the platform for the future growth.

Source: The Daily Star, 25 May 2009