Symptomatic stall – The aviation industry needs policy changes and regulatory overhaul

Source: The post is based on the article “Symptomatic stall – The aviation industry needs policy changes and regulatory overhaul” published in The Hindu on 6th May 2023.

Syllabus: GS 3 – Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Relevance: About the challenges faced by Indian commercial aircraft operations.

News: The Go Airlines, a low-cost carrier, became India’s first domestic airline since the outbreak of the COVID-19 pandemic to go into a mid-air stall and seek bankruptcy protection.

What are the reasons behind Go Air’s insolvency?

What are the challenges faced by Indian commercial aircraft operations?

India’s pandemic lockdown, the increase in crude oil prices due to the Russia-Ukraine war and the rupee’s depreciation against the dollar increased aviation turbine fuel (ATF) costs for domestic carriers.

India’s commercial air transport industry has high capital and operational costs. So, they operate with wafer-thin profit margins.

For more than a decade, India’s budget airline sector’s rivals adopted highly aggressive pricing strategies to gain market share. That stretched balance sheets and made companies more vulnerable to shocks.

India’s tax structure keeps ATF costs prohibitive and a regulatory apparatus is outdated.

What are the government initiatives to boost India’s aviation industry?

The government should find long-term policy solutions if it wants India’s struggling airlines to be recovered.