2012 Turbulent for Indian Aviation

According to news reports, the Indian aviation industry witnessed tumultuous developments in 2012 with the grounding of Kingfisher Airlines and financial trouble hitting Air India and other carriers even as a prestigious airport project contract bagged by a leading Indian infrastructure firm was terminated by the Maldivian government.

The report further stated that steps to check high air fares did not have the desired impact and affordable ticket prices remained a distant dream. This also led to a fall in domestic air traffic, with the passengers carried by Indian airlines dropping 2.94 per cent between January-November compared to 2011.

The FDI liberalisation move saw no takers, though there were hopes that 2013 would witness some interested foreign airlines picking up equity in Indian carriers, some of whom were in talks on the issue.

Commenting on the FDI decision, IATA chief Tony Tyler said, “As long as high taxes prevail, high airport costs and high cost of operations exist, you are not going to get a lot of people to invest in airlines.”
While welcoming the move, he said, “Unless conditions in India are improved for the airlines, you are not going to see a flood of foreign carriers coming into the industry. Foreign capital needs a return just as anywhere else.”

The year also saw the government coming to the aid of Air India by promising additional equity of Rs. 30,231 crore in tranches between 2012 and 2021 provided the airline fulfils the tasks set out for it in a time-bound manner as per its Turnaround and Financial Restructuring Plans.

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