Aviation Industry

In: Other Topics

Submitted By jyotimeena9413
Words 1143
Pages 5
Indian aviation industry is passing through a bad phase. Though, Indian carriers flew over 55 millions domestic passengers between January and November against 47 million in the like period of last year, they are finding it extremely difficult to continue with their expansion plans and existing operations, amid rising fuel prices and other policy constraints.

Except the low-cost airline IndiGo, which continued to earn profit, all the other airline players faced tough times and many of them had to cut employee’s salary owing to their bad financial conditions.

The crisis became more evident recently when major private player Kingfisher Airlines cancelled its operation on a number of routes owing to the losses it was incurring on it. The government is also under pressure as the state-run Air India itself is reeling under a huge debt, estimated at over Rs 40,000 crore. A 50 to 60 per cent hike in the jet fuel prices, which account for 40-50 per cent of an airline’s operating cost, has made it difficult for airline players to make their operation profitable. The airline players are blaming central government for imposing unreasonable and unbearable duties on jet fuel prices, and demanding a cut in the taxes levied on the same.

Amidst the growing concern over an emerging crisis in aviation sector, industry honchos are mounting pressure on government to either relax taxes on ATF fuel or announce a bailout package for the ailing airlines.

Background: Indian aviation and India’s mass transit system

Rapid economic growth in India, especially in last 7-8 years has made air travel affordable to more and more Indians. Owing to the increasing number of low-cost carriers like SpiceJet, Paramount Airways, GoAir, IndiGo Airlines, there has been a spurt in the number of domestic air-travelers in last few years. The growth has been so much so that Delhi-Mumbai route…...

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