A Kingfisher Airline flight awaits clearance to take off from the city airport in Mumbai,
High taxes, poor infrastructure, even worse management and the absence of a national aviation policy have hobbled attempts to regroup, analysts say.
Flight School
Civil Aviation Minister Ajit Singh told parliament recently that the combined losses of state-run Air India and five private airlines were expected to reach 2 billion dollars in the financial year ending March 2012.
Aviation Colleges
Air India is staggering under the weight of its debts of more than 675.2 billion rupees (12.27 billion dollars). That is being made worse by losses from a month-long strike by some of its pilots.
Kingfisher Airlines, until 2011 the second-largest operator after Air India, now has the lowest market share and may go bust unless it finds fresh funds. It ended all international flights in 2011.
Despite strong growth in air passenger numbers of 12 to 17 per cent annually between 2006 and 2011, only 3 per cent of the Indian population flies, according to a recent report by Mumbai-based investment information and credit rating agency ICRA.
India's aviation industry is a potentially high-growth market, but several things have gone wrong since 2005, when several private firms entered the market with high hopes and passengers benefited from competitive fares.
"The state of today's Indian aviation industry is the result of a number of factors -- not least of which was aggressive expansion by the country's airlines just as the world encountered a pair of massive economic shocks in succession -- the skyrocketing oil prices in 2008 that shifted almost overnight into a global financial crisis," said Tony Tyler, director general of the International Air Transport Association.
The high oil prices and the limited ability of airlines to raise their prices due to strong competition and overcapacity left the operators with high debt burdens and liquidity constraints, according to the ICRA report.
Budget carrier Indigo is the only airline that has managed a smooth ride.
The high cost of aviation fuel has impacted the industry the world over but is worse for India, which imports most of its oil.
One thousand litres of aviation fuel cost 1,207 dollars in Mumbai in March compared to 808 dollars in Singapore, according to global aviation analyst Centre for Asia Pacific Aviation.
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