RECESSION: IT’S IMPACT ON THE INDIAN AVIATION SECTOR

Circa 2008 - The bear is loosened. And its claws are delving deeper into the economies across the globe. The year has been the year of extremes – while 11th January witnessed the SENSEX scale it’s highest, a complete volte-face surfaced as the year progressed. The ‘November Rain’ looks scary and no one knows what’s at the door!

While the dark clouds in the US, arising mainly due to liquidity crunch in the financial echelons, had started gathering in 2004-05, no one had ever imagined that this sputtering would lead finally to a global meltdown. More recently, the fall of the western investment banking behemoths like Lehman Brothers, Merrill Lynch and Bear Sterns made the Foreign Institutional Investors (FII) in the Indian Markets turn jittery. This global setback sucked out not only the money from businesses but also crippled the much talked about ‘Indian Growth Story’. The future looks bleak, major sectors have bled to the extent that withdrawals, layoffs, and shutdowns have become the rule of the day.

Aviation is one such sector that has been badly hit. The rise of Crude prices to the recent $147 per barrel and OPEC’s (in) generosity not to increase the crude production have nailed the coffin. Till this date, Indian prices for Aviation Turbine fuel are the highest in the world. This has gradually curtailed the growth of seemingly prosperous futures of Indian low cost carriers like Go-Air, Indigo and Spice Jet. Merger of Air Deccan with Kingfisher, Indian with Air India and Sahara with Jet have completely changed the market dynamics.

The global markets are now presenting a different picture. As the commodity futures and derivatives are in a downturn, one of the outcomes of such a course is a fall in the prices of the crude. But the irony is such, that when the aviation companies were expecting their fuel costs to go down, the general recession ate away their volumes. Now, the players are in a catch-22 situation.

Last two quarters saw the seat factor percentages of Jet Airways go down from 75% in April 2008 to 64% in September 2008 and total flights reduced from 16587 to 14960. The losses incurred by Air India are looming large. Kingfisher has also lost Rs. 6411 millions in the H1.

To revive the Aviation Sector, government’s attention is a must. Need of the hour is to incorporate hassles-free process to allow the expansion plans of companies by which new routes, domestic and international, can be added. The ministries must agree to reduce the ATF costs. Meanwhile, Airline companies will have to come up with innovative solutions which can help them to be cost efficient and provide differentiated services off- and on- board. Companies can also lease small carriers to increase, seat factor percentages.

The silver lining to the dark clouds is that Indian aviation industry is one of the fastest growing aviation industries in the world. Moreover, Domestic air traffic is likely to be more than double and touch 86.1 million passengers by 2010, states the market research firm PhoCus. All that is needed now is a political will and a systematic roadmap to rule the blue skies again!

Curb the Hatred

When the poor 'Raj thackerey's of Mumbai made the squeeze on the North Indian and Biharis, the political goodwill and the natural humane intents were smashed. India, once visioned by Sardar Patel and every other ordinary Indian came crashing down by none other than the Bespectacled, gentle looking Raj 'Maratha' Thackrey!

I doubt if ever Mr Raj has gone through the history of the India and the Indian Sub continent. India ruled the world by having the highest GDP at those times. India had always been futuristic with its trade practises and open arms culture, to invite High thinkers, Traders, Businessmen and who ever who wanted to test his fortune here.

Mr Raj inspite of challenging the increasing clout of a like youth leader, Mr Rahul gandhi, and increasing his concerns on India's Growth has proven every one wrong. He being a youth and a learned gentle man was expected to raise global concerns which could have gained him global acceptance, but he turned into himself into an old prehistorical 'neta' who believe only in winning and securing Vote Banks.

Mr Raj, Start believing on todays youth to bolster your strenghts and ask them to be a part of your team to achieve ubiquitous praise and love...and not hatred.