Yet another airline in the country, the latest being Go First, has stopped flying. This makes for a rich haul of grounded airlines since India
opened its skies to private airlines in the 1980s. Jet Airways
, the last man standing from the original line-up of private airlines, is yet to resume flights after insolvency resolution. Damania, East West and ModiLuft
are all memories from a distant past. SpiceJet
, from a later generation, is struggling to raise funds after half its fleet was grounded over safety concerns. Sahara was bought over by Jet, and maverick Air Deccan by Kingfisher before the latter went belly up spectacularly. Indian Airlines was merged with Air India. That, however, did not stop the state-owned carrier racking up a mountain of debt that taxpayers paid for before the Tatas
stepped in.Why do airlines fail? Because they can’t cover the cost, principally, fuel cost. The government-owned Indian Railways gets by on its monopoly status and cross-subsidies from hauling freight. Airlines must fly wallet-conscious passengers accustomed to artificially low rail fares, while paying jet fuel bills inflated by taxes at the Centre and states. Until recently, they couldn’t fly abroad where they could refuel cheaply. Then there is the cost of inadequate aviation infrastructure, a deficit that is being lowered speedily under this government. Yet, India’s experiment with mass aviation will remain iffy till the cost of flying is not grounded.
There’s a parallel with the telecommunications industry, where the considered opinion is to recover high spectrum costs upfront rather than allow speedier tax revenue-yielding development. In both telecom and civil aviation, India is entering a select club of the world’s largest markets. These industries in India require an unusually high degree of concentration to function, diluting the policy intent of providing competitively priced services to customers. Policy has been getting in the way of the market mechanism for most of Indian aviation’s history.