The current financial state of the Indian Airlines are, mildly spoken, in a quagmire.
Most worldwide airlines had a profitable year in 2018, except the Indian airlines. The financial downfall of the airlines started as early as back in 2015.
Why are the Indian airline companies facing losses, even after many new aircraft investments to modernize their fleets and reduce the operating cost?
Reasons for the financial downfall of Indian airlines
According to Indian aviation analysts the problem has its roots in the following areas:
The first and main reason for the downfall is deeply rooted in the rapidly rising fuel prices currently hitting India. The price increases have been incurring on a day-to-day basis.
This in turn, has had a big impact on the Indian economy, affecting the passenger’s ability to buy tickets. Some ticket prices have even doubled from their prices just a short while ago.
The increase in oil prices is large to be blamed on rising Indian rupee versus the U.S. dollars’ exchange rate.
2. Taxes, customs, and currency exchange
Increased taxes and customs fees for imported fuel has had a large negative impact on Indian airlines.
3. Limited market capability and selection
Due to the low number of airports relative to India’s approximately 1.4 billion people, there are too many airlines competing against each other in the same market.
Here a price-war instigation has been causing large financial losses for the legacy carriers, as well as the many low-budget carriers in India today.
And that’s why Jet Airways, India’s largest airline, has disappeared from the sky. Jet Airways dissolved from their financial losses.
Because of the Boeing 737 Max-problem, people felt scared about flying. To activate countermeasures to lure passengers back SpiceJet reduced its fares. That, in turn, affected their financial bottom line.
GoAir simply isn’t flying their airplanes on profitable routes.
IndiGo Airlines is nervous about the other Indian airlines. IndiGo’s competitors are getting the A320 NEO. That will lower their competitors’ fuel and operating cost drastically. It will also place IndiGo into an even bigger challenge for survival.
The future of Indian airlines
Indian airlines have entered a downward spiral with no clear direction or a turnaround in sight. Passengers are equally affected. Flight options and prohibitive ticket prices have put many passengers stuck on the ground.
What is the future of Indian airlines? How will this all end? How many airlines will be left flying after the mess has been sorted out?
There are so many questions, but no definite answers. Only time can tell the outcome.