Air traffic has grown exponentially in last few years. The country has become the third largest aviation market in terms of domestic traffic, overtaking Japan and United Kingdom. The industry witnessed double digit growth in last five years of Modi government and the demand is so high that it overtook rival countries in less than projected time. Only United States with 800 million passengers and China with 500 million passengers are ahead of India. The cumulative air traffic of domestic carriers stood at 171.25 million in FY 19 from 146.84 mi llion in FY 18, a 14.25 percent growth.
In last one year, two of the large private airlines – Spicejet and Jet Airways and the public sector carrier- Air India have been in shambles. The media presented the story in a manner that aviation industry in ailing. However, the fact is that the low budget airlines like IndiGo and GoAir have been highly successful in last few years. The old airlines treated the air travel as a matter of luxury for the travellers rather than convenient and time saving mode of transport. Air India and Jet Airways faced the problem where their expenditure per traveller was more than their earnings. They did not make efforts to bring the operating cost down.
On the other hand, budget airlines like IndiGo leave no stone unturned to make air travel cheaper. Today, a person can get an IndiGo ticket for Delhi-Mumbai route at the price lower than second class AC ticket of India railways. The air traffic nearly tripled in last 8 years. In 2011, the total domestic air traffic was 59.87 million passengers in 2011 and it reached 171.25 million in 2019. This is the highest growth in aviation sector in any country around the world in any time period.
Despite such an explosive growth of the aviation sector, if the airlines like Jet Airways are failing, then it must be their internal management failure which does not have anything to do with government’s policy. The government should not step in to bailout the companies like Jet Airways which has debt of 14,000 crore rupees. Air India, which has a debt of around 9,000 crore rupees and has sucked taxpayers’ money for years, should be sold as soon as possible. If the government steps in to bailout the companies like Jet Airways, it would be unnecessary intervention against free market forces and great injustice to good performers like IndiGo. IndiGo, a company which commenced operations in 2006, has acquired 40 percent of the market share in less than 13 years.
Modi government launched Udega Desh Ka Aam Nagrik (UDAN) scheme which aims to provide and boost regional air connectivity. UDAN scheme is a part of the National Civil Aviation Policy (NCAP) which was released on June 15, 2016. The Regional Connectivity Scheme (RCS), launched in April 2017, aims to make air travel affordable and increased the connectivity in tier two and tier three cities of the country. As many as 43 cities are expected to get regular connectivity under this new scheme and a dozen airports where limited but irregular flights operation will be connected. 31 destinations, which were not connected earlier despite having airports will now become active.
The government should support the aviation sector by developing infrastructure and Modi government is doing the same through UDAN scheme. The companies like Jet Airways should not be bailed out because it would ultimately end up hurting the sector.