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Last Updated On: 1/26/2012

An Air India flight is cancelled to fly a cricket team and an ex-minister of aviation's daughter without authorization, Jet Airways has cut back salaries for their test pilots, other Indian airlines can't pay their empoyees on time.  While these are not the heart of India's aviation problems, it has complicated the current mess they are in.  So, why is the Indian Aviation in such a mess?

Sum It Up

  • Safety: Directorate General of Civil Aviation (DGCA) requested an aviation safety report, and before the ink had even dried, the report was leaked, and the Indian aviation industry took another hit.  This news already has investors wondering if they should continue funneling money to the India airlines.
  • Depreciation of the rupee: the rupee has been falling.  Behind the scenes of airlines, is all the costs such as building rentals, loans, payments, etc.  These are all high amounts, and with the drop of a rupees worth, airlines have to pay more on the dollar just to afford these costs.  Unfortunately the rupee's worth is out of any airline's power to control.

indian aviation industry

  • Fuel prices: Because jet fuel is practically 50% higher in India than other countries, their airline ticket range is a little higher to try and offset this crisis.  In doing so, their passengers have also fallen off.  People want cheap airfares , and they will go to whatever airline offers the cheapest even if it means going to a different country instead of India.
  • Competition from foreign carriers: Indian Carriers face stiff competition from carriers from Europe, the U.S, and Middle East. People would love to fly directly into India, and not have to connect anywhere along the way. Unfortunately Indian carriers force people to connect in Mumbai, Delhi, and Chennai in order to get to their final destination. I can't imaging anyone passing up on an offer to fly cheaper, and straight to their destination. Most Middle Eastern carriers have priced their fares to India very low in order to cash in on the NRI business. Most Indian families fly to India at least once a year, if not more even in the worst economic climate possible. The airlines know, and love that.
These are some of the main reasons India is fighting to regain ground in the aviation industry, and they will not give up hope just because someone decided to kick them while they are down.  There is still plenty of fight left in them.


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