This page contains a Flash digital edition of a book.
infrastructure, most importantly at the airports, and an absence of coordination amongst the different parts of the supply chain.”


Aircraft orders Tripling in the past five years, expansion in the country’s domestic aviation market has been the strongest in the world, according to a report from the International Air Transport Association (IATA) that estimates 1,100 commercial aircraft worth $130 billion will be needed over the next 20 years. Recent orders placed by IndiGo for 180 A320s and GoAir for 72 A320neo aircraft certainly illustrate that airlines in India want to expand. But in operational reality, the Indian


aviation industry is facing huge problems. While it has enjoyed high passenger and cargo growth rates, all the airlines in the country have suffered from a high rate of debt and losses, IATA points out – and by the end of 2011 the Indian airline business seemed to be on its knees. IATA chief economist Brian Pearce comments that although there is “enormous potential in economies like India”, the challenge is to turn to that opportunity into profitable growth. Loss-making, state-owned national


carrier Air India is struggling. In a report presented to parliament last September, the comptroller and auditor general of India outlined the current dismal state of affairs at Air India as a combination of risky aircraft acquisition, operational


deficiencies and an “ill-timed and driven from the top” merger with Indian Airlines in 2007 that had been done “without thought to the synergies that could be exploited”. By the end of November, with an


estimated debt of $9 billion, the carrier was trying to reach a broad agreement with a consortium of banks to restructure $3.45 billion in debt in order to keep its aircraft flying. As part of the deal, the government is considering the repayment of Air India’s debt over 10 years, a move that is likely to upset the country’s private-sector airlines, which are having their own problems. Kingfisher Airlines, Jet Airways and


SpiceJet are all thought to have lost more than 60 percent of their market value during 2011. Hit by steep fuel costs, taxes and high interest rates on its debt, cash-strapped Kingfisher was forced to cancel many flights in an effort to stay aloft. Brewery magnate Vijay Mallya, chairman of Kingfisher, was late last year seeking a $370 million deal with investors and a banking consortium to prop up his airline.


All-cargo fortunes In terms of India’s all-cargo carriers, fortunes have varied hugely. Blue Dart, South Asia’s premier courier and integrated express package distribution company, part of the DHL Group, posted a 32.4 percent year-on-year improvement in its profit after tax for the quarter ended 30 September 2011


compared to the year-earlier period. All-cargo carrier Deccan 360,


however, had by the beginning of December been grounded for six months. The airline had sent its three A310 freighters back to the lease company in May, leaving Deccan with two short-haul ATRs, which were grounded as the company was not taking orders. Sources said that since starting to fly in mid-2009 Deccan 360 had not been able to attract enough large customers and had been relying on low-yielding and inconsistent small businesses for its revenue. Many observers believe that India’s


aviation sector needs to reform, undergo a major policy rethink, and put initiatives in place to level the playing field between competing private and public players. The Federation of Indian Airlines (FIA),


a representative body of Indian carriers, recently warned that “a bad operating climate” in the country might compel some domestic airlines to default on their debt repayments, bringing them to the brink of closure. The situation is leading some to seek outside investment and the Indian cabinet is set to consider a proposal to allow foreign airlines to invest in domestic carriers. The leading airlines met recently with


the country’s prime minster Manmohan Singh to discuss legislation to allow 26 percent foreign direct investment by overseas airlines in India’s domestic carriers. Some airlines like Kingfisher are seeking a change in the current policy, while other carriers like Jet Airways and IndiGo are not in favour of such a move – although in any case analysts say it is hard to imagine why any foreign investor would be interested in entering the Indian aviation market right now. A major factor driving change over the


next few years will be the rising pressure of competition from cargo airlines operating from some of India’s neighbours and main trading partners – like the Gulf countries and Singapore. Akbar Al Baker, CEO of Doha-based


Qatar Airways, a carrier that wants to extend its coverage in India, has described the proposed 26 percent limit for foreign direct investment as being “too little” to allow investors any leverage in the way the airline is run. He considers that the share allowed should


AIR LOGISTICS MANAGEMENT 35


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68