2015 in review: Aviation waited in wings for a new policy


If the revival of an airline and return to profitability of some others marked the highlights in 2015 in Indian aviation, the year also went by without the government spelling out its long-awaited policy for the sector. 
All that the civil aviation ministry managed in the last 19 months was to come up with a draft national civil aviation policy (NCAP) which, nonetheless, has some far-reaching implications. Among the proposals is one to scrap the 5/20 norm, which stipulates a minimum five years of operations and a fleet of 20 aircraft for oversees flying rights, and to peg a minimum tariff of no more than Rs.2,500 per ticket for each flying-hour. 
The grand scheme, however, still hangs in the balance and awaits the union cabinet's approval. "Draft NCAP has contemplated many interesting proposals to promote growth in the aviation sector," Amber Dubey, partner and head of aerospace and defence at global consultancy KPMG, told IANS. 
"Its vision to enable 300 million domestic ticketing by 2022, although ambitious, highlights the potential of the Indian aviation sector." In addition, aviation was among 15 industries in which foreign equity norms were eased in the year gone by. Moreover, India's passenger traffic demand grew at a stellar pace. 
Official data from the Ministry of Civil Aviation showed that passengers carried by domestic airlines between January and November 2015 grew by 20.41 percent at 73,382,000. 
Sector-based experts pointed out that low crude oil prices helped to bring down fares which supported the rise in passenger traffic. 


"Aviation fuel makes up for 30 percent of the cost of running an airline, at record low levels, airfares have reduced which in turn has led to the increased passenger load that we see today," Rajiv Chib, director for aerospace and defence with PwC, told IANS. 
Besides fares, lower oil prices gave a jolt of fortune to the sector which till a year back was reeling under heavy losses on account of expensive jet fuel. 
"Whenever fuel cost as a percentage of total cost falls near or below the 40 percent level, airlines start reporting profits. Further, oil price reduction leads to a tempering of the airfares which stimulates demand, thus increasing load factors of airlines," Kuljit Singh, partner for infrastructure practice at EY, told IANS. 
For the industry the year saw the dramatic turnaround of one of the country's earliest budget carriers - SpiceJet - what with another having crashed towards bankruptcy led by industrialist Vijay Mallya. 
The crashing budget airline was piloted back into a stable financial trajectory by one of its co-founders, Ajay Singh, who bought out the stake of erstwhile promoter Kalanithi Maran and KAL Airways earlier in the year. 
Under his leadership the airline soon recovered lost ground, garnered fresh funding, posted three consecutive quarters of profit and is in the process to augment capacity. 
The airline set new benchmarks in Indian aviation by achieving over 90 percent load factor (PLF) for seven consecutive months since May and reported the highest PLF amongst its peers for the last nine months. 
"The biggest reason behind SpiceJet's revival is the hands-on approach of the new owner-cum-CMD Ajay Singh. He understands the industry and the airline inside out," Dubey elaborated. 



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