Recovering from a stall

Piecemeal policy making has played havoc with the health of India’s airlines. What can propel the industry back to greater heights?

Rebecca Abraham reports

As the Indian economy stumbles many eyes are on the airline industry, for nothing epitomizes the promise of India more than its ambitious airline companies and spanking new airports. But this industry is drowning in debt and whether it can turn itself around will depend greatly on the government’s ability to move away from the status quo.

“Over the last six or seven years the airlines have accumulated losses of US$8.5 billion and they are carrying an estimated debt of around US$16 billion,” says Kapil Kaul, CEO South Asia at CAPA India, an aviation consultancy, which estimates that investments of US$25 billion have been poured into the sector since 2004.

Kaul adds that the debt burden of India’s full-service and no-frills airlines is expected to go up by between US$2 billion and US$3 billion in 2013 after Air India takes delivery of three Boeing 787 Dreamliners. Air India has ordered 27 of these aircraft.