Thursday, March 15, 2012

India Aviation - It's Incredible and That's Not Good

The contrast is like day and night. In the span of 24-hours I have written about two countries with vastly different views of the importance of aviation to their national future; Turkey and India.

In my story in today's International Herald Tribune, I interview folks who are agog over the rapid growth and ambitious plans of the formerly overlooked Turkish Airlines. Of Turkish, Ralph Anker of writes Istanbul is "the most diverse hub in Europe."

While Turkey keeps sending its Prime Minister Recep Tayyip Erdogan to soothe trouble spots around the world maybe he ought to plan a stop in New Delhi and explain that when a nation's aviation system becomes a global laughing stock, you got problems baby!

IATA boss Tony Tyler, photo courtesy IATA
Oh, never mind, Tony Tyler already did.

Okay, so the incredibly handsome and dapper Tyler didn't put it exactly that way. He's a gentleman after all. But in a speech to India Aviation 2012 conference in Hyderabad he got thisclose calling the situation in India "critical" and saying, "I am not here to point fingers or apportion blame. The state of today’s Indian aviation industry is the result of a number of factors."

A number of factors, indeed. Let's just recap.
  • Over the past year pilots flying for Air India, Spice Jet and IndiGo were charged with falsifying their flight hours
  •  Air India battled additional charges that its pilots had broken "bottle to throttle" regulations. 
  • Kingfisher canceled flights by the hundreds as regulators examine whether the airline is safe. 
  • Practically every Indian airline is losing money
  • A government audit showed inadequate training and flight monitoring are endemic to all Indian airlines 
  • The Indian carriers are so unreliable as business partners, the Star Alliance boss, Jaan Albrecht told me in December, the global airline network would not be looking to add an Indian member in the near future.
All of this suggests the booming demand for air travel has outpaced Indian airlines' abilities to safety operate. That's the airlines' problem. What the government does about it becomes the problem of the Indian travelers who - like the rest of the world - are developing an appetite for mobility. It's also a problem for the growing number of visitors intrigued by or doing business in Incredible India.

Tyler's speech, which you can read here, presented a four-pronged plan of action and a call for a unified national aviation policy. It is all well couched in niceties of course. 

But if you ask undiplomatic me, it is terrible that a country with so much to offer can be languishing so far behind the pack in aviation. 
In fact, it's incredible.


Ron Kuhlmann said...

The problem, as Tyler so gently noted, is not with the market or the business plans, but with the government. There are taxes and restrictions that are unique to India. But primarily, the problem is that the government is not only the regulator but also one of the players by owing Air India. The airline has for decades been a stewpot of patronage and inefficiency and there is little hope that things will change as long as the ownership persists. There are observers who believe that the cost just to maintain the Air India will run to additional billions every year. Things get even dicier when one considers that much of the Kingfisher debt is also held by the government. Until these ties are broken and the Indian government becomes a true, impartial overseer, there is little hope that the mess can be unwound and the cost to the Indian economy, both direct and indirect, will be staggering.

Finally, the weakness of the Indian airlines has allowed India's primary hubs to now be located in Dubai, Qatar and Abu Dhabi. Even with reform, Indian carriers will face an entrenched competitive force that will likely not be undone.

najmun_noor said...

In tracing India's steps to its current state of being the humongous market, it is fair to state that it is entitled to the mistakes. Considering its phenomenal growth, it is easy to forget that this is the same country that disallowed import of pins and percolators and anything in between. Its learning curve in aviation continues to be steep. Perhaps its biggest mistake was in allowing the mixture of both worlds. Knowing India's entrepreneurial prowess, though, it may very well transform that mistake into an opportunity. It was the Tata enterprise that oversaw the rise of Air India. Is there now a perfect recipe for a return of the "national" carrier to private enterprise? After all, there could be a half a dozen Tatas today, if not more. The wisdom is not so much with that question than in the fact India, with its traffic base, can afford this flip-flop until it strikes the right chemistry. Its spillover on the Indian economy can be grossly overstated. This is an economy that proved the Malthusian theory wrong and from a position where foreign airline managers used to conceal their promotional fares under mattresses for fear of raids from the Reserve Bank of India, the industry now toys with deregulation. There will be a change in perspective with a change of the guards in the establishment. Indian carriers like JetAir have also been innovative in establishing hubs in Europe. There's more to it in Tyler going to the India Aviation Conference. There is a rationale for it in India than anywhere else --like Turkey. Sheer numbers are stupefying.

Grumpy said...

Entitlement to mistakes is only valid when those who are accountable learn from them. (And it only counts once!)Whether that is the case amongst Indian airlines' regulators and management remains to be seen.

Yesh said...

India's problem is much more. The ministry of civil aviation is the boss for Air India, Airport Authority, DGCA. Accident investigation is done under the Government Authority. Our investigation of the accident which killed 158 people stands testimony. The situation will continue to remain so as the system is fully corrupt and if there are pilots who will not qualify to fly in any part of the world, please send them to India, we have systems that will accept them. Its not that the world doesn't know this, but it simply cannot afford to miss the emerging market and the growing airline industry. finally, its all about Money, honey.

Cedarglen said...

Yes, the airlines of India are in trouble and I see a Big Business Crash on their future. As for Turkish Airways - whatever the proper name - I think they are OK for a bit. If the don't achieve the necessary load factors on those expansion routes, I'm sure that they will pull out. Their expansion has been great, but they usually fly the questionable routes with modest aircraft, enlarging them as the loads require. I've flown them only thrice, but their soft product seems to be in the top tier. Time will tell, but I think they will respond quickly when necessary.

najmun_noor said...

In giving credit where credit's due, it is hasty to be dismissive about large markets. We've seen that happen in the North American market.

The industry learned from a multiplicity of experiences and so- called mistakes. If there is only one mistake that business entities or airlines can afford or entitled to in their life cycle, we'd be traveling by surface. In the case of Turkey vis-a-vis (not versus, mind you) India, we're comparing apples with oranges.

Turkish is a mature airline with a traffic base that is principally international. The mushroom growth of airlines in the Indian industry still caters to the domestic market. They are still in the frenzy of capitalizing while the sun shines, not realizing that there are many sunny days still to come.

Not all Indian carriers can boast of a density in international traffic.

Looking at Turkish closely, it looks as if they are keen on pursuing a successful 6th freedom model along lines of Emirates (of the past) and Ittehad, Qatar (of the present).

Their rationale in what-seems-questionable- (opening) routes in South Asia mirrors the ambitious launch of trans Atlantic routes - where they are extra zealous to put bums on seats, figuratively, literally.

Question is-- is consistency in their product being compromised with? There is a glaring mismatch in the service offered for the same premium class when you've flown routes east and west of Istanbul.

Additionally, with the pronounced entry into some key trans- Atlantic markets, there is a lot that needs to be done at its hub at Istanbul. Any quick response in competition to generate perhaps needs to be in that area -- a facelift and sprucing up at its hub.

It is fair to state that its hinterland and the airline is under-served because of that perceived shortcoming.