On a wing and a prayer: The plight of India’s smaller airlines

India is now the world’s 5th biggest aviation market with 21 crore passengers last year, surpassing Japan which had more than 20 crores, according to the latest figures of the International Air Transport Association (IATA). Only the US, China, UK and Spain have more passengers than India. In the last decade, India’s operational airports have more than doubled from 74 back in 2014, and so has the number of commercial planes. What more, another 2,000 jets are on order, indicating a robust market that just can’t have enough air miles.

Try telling that to the nation’s struggling smaller airlines and the wannabes waiting in the wings dreaming of soaring high.

Call it network effect or deep pockets, the country’s civilian aviation scene is dominated by two pan-national players — the InterGlobe-promoted Indigo and the Tata-owned Air India/Air India Express combine, both headquartered in Gurugram. Between them, they have garnered to themselves a gargantuan 91 per cent of the market, leaving little to the rest.

And the rest, the little guys, are running to just stand still, even as turbulence of all sorts pummel them from all sides.

SpiceJet and Akasa

There are only three other pan-national airlines in the picture — one is Ajay Singh’s SpiceJet, which seems to have made a habit of surviving existential crises almost on a monthly basis, wile the other is Akasa, seemingly run smartly an experienced team, though not without its own recent management churn as well as, perhaps more worringly, a lot of funding anxiety. This is because the chief backer of Akasa was the legendary ‘Big Bull’ Rakesh Jhunjhunwala who passed away on the eve of the airline’s launch.

Star Airlines

Then there is a third player, perhaps the most curious of all. Kolhapur-based Star Airlines, with its hub in Bengaluru and a direct beneficiary of the UDAN scheme since the government guaranteeing at least part of the operational expenditure. And flies primarily to smaller destinations, taking a leaf out of market leader Indigo’s original strategy of expansion.

While it does treat the bigger Kempegowda International Airport in Bengaluru as its hub — it was one of the first airlines to operate out of its flashy Terminal 2 couple of years ago, most of its routes otherwise are to Tier 2 or Tier 3 towns — like Gulbarga and Belagavi in the south and Jamnagar and Bhuj in the west. And even though it has flights to Delhi, the National Capital Region with the highest passenger catchment in the country, the airline has shrewdly chosen to fly not to the larger, and more expensive Indira Gandhi International, but to the smaller Hindon airport in the satellite city of Ghaziabad.

No surprises then that Star has turned profits for the first time recently. The airline presently has 32 destinations and aims to hit 60 pretty soon.

For all its shiny achievements, Star remains an outlier in India’s aviation scene, where most smaller operators are struggling to survive, or in an interesting twist at least this year — struggling to even take off.

Struggle of new players

At least three airlines were supposed to take to Indian skies this year — Air Kerala and Al Hind from Kerala, and Shankh Air from Uttar Pradesh. Though the airlines had made big ticket announcements — the Kerala ones aiming to take advantage of the lucrative and underserved Kerala — Gulf route, there is still no clarity on when operations will start. Market sources indicate at least some of them are finding it difficult to lease aircraft, all thanks mainly to the ghost of GoAir, which went defunct a couple of years ago (GoAir’s foreign lessors were stopped from retaking their aircraft by local courts).

The irony in the whole story is that conventionally, the make-or-break factor for most airline companies have been fuel prices. Fuel constitutes about one third of the operational cost of a non-Gulf airline, and in India, soaring prices have more than once proved a death knell for ambitious private airlines. But in the present scenario, fuel prices have actually been stable for the last several years, though other factors like availability of aircraft and other operational reasons are making India’s fledgling little birds not even surviving but hoping take life, on a wing and a prayer.