Jet is only one of several Indian carriers that have had major safety issues this year. This spring, regulators forced IndiGo, a low-cost carrier that has become the country’s biggest and most profitable airline, and GoAir, another low-cost carrier, to ground some of their Airbus A320neo planes after problems with engines manufactured by Pratt & Whitney contributed to in-flight engine failures at the airlines.
IndiGo also had to deal with the fallout of a video showing employees dragging an angry customer across the tarmac, an incident reminiscent of the Chicago security officers who violently removed Dr. David Dao from an overbooked United Airlines flight last year. Like United, IndiGo was slow to publicly apologize for its actions. IndiGo also fired the employee who shot the video of the abuse while allowing others involved to keep their jobs.
But the biggest problems facing India’s airline industry are financial ones. A sharp increase in oil prices over the past year to around $80 a barrel, combined with an 11 percent drop in the value of the Indian rupee against the dollar, have dealt a double whammy to expenses.
At the same time, the carriers are adding planes in a bid to attract millions of new fliers, many of whom are trying to decide between ponying up for a plane ticket or taking a cheaper, slower option like a bus or train. The result has been a brutal price war: Just this week, AirAsia India, a joint venture between a Malaysian airline and one of India’s biggest conglomerates, announced a sale with one-way fares as low as 500 rupees, or about $7.
The country’s state-owned flagship carrier, Air India, is functionally bankrupt, kept alive only through periodic infusions of government cash. An attempt to sell a majority stake in the airline a few months ago drew no bids because potential buyers were concerned that the government would force the winner to retain Air India’s bloated staff and money-losing routes, and absorb much of the airline’s accumulated $8 billion in debt. Now the airline is having trouble paying its employees and maintaining its planes as it waits for the next tranche of bailout money.
Harsh Vardhan, chairman of Starair Consulting and former chief executive of Vayudoot, a now-defunct regional airline, compared the current state of India’s airline industry to an “unending marathon.”
“They cannot truncate operations. They cannot increase the prices because the moment one reduces price, they risk being out of the market,” he said. “If the situation continues for the next 12 to 18 months, airlines could go bust.”