News / Asia

India’s Struggling Aviation Sector Looks to Foreign Investors

Commuters drive past a stationary aircraft belonging to Kingfisher airlines at the domestic airport in Mumbai, India, March 20, 2012.
Commuters drive past a stationary aircraft belonging to Kingfisher airlines at the domestic airport in Mumbai, India, March 20, 2012.
Anjana Pasricha
In India, a crisis gripping what was once the country's second largest airline has turned the spotlight on the struggling aviation industry. Until just a year ago, Kingfisher Airlines operated both domestic and international flights and was one of India’s premier carriers.  
 
But its fleet has been grounded since the start of the month after employees went on strike to protest unpaid wages. And even though employees have resumed work, the airline still faces an uncertain future.   
 
Kingfisher’s license was suspended by the aviation regulator after it failed to address concerns about how it plans to provide a safe, reliable and efficient service given the financial crunch faced by the airline.  Over the past year, Kingfisher has piled up losses estimated at $ 1.5 billion and has been forced to reduce its operations.  
 
The crisis at Kingfisher reflects the larger problems faced by India’s aviation sector. Analysts say the high operating costs in India make it difficult for most airlines to turn in profits.
 
India's aviation fuel is among the most expensive in the world due to high local taxes, points out Amber Dubey, director of aerospace at consulting group KPMG India.

“Nowhere in the world, it happens like this," said Dubey. "The landed cost is 55 to 60 percent costlier than competing locations like Dubai and Singapore. No way can our aviation sector absorb that. If the raw material is taxed at a very high level, you can well imagine the impact it has on the final product, which is the air ticket.”  

Analysts say the rising cost of an air ticket has dampened demand. Only one of India’s six carriers has posted a profit in recent years.  
 
The government recently relaxed investment policies and allowed foreign airlines to buy stakes of up to 49 percent in domestic carriers. This could be a lifeline for an industry looking for a source of funding.
 
Investors, especially those in the Middle East and East Asia, are attracted by the long-term potential of the Indian market, said Dubey.
 
“There’s been a lot of interest. There are lots of conversation happenings behind the scene. Once some more reforms happen, we could see one or two deals happening in the existing airlines and we might also see one or two new airlines being set up because that is another strategic option global airlines have," Dubey said. "Someone like Emirates or Singapore Airlines, all these guys have 300, 400 aircraft. They can always take out five aircraft and lease them to their Indian subsidiary.”
 
Among those scouting for a foreign partner to rescue its fortunes is Kingfisher. But analysts say it may be tough for the ailing carrier to find a partner to pump in capital.

You May Like

Tunnel Bombs Highlight Savagery of Aleppo Fight

Rebels have used tunneling tactic near government buildings, command posts or supply routes to set off explosives; they detonated their largest bomb this week under Syria's intelligence headquarters More

Sierra Leone Launches New Initiative to Stop Ebola Spread

Government hopes Infection and Prevention Control Units, IPC, will help protect patients and healthcare workers More

UN Official: Fight Against Terrorism Must Not Violate Human Rights

UN High Commissioner for Human Rights says efforts by states to combat terrorism are resulting in large scale rights violations against the very citizens they claim to defend More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Video Claims to Show Shia Forces in Iraq Executing Sunni Boyi
X
Jeff Seldin
March 05, 2015 2:36 AM
A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960s Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7 to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More