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

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

    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.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora