In 2020 everything went topsy turvy for the Indian aviation sector but as we headed to 2021,it has been much better. As I write this, India has seen 3,93,245 passengers take to the skies on one single day in November 2021, bringing us close to 93 percent of the pre-pandemic peak for domestic air travel. This strong resurgence was witnessed in a year the country was ravaged by the second wave of COVID-19, and even as there is a knock on the door for a new unknown variant.
Air India sold, Jet Airways revival in-process, Akasa Air announced
On the airline front, many movements happened in 2021. Air India’s sale was concluded with Tata Sons. The transfer of the airline to the group will take place in January 2022 when the transaction closes. Along with Air India, 100 percent stake of Air India Express will also be transferred to Tata Sons, and a 50 percent stake in ground handling company, AISATS comes along as well.
Jet Airways was also given the go-ahead to resume operations under new ownership, that of the UAE-based businessman Murari Lal Jalan and London-based financial services firm Kalrock. In spite of a significant haircut to creditors to the tune of 95 percent of outstanding debt, the new consortium has not yet deposited the agreed-upon money to the NCLT and initiated a transfer of ownership. While the airline claims it will restart operations in 2022, it will be a long road ahead.
One of the wild cards in the Indian aviation scenario, however, was Akasa Air. Vinay Dube, the ex-CEO of Jet Airways, founded the new low-cost carrier with the support of a large ex-Jet Airways team who are all co-founders now. With Rakesh Jhunjhunwala as a major investor in the airline, the carrier placed its first order of 72 aircraft at the recently concluded Dubai Airshow for Boeing’s 737 MAX aircraft. Akasa Air will launch operations in 2022.
SpiceJet agreement with Boeing
Apart from these moves, other seeds were also sown in Indian aviation. SpiceJet, which saw success with its cargo fleet under SpiceExpress, saw the return of the 737 MAX aircraft in the fleet. After Boeing won approval for the 737 MAX to resume operations in India in August, SpiceJet reached a settlement in November 2021 with Boeing for the extended grounding period. The airline is rapidly re-inducting MAX aircraft into its fleet. As a part of the settlement, it seems SpiceJet will receive two 777-200ER aircraft as well, which will be used for long-haul flying.
Go First IPO
Go Air, which rebranded to Go First in 2021, received approval for its Initial Public Offering (IPO) and intends to raise Rs 3,600 crores. The promoters of IndiGo-India’s largest airline, are smoking the peace pipe. Finally. It is widely expected that an Emergency General Meeting will be called on December 30, 2021, to scrap a clause in the company’s Articles of Association (AoA) which will give the promoters the right of first refusal over acquisition of each other’s shares, thus allowing them to sell their stake whenever they want.
Airport privatisation, greenfield airports
Airports had a tough run during the year with passengers drying up, but a white knight appeared in the form of Gautam Adani-led Adani Group, which came out with a Adani Airports arm. After taking over Lucknow, Mangaluru and Ahmedabad in 2020, Adani took control of the Ahmedabad, Thiruvananthapuram and Guwahati airports in 2021. Not just that, Adani also completed the takeover of Mumbai International Airport in 2021, thus hence getting 7 airports under its control.
Two new airport projects take-off
Two major airport projects finally took off in 2021: Navi Mumbai and Jewar. While Jewar airport had its foundation stone laid by the Prime Minister of India in November 2021, Navi Mumbai’s airport has also completed its land acquisition process. Both the airports are expected to be online in 2024.
2022 needs policy openness
While 2021 saw a lot of changes, one change that did not come through fully was the fare regulation. India had placed fare caps in 2020 when domestic operations of airlines were resumed, and these continue, albeit with less stringent levels. While this might have saved the financially weaker airlines from going under, they have served their purpose and are now keeping fares artificially high with the return of travellers to the skies in good measure.
As 2022 is ushered in, we not only need to keep our eyes and ears open for Omicron, but also not tie down the country to closed international links. This means normal international air operations should resume in early 2022-- once we find out more about the impact of the new variant on our health. As air bubbles go away, fares will fall and travel will be allowed to resume to its normal level and contribute to the country's gross domestic product (GDP).
(Ajay Awtaney writes about Indian aviation on livefromalounge.com and tweets from @LiveFromALounge)
