Photo: Bloomberg
Photo: Bloomberg

Opinion | Mayday mayday, air traffic is diving

Troubles for the aviation sector in March were driven by the grounding of a large number of aircraft

The withdrawal of Jet Airways from the aviation market and the grounding of Boeing’s 737 Max aircraft seem to have taken a heavy toll on Indian air traffic. By the latest data, growth has more or less flat-lined with just a 0.1% year-on-year increase in March to 11.59 million passengers. That is the weakest showing in almost five years and should raise red flags, considering passenger traffic grew at double-digit rates during most of these years.

March’s troubles were driven by the grounding of a large number of aircraft for a variety of reasons. Lessors took back possession of as many as 35 aircraft from Jet Airways after the airline defaulted on its dues. SpiceJet grounded 13 of its 737 Max aircraft due to safety concerns after an Ethiopian Airlines flight crashed, less than six months after a Lion Air flight crash involving the same aircraft type. In addition, IndiGo cancelled more than 30 daily flights due to a shortage of pilots. The effect was that airfares soared, hurting affordability in a market that has mostly banked on cheap fares to attract fliers.

It’s fair to assume some of these troubles are temporary and would abate once problems to do with safety and pilot shortages are addressed and aircraft return to the skies.

But there are steps policymakers can take to reduce turbulence. Aviation is one of the highest taxed sectors in India and bringing jet fuel under the goods and services tax (GST) would help soften the blow of high oil prices. The benchmark price of crude oil has crossed $74 per barrel and look set to climb further as the US tightens the screws on Iranian and Venezuelan oil exports. A look at rationalizing tax rates would help. Further, the re-allotment of airport slots vacated by Jet Airways to other airlines must be fast-tracked. Policymakers need to act fast if they want to see the sector return to form.