India’s aviation sector is, once again, battling fierce headwinds and, this time, the centre of the storm is Air India. If you have been reading news reports over the past week, it is no longer about the one horrific crash of Air India’s flight AI171 from Ahmedabad to London on 12th June. A spate of incidents in quick succession has cast a dark cloud over the Tata-owned carrier.
On 17th June, AI159, the rebranded AI171, was cancelled due to aircraft unavailability, barely a day after resuming service. On the same day, AI180 from San Francisco to Mumbai was grounded in Kolkata due to engine trouble.
On 16th June, AI315 (Hong Kong to Delhi) and AI9695 (Delhi to Ranchi) both returned to base due to suspected technical snags. A British Airways 787 Boeing was also forced to turn back to London that day, indicating broader concerns around aircraft reliability.
India’s aviation regulator, the directorate general of civil aviation (DGCA), ordered immediate safety inspections of Air India’s Boeing 787 fleet which further disrupted schedules and likely led to additional groundings.
All this played out amid another crisis: the temporary closure of airspace following hostilities between Israel and Iran. Four Air India flights were directly affected, alongside many others globally.
The current panic engulfing Air India may have started with a Dreamliner, but it raises a broader question: Can Indian aviation truly meet its immense growth potential without clear policy, robust safety standards and rationalised cost structures?
India’s commercial skies are now a near-duopoly, dominated by IndiGo and Air India. Air India itself is now an amalgam of its legacy operations with Air India Express, Vistara and AirAsia India, reorganised under two brands: Air India and AIX Connect. SpiceJet and Akasa Air limp along without showing signs of overcoming financial issues. This is in a market already littered with failed ventures—Jet Airways, Kingfisher, Deccan, Sahara and many others, over the decades.
Tata Re-entry
When the Tata group reacquired Air India in 2022, the rhetoric was bold and public expectations sky high. The group announced a US$70bn (billion) fleet overhaul as part of a five-year transformation plan dubbed Vihaan.AI. Its chief executive, Campbell Wilson—a Singapore Airlines veteran—announced plans for a major recruitment drive (9,000 new employees) and investments in IT and infrastructure aimed at rejuvenating an ageing workforce with a drop in average employee age of 54 to 35. Three years on, the optics are underwhelming, despite posting an operating profit after years of losses. Air India’s image was tarred by technical failures, creaky aircraft and demoralised staff, even before the disastrous crash.
Adding to the concern is growing unease over Boeing aircraft. Air India’s ambitious fleet expansion includes orders for 20 Boeing 787s, 10 Boeing 777Xs and 190 737 MAX jets—placed at a time when whistle-blower allegations against Boeing are gaining credence in public minds, fuelled by India’s own recent crash.
Aviation is a uniquely high profile but unforgiving sector. Mishaps tend to go viral and make news headlines. For the Tata group, known to be super-sensitive, this has been a humbling lesson. Under chairman N Chandrasekaran, it had often launched defamation suits against media organisations on very flimsy or imagined issues. But an airliner crash—and a string of viral posts and media reports on poor aircraft maintenance—forces a very different and more humble response.
Then there is the internal turbulence. Air India, in opting for a policy of centralisation, may have ignored the cultural fragmentation across its various carriers instead of working at cohesion. Vistara, once praised for premium service, has been smothered by Air India’s public sector legacy. Complaints of arbitrary staff transfers and contract disparities has also hurt morale and caused resentment. Air India Express saw a virtual mutiny in May 2024 when 300 employees called in sick, forcing the cancellation of 170 flights before the management took note, after threatening to sack several of them. (Read: https://www.moneylife.in/article/25-crew-members-of-air-india-express-receive-termination-letters-over-70-flights-cancelled/74122.html ).
All this unfolds even as India boasts its position as the world’s third-largest aviation market. On 2nd June, prime minister (PM) Narendra Modi addressed the IATA annual general meeting, hailing UDAN, a regional connectivity scheme, as a ‘golden chapter’ in civil aviation that had given 15mn (million) people the benefit of affordable air travel. He touted milestones: 240mn air passengers annually, projected to reach 500mn by 2030, and a tripling of cargo capacity from 3.5mn to 10mn metric tonnes. Mr Modi also said that India's airports, with an annual handling capacity of 500mn passengers, are setting new standards in user experience.
But a closer look reveals highly misplaced optimism. Of the 619 UDAN routes launched, only 323 remain active; 114 were discontinued within three years, minister of state for civil aviation, Murlidhar Mohol, told the Rajya Sabha in February this year. Many regional airports, constructed at considerable cost, remain underutilised. These are symptoms of poor planning and bad policies and not enough carriers to meet growing demand for airline seats in metro cities.
In a sector already burdened by historical mismanagement on the policy front, India’s airlines are struggling with rising input costs. Aviation turbine fuel (ATF), comprising 35%–40% of operational expenses, is taxed steeply in India. The weak rupee makes matters worse—raising the cost of aircraft leases, maintenance and fuel, all denominated in dollars.
Airports are also pinching pockets. The privatisation of airports has led to increased user charges. In Mumbai, the Adani group’s demand that airlines shift from bank guarantees to upfront deposits, because they are prone to defaults, has strained the working capital of smaller carriers. High user development fees and other levies have made air travel more expensive for consumers.
Further complicating matters is geopolitics. The closure of Pakistani airspace has forced costly detours, affecting fuel budgets and timetables. The Ahmedabad crash will likely push up insurance premiums—further squeezing the sector.
India’s aviation story is one of unrelenting demand that has been throttled by poor policies and many failures. The system is overstretched and airlines need support rather than slogans—they need consistent policies, rational taxation and government investment in infrastructure and oversight.
The risks of a duopoly that we have today are obvious. If one airline stumbles—as Air India just has—passengers, airports and the economy bear the brunt. It is a precarious structure for a nation that aspires to a US$10trn (trillion) economy but cannot build a credible aviation backbone.
The government needs to act quickly to reform policy, encourage fair competition, reduce taxes and address systemic weaknesses. A recently released report by a parliamentary standing committee highlights the scale of the problem: 53% of posts at the DGCA remain vacant, along with 35% at the bureau of civil aviation security and 17% at the airports authority of India. While new airports continue to be announced, the regulatory infrastructure is alarmingly hollow. This suggests a misdirected focus on building new airports and very little on safety or adequate carriers.
Indian aviation is at a crossroads. Demand is soaring, particularly in the metros. But unless safety oversight is strengthened and costs brought under control, the lack of airlines to meet growing demand will impact economic growth. For a country looking for superpower status, our failure to fix the aviation sector is an embarrassing contradiction.
Comments
nmrshreedhar
3 weeks ago
Well articulated and insightful article , as expected, from Ms.Sucheta. While fixing the structural Issues in the sector and in Air India might take a while ( it’s 3years since Tatas took over , however yet to see visible improvement ) , certainly there are certain issues which can be addressed and resolved urgently - for instance , housekeeping within the aircraft, ensuring things work as designed - seats recline, seat handles are not wobbling, the infotainment screens on international flights work etc - these maybe small issues , but they certainly create the image of an irresponsible and unresponsive airline. Also , the behaviour of the inflight personnel needs a 360degree change - common courtesy and polite behaviour doesn’t cost much but pays rich dividends. Regds
How suddenly so many technical glitches are reported? That too only for Air India? Is this sabotage, espionage, or just carelessness and 'chalta hai' attitude? All three need a thorough investigation. Some other airline's share is being taken away by Air India - reason enough for espionage /sabotage.
Very well articulated.
The increase in number of airports is only projected as an achievement but the usage and the improvement of livelihood in those places is more important and obviously not given the desired thought.
Air travel in India is still a luxury for around 70 percent of the population at least.
Some insights analysis of the problem and weakness ! There is no mention of areas where policy is lacking and surely vaccancies in carioys departments are indicator policy laxity ! Areas of improvements and causes for resultant deficit in the sector is not explored
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The increase in number of airports is only projected as an achievement but the usage and the improvement of livelihood in those places is more important and obviously not given the desired thought.
Air travel in India is still a luxury for around 70 percent of the population at least.
Otherwise harsher words would have been more apt.