In December, AirHelp ranked IndiGo 103rd out of 109 airlines in the world, based on punctuality, quality of service and compensation
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It hasn’t been the best of years for Indian aviation. While passenger growth in the world’s fourth-largest economy has been picking up, with over 150 million passengers taking to the skies during the year, the global supply chain shortage has forced many aircraft to the ground as deliveries are yet to keep pace.
Even those that have been up in the air have run into trouble, most notably in the quality of flying. Among them is IndiGo that, along with Air India, control as much as 92 percent of the Indian skies. In December, Berlin-based AirHelp ranked IndiGo, India’s largest airline by market share, 103rd out of 109 airlines in the world, assessing it poorly on metrics such as punctuality, quality of service, and compensation. IndiGo refuted the allegations.
“I expect these issues [growing passenger complaints] to worsen,” says Alok Anand, chairman & CEO of Bengaluru-based Acumen Aviation, an aircraft asset management and leasing company. “India has yet to experience the air travel boom seen in the US and China, and, as the market grows, so will the challenges. Staff shortages, skill gaps, and infrastructure limitations are the key drivers behind these problems, and I don’t foresee a quick resolution.”
IndiGo has over 70 aircraft grounded due to issues with its engines from Pratt & Whitney. “Currently, Indigo has a third of its fleet grounded and still faces daily customer management complaints; imagine the strain if the full fleet were operational,” adds Anand. “From the airlines’ perspective, these challenges are manageable for now, given the limited competition in the market.” In all, some 144 aircraft in the country were grounded till September.
The situation isn’t any better at Air India, which has been in the midst of a turnaround programme for the past three years. The airline continues to struggle with an aged fleet that is yet to be refurbished, largely due to global supply constraints that have only begun to ease. Of Air India’s order of 470 new planes, 70 are wide-body jets and it is refitting about 67 planes by mid-2025. Despite that, the airline continues to receive flak over its poor quality of flying, and frequent complaints.
Still, the year remains notable for two reasons: One, it saw the winding up of Vistara, often counted among India’s best airlines, that merged with erstwhile Air India as the Tata Group looks to consolidate its aviation operations into two airlines, Air India and Air India Express. Air India now comprises Air India and Vistara while Air India Express comprises Air India Express and AirAsia India.
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Second, there was the move from IndiGo to tap into the premium segment, having shied away from it for much of its 18 years. Besides the business class, the airline is also launching a frequent flyer loyalty programme, making it the only low-cost carrier in India apart from Air India Express to offer it.
The move, consultancy firm AT-TV estimates, will provide for between a 3 and 8 percent bump in revenues between the next 12 and 18 months for IndiGo. “This is based on the IndiGo network and market share coupled with competitor weakness,” Satyendra Pandey, the founder of AT-TV, had told Forbes India earlier. “As costs will only see a marginal increase, overall, this is an accretive step.”
But that doesn’t mean India’s airlines won’t stop bleeding in 2025. ICRA reckons that the country’s airlines will report a net loss of between ₹2,000 crore and ₹3,000 crore in FY2025 and FY2026 each, significantly lower than the losses witnessed in the past. Much of that is due to the improved pricing power of the airlines.
“The spread between revenue per available seat kilometre and cost per available seat kilometre (RASK-CASK) saw some moderation in H1 FY2025 over FY2024 due to higher fuel prices and overall increased costs amid grounding of aircraft, while yields moderated marginally as airlines strove to maintain adequate passenger load factors [PLFs],” ICRA said in a statement. “Nonetheless, the same is expected to pick up in H2 FY2025, amid healthy passenger traffic.”
Even then, as global aircraft manufacturers continue to struggle with production issues, record deliveries placed at both Boeing and Airbus by India’s airlines are only expected to see significant delays. Boeing’s 737 Max series had been forced to cut targets while some 350 Airbus planes are grounded annually as a result of the Pratt & Whitney engine defect. Air India and IndiGo both have over 500 aircraft on order.
The sheer size of the order from both airlines also means that the duopoly emerging in India’s aviation sector will only be strengthened further, especially as SpiceJet has been hit hard by debt woes, while Akasa’s fast-paced growth has slowed down significantly in recent times. Akasa is now reportedly raising funds, with reports suggesting a potential IPO shortly.
“If they [Akasa] can sustain their growth until then, it would be a positive development for the market,” adds Anand. “While SpiceJet has been addressing some of its challenges, lingering supply chain issues and past difficulties still pose obstacles. New, smaller players have also emerged, but they continue to struggle due to insufficient support in aircraft financing, leasing, and ongoing supply chain problems. Larger airlines are better positioned to manage these challenges, so if policymakers are serious about preventing a duopoly, they must prioritise resolving these issues.”
(This story appears in the 10 January, 2025 issue
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