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Why The Airline Industry Is Not Profitable In India 2022

by admin   ·  July 4, 2022   ·  

In this blog, we will discuss the Indian Airline Industry. You will know in this blog, How Indian Airlines has been facing losses and problems in their business for a long time.

must have travelled many times by airlines. You find many sources to book a flight seat before you go, and you select a flight that is perfect for your BUDGET.

You must be wondering why airline tickets are so expensive, And sometimes cheaper? And if you would have thought that if the airline ticket is so costly, then the industry is at a loss, then how is it possible? Let’s see…

Airline Industry In INDIA:

You may have noticed in childhood that most of the rich people used to travel by aeroplane, but now middle-class people are also preferring to travel by airline. Its main reason is that it is very easy to travel by airline, quick, and has become much cheaper than before. In recent times, airports have come to many places. The government is also planning to build airports in many cities. So as to facilitate tourism and quickly transportation in the country.

It is true that air travel in India is going pretty well and there is a lot of possibility in the future. But airline industries are at a loss. Let me know the reason; There are already a lot of airlines flying in India daily. Due to more airlines, airlines are having difficulty selling all tickets. There are many types of classes on the airlines. Like First Class, Business Class, Premium Economy, and Economy Class. If the aeroplane’s first-class and business class seats were sold and even without sold of all economy seats, airlines would not have suffered such losses. But the main all classes didn’t sell then the airline got the loss for that trip.

COVID-19 Impact On Airline and Tourism Industry:

If you are interested in the stock market then you will know that spice jet and IndiGO (Interglobe aviation) are listed in the Market. But these airlines are not able to give good profits to their shareholders. Right now the airlines and tourism industry has suffered a lot due to the CORONA Epidemic. When the first case came to India, the tourism industry of India suffered a loss of 85%. And the flight tickets which were booked had to be cancelled due to Lockdown. No profits to airlines on cancellation of tickets in lockdown. The airlines refund a full refund to their passengers and it is taking up to a month to get a refund.

Why airline industry is not profitable in India?

Due to a lot of competition in this industry, LCC and full-service airlines have been struggling to make a good profit. The ticket price of any airline depends on all the expenses for that trip, such as Base fare, fuel costs of travel distance (Fuel Surcharge), Airport Tax, Goods And Service Tax, Development Fees, and other charges.

There are a lot of LCC (low-cost carriers) and full-service airlines in India. Such as SPICE JET, INDIGO, AIR INDIA, VISTARA, GO AIR, etc. LCC airlines have a much lower tickets than full-service airlines, so when people book tickets, low-ticket airlines book quite a lot. LCC does not give many services compared to full-service airlines. Because of this, full-service airlines have to reduce fares, and they do not earn much profit even by giving more service, And then airlines challenging to earn that much profit which was targeted.

Airlines do not run without fuel when airlines get fuel at an expensive price, then the fare of the tickets has to be increased. Many times the seats of the airlines are not sold completely, subsequently at that time, it is not profitable for the trip.

The airline has to pay its employees, such as pilots, and ground staff As well as airport taxes, parking charges, Fuel charges, loans, etc. The amount of pay to airline staff and other payments are huge in amount; then, if there is a loss in the trips of the airlines, so then there is a lot of difficulty in paying them. Due to this, it happens quite often that the payments of pilots and ground staff are stopped for months. The airline takes enormous loans from banks and is unable to pay due to heavy losses.

Aircrafts Grounded On Airports:

For example, JET AIRWAYS considered India’s best airline, closed last year. There was more than  8500 cr of debt on Jet Airways airlines. This airline had to face a lot of trouble, unable to pay the staff for several months. Later JET AIRWAYS aircraft were bought by other companies, and Jet Airways had to sell all aircraft. Many of my friends worked with Jet Airways, and they used to say many times Jet Airways is a good airline and provides excellent service, as well I also like Jet Airways. In India, only Jet Airways, AIR INDIA and Vistara are full-service airlines. Now there is no Jet Airways, so only two airlines provide full service.

In recent times, AIR INDIA also has a lot of debt. The LCC airlines fare is much lower than full-service airlines. Full-service airlines do not provide service at the rate (fare) of LCCs, if provides then airlines have to suffer a lot of losses.

Future Of Airlines In India:

There is a lot of potential for growing the airline industry in India in the coming times. The government is working to build airports in many cities. And Indian tourism is also growing so airlines can gain more momentum in the industry. If the government also changes some policy, then this industry can get a good response and helps to grow.

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Pradip Wasre

Having 4 years of experience in trading, investing and making financial reports. Investments are important and it also helps in the passive income in the long run. Experience makes a man perfect so stick to it.

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