There is a rather strange paradox playing out in India’s aviation sector.
To begin with, India’s oldest private airline will make a comeback into Indian skies next year. Around the same time, a new entrant, backed by a billionaire businessman and a few aviation veterans will also take to the skies. Yet another, backed by one of India’s oldest business groups, will tap the bourses to raise money and have already received approvals for it.
While all this plays out, India’s oldest airline and its national carrier, Air India, will have a new owner for the first time in more than 70 years. One of the suitors is an airline whose promoter has close ties to the government, but one who has seen its fortunes dwindle over the past few years, raising concerns about its viability. If all this isn’t enough, India also has a two-year-old player emerging as its largest airport operator and accounting for one in four passengers passing through its airports.
Amid this churn, India’s aviation sector is expected to see debt levels rise to Rs 1.2 lakh crore in FY22, requiring additional funding of Rs 45,000 crore in the next two years. Over the past few years, many, including Jet Airways, had fallen prey to high debt levels, making operations unsustainable. Beleaguered airline owner Vijay Mallya had to flee the country after his airline, Kingfisher Airlines, had mopped up massive debts during its decade-long journey.