Encouraging Changes

The most progressive step of the government has been to abolish the Aircraft Acquisition Committee of the Ministry of Civil Aviation, eliminating a major bureaucratic hurdle and facilitating speedy procurement of new aeroplanes by airlines

The first commercial flight in India took place on February 18, 1911, by a French aviator Monseigneur Piguet when he undertook a ten-minute trip from Allahabad to Naini, covering a distance of just 10 km. However, the origin of the airline industry in India is traced to the year 1932 when the legendary J.R.D. Tata flew a De Havilland Puss Moth from Karachi to Bombay as part of the first Tata Sons Ltd flight to deliver mail carried by British Imperial Airways. In 1948, the Government of India acquired 49 per cent stake in Tata Airlines which was designated as Air India International and was operating on international routes as the flag carrier for the nation. In 1953, the government nationalised the air transport industry in the country, acquired majority stake in Air India International and at the same time, set up a domestic carrier called Indian Airlines through merger of eight privately-operated domestic carriers that had sprung up in a relatively short span of time. The flag carrier entered the jet age in 1960 with the induction of the first Boeing 707 and in two years later, was renamed as Air India. Indian Airlines becomes one of the first airlines to induct into its fleet the Airbus A320 in 1989.

After the nationalisation of the airline industry, Air India faced stiff competition in the international segment and built up a commendable reputation in the years that followed, the domestic carrier Indian Airlines (later renamed as Indian) enjoyed complete monopoly of the skies. There was no competition in the domestic sector and the airline was not restrained in any way in the crafting of fare structures. Consequently, air fares remained high and air travel was perceived to be the privilege of the elite, the affluent, those travelling at company expense and senior functionaries of the government. There was no pressure on the state-owned carrier to strive for better performance financially, in respect of on-time performance or quality of service. Unfortunately, with passage of time, performance of Air India too began to degenerate and very soon came to be on par with the domestic carrier Indian. Both airlines were never real commercial ventures and functioned more like departments of the Central Government under rigid bureaucratic control and afflicted with the associated ills such as low productivity, overstaffing, labour dispute and mediocrity. Excellence in performance or profitability was never of any concern. The travelling public meekly reconciled to the state of affairs as it neither had other options nor had seen anything better or different.

In the wake of economic reforms, in the early 1990s, the government took the rather bold and progressive step to liberalise the civil aviation sector paving the way for the emergence of private airlines. A number of airlines emerged on the scene, all operating as full service carriers as the low-cost concept was unknown in India. The first on the scene was East West Airlines followed by Jet Airways, Air Sahara, Damania Airways and a host of others. However, most of these were unable to survive the hostile and competitive business environment aggravated by stifling and unimaginative regulatory framework, high fuel prices, and exorbitant airport levies as also deep-seated systemic corruption. Barring Jet Airways and Air Sahara who had deep pockets, all the other airlines were consigned to the civil aviation archives well before the end of the decade.

There was a revival of the airline industry in the private sector in 2003 with the establishment of Air Deccan by Captain G.R. Gopinath based on the low-cost concept. Inspired by the Air Deccan experience, a number of private carriers mushroomed with the total number of private airlines operating in the Indian skies going up to nine. However, despite the novel concept of no-frills service, profitability still remained a distant dream for most of the new players. Once again, the doddering business models were unable to survive the adverse operating environment and what followed was consolidation in the industry more out of desperation than any business strategy. Two airlines merged and by 2012, three others completely shut down operations leaving just four private carriers in the market. The government appeared to remain insensitive to the plight of the industry.