2014 proved to be quite an eventful year for the aviation sector, with two new airlines getting licences to fly, another one almost shutting down, a fare war, the sector's safety downgrade and Tatas' re-entry into the Indian skies - it was quite the mixed bag for Indian skies.
The Downgrade
The year started off on a not so great note for the sector, when the US Federal Aviation Administration (FAA) downgraded India's aviation safety ratings from the top to second category in January.
The downgrade means that India's safety oversight system does not meet the minimum standards laid down by the UN body International Civil Aviation Organisation (ICAO).
Due to the downgrade, Indian airlines -- Air India and Jet Airways, which are the only ones flying to the US, would not be able to expand their flights to that country or tie-up with any American carrier for expansion of operations.
The flights of these Indian carriers are also subject to additional safety checks at US airports.
New Airlines
Malaysian budget carrier AirAsia made its debut in Indian skies through its Indian arm in June and become the fourth no-frills airline after IndiGo, SpiceJet and GoAir. AirAsia India, a three-way venture between Malaysia-based AirAsia Berhad, Tata Group and Delhi-based investment firm Telestra Tradeplace launched its maiden flight on June 12 from Bangalore to Goa.
Vistara - a joint venture between Tata Sons and Singapore Airlines - on December 15 received the Air Operator Permit (AOP) or flying permit from aviation regulator Directorate General of Civil Aviation (DGCA). The airline - where Tata Sons holds a 51 per cent stake while the remaining 49 per cent is with Singapore Airlines - will take the skies in the new year on January 9 with its flight from Delhi to Mumbai and Ahmedabad.
Vistara would be third full-service airline in India after state-run Air India and Jet Airways.
Tata's Return in Indian Skies
Vistara marks the third attempt of Tata Group for re-entering the airline business. In 1995, the Tata Group had teamed up with Singapore Airlines to float an airline, but its proposal failed to take off. In 2000, the duo's proposal to buy into Air India also fell through.
The Tata group also holds a minority stake in budget carrier AirAsia India.
The Tatas were pioneers in Indian civil aviation, having founded India's first commercial airline, Tata Airlines in 1932, which became Air India in 1946.
SpiceJet Crisis
Billionaire Kalanithi Maran's Sun group controlled SpiceJet came close to shutting down, but managed to buy more time from the government and the regulator after its co-founder Ajay Singh got involved in talks with the authorities. SpiceJet has bank loans of Rs 300 crore. The beleaguered airline has to come up with a concrete cash flow plan and submit to the authorities in order to continue operations.
Fare War
Ever since AirAsia entered the Indian skies, airline companies were locked in fare war for most parts of the year. IndiGo, SpiceJet, Jet Airways and the AirAsia all tried to pip each other with one promotional offer after the other with fares going to three-figure numbers.
Promotional offers from different airlines helped passenger traffic growth in 2014. During January to November, passenger traffic growth was more than 9 per cent.
Jet-Etihad Deal
Jet Airways and Etihad on November 20 announced closure of a Rs 2,069-crore deal for the Abu Dhabi- based carrier to pick up 24 per cent equity in the Indian airline, marking the first FDI infusion by an airline in the Indian aviation sector. The deal gives access to cheaper fuel for Jet Airways and a wider network. It will also help the Indian company reduce debt.
(With agency inputs)
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