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What’s ailing the Indian aviation industry?

High costs and low yields. The implosion of the country’s second-largest airline. Persistent technical issues plaguing two of the most popular passenger aircraft models flown by India’s airlines. Together, these factors have now plunged India’s aviation industry to its most precarious phase in the last five years or so.

Santosh Hiredesai of SBI Capital Markets summed up the situation in a recent note, characterizing FY19 as a “year of sharp U-turns” for India’s aviation industry — from record profit in FY18 to mega losses, resulting in dire need of recapitalization. The most visible event was the temporary suspension of operations by Jet Airways, once India’s biggest airline by passengers and for many years the second largest.

Jet, which canceled all flights, has at least Rs 15,000 crore in dues and leaves more than 15,000 unpaid staff in the lurch. Jet is the most critical case in the industry but by no means its only one. Air India has debt repayments worth Rs 9,000 crore lined up this financial year and limited means to service them.

GoAir has grounded at least 10 of its 48 planes for want of a network to fly them. More than 15 top executives have quit the airline in the last few months. Almost every top position in the airline, including that of the CEO, is empty.

IndiGo, the country’s biggest airline, and its rival low-fare carrier SpiceJet have both ordered aircraft that have been facing severe technical glitches. The Pratt & Whitney (P&W) geared turbofan engines that power IndiGo’s Airbus A320neo (new engine option) planes have developed constant issues since they were pressed into services, leading to several groundings last year and this year. The country’s aviation regulator, the Directorate General of Civil Aviation (DGCA), last week served notices to the airline on the engine issues and will be conducting a safety audit on its fleet soon.

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