IndiGo, the largest low-cost carrier in India, is pushing the government to offer incentives such as discounts on fuel and lower airport charges to the airlines that perform well.
The airline’s recent criticism that the civil aviation ministry is “tweaking with policies for a select few” is actually a pressure tactic aimed at pushing the government to help better performing carriers, according to analysts. The airline’s president Aditya Ghosh had said a few months earlier that he wanted the government to turn its focus to better performing airline companies.
IndiGo, run by InterGlobe Enterprises Ltd, controls almost 26 per cent of the domestic air passenger market and is moving closer to the country’s largest airline Jet Airways (India) Ltd, which has a 27.4 per cent share.
IndiGo’s brush with the government is not something new. The airline had issues when the government reduced the frequency of its Mubai-Muscat service from seven days to four days a week.
“For healthy competition to happen, there has to be a level-playing field among all operators, and basically that means the policies and the support should be the same for all airlines,’’ Ghosh had told Business Standard on the sidelines of India Aviation show in Hyderabad a few months ago.
He had also suggested efficient operators could be rewarded with discounts on fuel, lower airport charges and low-cost airports. “Whoever is performing better, please reward them with these things because then there is an incentive in industry to fix its own house,” he had added.
IndiGo’s promoter Rahul Bhatia recently said in Kolkata the government “must take decisions that are for the good of the industry and not for the good a select few”. According to analysts, he was, perhaps, hinting at the crisis-hit Kingfisher Airlines Ltd and the state-owned Air India Ltd.
Kingfisher has reduced its number of services recently and hasn’t paid salaries for employees for months due to cash crunch, while Air India is being financially backed by the government.
Bhatia’s views have been endorsed by others, too. Tony Tyler, director general and chief executive officer of the global aviation trade body, International Airport Transport Association (Iata) told reporters here on Wednesday: “I don’t think giving one airline a protected golden route is the way forward. The international obligation would not allow it any ways. In principle, it’s a mistake and I think that’s just another form of subsidy.”
The government has strongly refuted the allegations made by Bhatia. It said on Wednesday the government, being owner of the Air India, was well within its rights to promote the national carrier and prepare it for competition.
The ministry of civil aviation also clarified the private operators were not being provided any financial support directly or indirectly but had been allowed to perform as per market forces. It said an airline’s licence could be cancelled anywhere in the world for “merely failing to pay salaries to the staff.” Kingfisher is yet to pay salary for February to all its employees and no one has been paid March-June salaries.
Many say even IndiGo has benefited from the government’s approach towards airlines. Captain Ranganathan, an aviation safety consultant said, “It’s not that the government is targeting IndiGo. The government has been lenient with all the airlines. Had the government been strictly adhering to the rules, they could have taken action against all airlines and even IndiGo on safety violations.”