Edition 67
I have now seen or tracked aviation for close to two decades and seen two major falls in Indian aviation – Kingfisher Airlines and Jet Airways, which at one point seemed too big to fail. The rest like Air Costa’s, AIr Carnivals, Indus Air or even Go FIRST were much smaller than these biggies who were backed by maverick businessmen who seemed to have reach like no one else. Everybody knew they had deep pockets, but nobody knew how deep they were.
In almost all cases, the high oil scenario was handled effectively though under stress and the fall came later. Take 2008 for example. Crude oil had reached $140 per barrel, no airline went down. The stress started in 2010 onwards and Kingfisher went down in 2012. At the same time, Jet Airways got a lifeline in the form of stake sale to Etihad as the government opened up FDI. Oil made peaks crossing $100 per barrel in 2012 and 2013, but SpiceJet was nearly out in December 2014 – it had braved the oil peaks. Oil dropped to $31 per barrel in 2015 – 16, only to peak around $74 in 2018. The very next year, Jet Airways went down when oil was at $52 for a barrel.
Oil prices have significantly gone down recently, dropping a good 25% over last year for the same month. A raging war in Europe has been going on for nearly 1,000 days now but a new one is lurking around the middle east – the hub of oil production in the world. Where does that head might decide the way forward for airlines everywhere and especially in India since a lot of planned routes could well be planned to fly over what could be a future conflict zone. Its impact on the global economy could be larger than the Russia – Ukraine war and thus have an impact on spending power. This may sound a little pessimistic but is certainly closer to reality than looking at the population of the country, then at the number of air travellers and calculating the potential number of travellers. Fingers crossed, until a realistic scenario evolves in front of us.
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