Centre for Asia Pacific Aviation India (CAPA India) has warned that the nation’s aviation sector is likely to be adversely impacted this year by potential supply chain issues. With nearly 200 out of a total fleet of nearly 800 aircraft facing grounding during this financial year, the report by the Capital & Transaction Advisor says that this number is likely to go up with more airlines planning to ground planes in the coming months.
Although India’s leading airlines have already placed orders for nearly 1,700 aircraft, because of the global supply chain challenges faced by aircraft manufacturers, the delivery of these is likely to be a gradual process spanning almost the entire next decade. News reports also indicate that leading manufacturers like Airbus and Boeing have stopped taking orders for some of their popular models until 2030. Meanwhile, industry experts say that the existing crisis will lead to constrained capacity, more flight cancellations and delays, thereby forcing airlines to increase rates.
The group chairman of UAE-based aviation conglomerate says that the global shortage of aeroplanes may lead to an increase in ticket prices, particularly for short-haul flights.
“With travel demand outpacing seat capacity, it will naturally result in increased fares. Due to the impact of global supply chain issues, capacity augmentation is also likely to take more time. This will naturally lead to higher fares, especially in the domestic travel sector, where there are only a limited number of players operating on certain routes. Less competition is another factor that may precipitate the surge in airfares,” says Jaideep Mirchandani, group chairman of Sky One.
Meanwhile, according to the online travel platform Cleartrip, airfares this summer have seen a major increase compared to 2023. As per the data, the airfare for the Bengaluru-Delhi route was INR 7,300 in March 2024, compared to INR 5,600 in the previous year, marking an increase of 30 percent. Likewise, the rate for the Mumbai-Delhi route was 22 percent higher than in 2023, at INR 6,000 in March this year. The Mumbai-Bengaluru flight ticket has also risen by 37 percent this March, at INR 4,400 as against INR 3,200 during the same period last year.
Further, the airline has deployed larger aircraft like B787-9 Dreamliner and A321neo on select domestic routes to combine flights or accommodate more number of customers, wherever possible. One of the sources said first officers reporting sick have forced the airline to cancel flights as their salaries have been reduced significantly. The source claimed that some components of the salary have been reduced while incentives linked to flying hours have been raised.
Mirchandani said one of the most cost-effective ways for airlines to overcome supply chain issues is through leasing aircraft. “Leasing will enable airlines to adjust their fleet size and composition in response to market demand, seasonal variations, and network expansion. It is a cost-efficient option that will reduce the burden of upfront capital expenditure and depreciation costs for the airlines,” he adds.He also expects an uptick in wet leasing, which involves renting planes along with operating crew and engineers, to meet the rising demand for flights which will place some control on airfare price increases.
