2020 has been like the Boeing 737 Max. It barely took off.
It was only towards the end of the year that we started seeing the sector make some recovery and return to a shadow of its glorious past. With international travel, largely still restricted in India and the black Swann event not completely past us, the year will continue to cast its shadow as we go into 2021. As much as we want the magic wand to be rolled, we know that the new year will grapple with the long, dark shadow that 2020 has cast. Having said that, there are some very interesting things to look forward to in 2021. So fasten those seat belts, because we for sure, will be flying a lot more in 2021 than in 2020.
Here are a few things to watch out for:
Growing Domestic Market Capacities
With Indigo announcing that it will soon reach 80 per cent of its domestic capacity by the end of 2020, it is not beyond the realms of expectations that 2021 will see them back to the levels that they were operating before the pandemic. While the load factors steadily rise, with vaccines coming into the picture, the travel world will be a lot more cosy and confident. The number of passengers taking flight has steadily grown month on month since domestic flights resumed in India post a total lockdown, and this trend will only continue to evolve. The consolidation of this trend has been observed already with certain domestic sectors, for example, Goa, already reporting close to a full capacity booking. The pandemic has not taken away the zeal of travelling and if anything, it has made the people all the more energetic to take flights as things continue to ease up. We foresee that the Government sometime next year will also do away with fare capping, allowing the aviation market to return to a free market, which could push the airlines to give unprecedented discounts as they look to recover the losses made.
The Return of Jet Airways
With new owners in place and a resolution with NCLT on the cards, the aviation industry is more optimistic than ever for the return of Jet Airways. Once the crown jewel of the Indian aviation sector, Jet will continue to operate as a full-service airline and operate both, domestic and international routes. It would be interesting to watch out what will the fleet comprise and how will the routes differ from the Jet of old. The resurrection of Jet Airways will also lead to hiring, giving the sector some fuel for growth. You would expect Jet 2.0 to be a lot more operationally efficient and leaner than Jet 1.0 and that would be a fascinating aspect to follow as we get more information on the return of Jet Airways.
The MAXimum Joy
After long scrutiny, the 737 MAX returned to the skies in the US at the end of 2020. It is expected more regulatory bodies, especially across Europe and Asia will scrutinise the changes and hopefully will give it an all-clear. With the MAX a viable option again, it would be interesting to see how Spicejet, who will now be the largest Indian customer of the model will induct the order. There have been enough stories and more written about the struggles of SpiceJet financially and on a lighthearted tone, it was often said that the MAX made them more money grounded than they would if they flew. How this situation develops, will be crucial for the future of SpiceJet.
The Role of TATAs in Indian Aviation
We could be looking at a situation where TATAs could be involved in at least three airlines in India. Having submitted their EOI for acquiring Air India, their JV with Singapore Airlines in Vistara and partnership with Air Asia, the famous business conglomerate will be at the thick of the action in 2021. You would expect a rationalisation at some point in 2021, and with Air Asia at the crossroads, we could even be perhaps looking at another airline going out of the market in India. How will the TATA group react to it, will be quite something to watch out in the new year.
The Future of UDAN
The flagship regional connectivity scheme of the Indian Government has got off to a slow start. Despite the promise, it is fair to say that UDAN has not reached its cruising altitude. With Zoom Air and Air Taxi set to join the skies in the new year, we could see some momentum here. Several routes continue to remain inoperational due to either logistical or financial reasons. The seaplane service, for example, was started with much fanfare but soon the excitement fizzled when the planes had to go back for maintenance, leaving experts with plenty of question about the viability and planning of the scheme. How the government tackles UDAN in 2021 and what, if any other incentives are added will be very interesting to see.
Which of the above are you most excited about? We look forward to hearing from you and your thoughts on the same.
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