The Association of Asia Pacific Airlines (AAPA) believes that the response by the market to the failure of Indian carrier Jet Airways has worked well without the need for New Delhi to interfere.
Director general of the AAPA, Andrew Herdman says that although the loss of such a large operator has been painful to watch, the industry overall is in a healthier position.
“With the demise of Jet, we’ve seen capacity reductions, fares have recovered to more normal levels and so the industry is in a healthier spot,” he says.
Herdman adds that the quick redeployment of Jet’s aircraft to other operators has helped to plug some of the gap in the market, and
So far, SpiceJet has been the biggest beneficiary of Jet’s demise, having rushed to add several Boeing 737NGs to its fleet. Vistara has also added some former Jet 737-800s, even though it is an Airbus A320 operator.
During a recent earnings call, IndiGo chief executive Ronojoy Dutta commented that the short-term boost in yields following Jet’s departure from the market is expected to have washed through by the end of June, and conditions will return to normal after that.
Herdman says that while the collapse of Jet has been dislocating, the market has responded on its own without requiring any intervention.
“It’s a self-healing mechanism,” he says. “It’s capitalism rough and ready, it can be quite brutal – bankruptcy is never kind to anyone, but overall it doesn’t require government intervention to direct additional capacity to come into the market. That all happens in the marketplace.”
Herdman adds that the outlook for India continues to be strong, and New Delhi needs to keep its attention on ensuring that airport infrastructure keeps up, rather than trying to direct airlines to adjust capacity or fare levels.
“Our advice to the government is to focus on the framework and the way in which the ecosystem of airport investment and service provision. Don’t get too much into trying to micro-manage capacity or pricing policies,” he says.