Strikes By Pilots Cause Turbulence In India's Aviation Sector

India's aviation sector witnessed a turbulent period in September as the country's state-run carrier, Air India, and its second largest private airline were hit by strikes. The disruptions turned the focus on the problems faced by India's aviation sector.

Pilots at the national carrier, Air India, called the strike after the loss-making airline announced plans to cut pay incentives by about 50 percent as part of a drive to reduce costs. The strike ended on Wednesday after the government promised that no changes will be made in salaries without consulting employees.

Jet Airways aircrafts sit on the tarmac at the Santacruz domestic airport terminal in Mumbai, India, 09 Sep 2009Earlier in September, Jet Airways grappled with a five-day strike led by pilots protesting the firing of four colleagues who tried to form a union.

Both the strikes have ended. But the fundamental problems of Indian aviation are far from resolved.   

India's civil aviation minister, Praful Patel, has stressed that the industry will have to go in for cost cutting measures such as reducing wages, pointing out that many airlines around the world have had to do the same as they also accumulate losses.  

"I am very concerned that the civil aviation sector as a whole in India and in the world is going through a downturn, and it is imperative and therefore every section of employees of all airlines must behave responsibly," said Patel. "After all, these are difficult situations."

After Air India piled up losses of over $1 billion last year, the government promised an infusion of funds for the ailing airline, provided it became "leaner and trimmer."

But with the management backing down from its plans to trim wages following the pilots strike, concerns have been expressed that it may not be easy for the airline to cut costs and restructure.  

The problems faced by Air India are shared by many private airlines, which are also struggling to cut costs as they pile up losses and huge debt.

The Indian aviation industry's losses in the fiscal year that ended in March amounted to $2 billion - one fifth of the total for the airline industry worldwide.

The industry's problems stem from the massive expansion that took place during a five-year period of economic growth. Between 2003 and 2007 new airline companies emerged, buying new aircraft, and selling low-cost tickets hoping to attract millions of new fliers from the country's emerging middle class.

But as rising fuel prices forced airlines to raise prices, many passengers returned to using India's extensive rail network. The situation worsened due to the economic downturn, as both leisure and business travel dropped. This year, passenger traffic dropped instead of growing, leaving many airlines with excess capacity and vacant seats.

Analysts say the future for the Indian aviation industry remains uncertain.