Airlines need to restructured to be more efficient: CAPA India

Aviation consultancy CAPA India on Thursday said COVID-19 has said the aviation industry in India needs to leverage the pandemic as an opportunity to redesign and strengthen the sector.

Hyderabad (Telangana):Speaking at a webinar on 'Redefining Aviation Risk', Kapil Kaul, head of CAPA India, said, "Indian division is at a critical risk juncture and requires continuous development of its capacity, capability and agility to implement effective risk management."

Kapil Kaul said that a three-step process is required if the opportunity to reset the sector is to be realised. "We need to recognise that we are now at a critical risk setting, we need to review current and future drivers of risk across strategic, economic, commercial, operational, financial, safety, security, technology and consumer issues and their respective impact on revenue and costs and lastly engage in a highly coordinated and collaborative manner with all stakeholders across industry and government to develop and execute a robust risk mitigation strategy with a clear approach and responsibilities."

CAPA India head further said that Indian aviation has always presented higher risks than other major markets even during the pre-Covid era, largely due to a failure to solve structural issues since 2004.

He said risks remain elevated because the industry has not learnt key lessons from two major airline failures (Jet Airways and Kingfisher) in the last decade, leaving a trail of USD 6-7 billion of liabilities.

"Firewalls have not been implemented in the aftermath of these events to prevent further airline failures. All stakeholders are responsible for the absence of preventive risk management," he added.

Talking on the issue, former CEO of Adani airports Sidharth Kapur said, "COVID has made aviation even more complex than it already was. There is a critical need for aviation operators to formalize structure risk management Framework starting with the appointment of Chief Risk Officers."

Meanwhile, Tejpreet Chopra, former president and CEO India of General Electric, said that airlines that are able to adapt to the technology to become more productive and efficient are going to play a much larger than those which don't understand the risk of not deploying the relevant technology to make the customer experience better and increase operational efficiency.

Notably, Civil Aviation Minister Hardeep Singh Puri on Thursday informed the Lok Sabha that Indian airlines incurred a loss of Rs 16,000 crore between April-December 2020, while airports lost Rs 3,000 during the same period.