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Author Name 6 BBAT Shilpa Sarvani Ravi

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Paper/Submission ID 3342020
Submitted by [email protected]
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 Aviation under pressure: Investigating operational problems in
Airports and Airlines

Chapter 1

Introduction
18
India aviation industry promises huge growth potential due to large and growing middle class
1
population, favorable demographics, rapid economic growth, higher disposable incomes, rising
aspirations of the middle class, and overall low penetration levels (less than 3%). While the
domestic airlines have not been able to attract foreign investors (up to 49% FDI is allowed,
though foreign airlines are currently not allowed any stake), foreign airlines may be interested
in taking strategic stakes due to their deeper business understanding, longer investment
horizons and overall longer-term commitment towards the global aviation industry(Rajesh U.
Kanthe, 2012). Healthy passenger traffic growth on account of favorable demographics, rising
disposable incomes and low air travel penetration could attract long-term strategic investments
in the sector. There are in challenges: i) aviation money matters is currently not favorable India
resulting in weak financial performance of airlines and ii) Internationally, too airlines are going
10
through period of stress which could possibly discourage their investment plans in newer
markets. Besides, foreign carriers already enjoy significant market share of profitable
international routes and have wide access to Indian market through code-sharing arrangements
1
with domestic players. Given these considerations, we believe, foreign airlines are likely to be
more cautious in their investment decisions and strategies are likely to be long drawn rather
than focused on short term valuations.

On the proposal to allow import of ATF, we feel that the duty differential between sales tax
(averaging around 22-26% for domestic fuel uplifts) being currently paid by airlines on
38
domestic routes and import duty (8.5%-10.0%) is an attractive proposition for airlines. (Rajesh
U. Kanthe, 2012)
1
However the challenges in importing, storing and transporting jet fuel will be a considerable
roadblock for airlines due to OMCs monopoly on infrastructure at most Indian airports. From
the working capital standpoint too, airlines will need to deploy significant amount of resources
in sourcing fuel which may not be easy given the stretched balance sheets and tight liquidity
profile of most airlines (Rajesh U. Kanthe, 2012)
Aviation Industry Current Status

Global connection, economic growth, and trade all depend on the aviation sector, which also
is rather important. Thanks to developments in aircraft technology, rising globalization, and
the spread of low-cost carriers (Wensveen, 2022), it has expanded dramatically during the past
39
few years). Driven by a rising middle class, more disposable income, and a need for faster
42
transit, the demand for air travel is still rising (Doganis, 2019).
32
The aviation sector has several difficulties including changing fuel prices, strict environmental
laws, and operational inefficiencies (Gössling & Humpe, 2020). Furthermore significantly
hampered by the COVID-19 epidemic was air transport, which resulted in large financial losses
for airports and airlines all around (IATA, 2021). With rising passenger confidence,
developments in sustainable aviation fuel (SAF), and aircraft efficiency (Boeing, 2023), the
sector has however shown indications of resurgence.

Aviation Industry Current Status in India

India's domestic aviation sector has experienced significant growth, achieving a record of
34
nearly 500,000 passengers in a single day (Gupta, 2024). Government initiatives such as the
UDAN scheme have improved regional connectivity. The sector is encountering significant
operational difficulties as Vistara prepares to terminate its operations and merge with Air India
(Mehta, 2024), while Go First has indefinitely suspended all flights due to financial limitations
(Rao, 2024).

Airport congestion continues to be a significant problem. A technical malfunction at Bengaluru

Airport resulted in passenger disorder, underscoring the precarious infrastructure underpinning
India's aviation expansion (Sinha, 2024).
3 2
The first commercial flight in India took-off in , 1911, when a French pilot Monseigneur Piguet
flew airmails from Allahabad to Naini, covering a distance of about 10 km in as many minutes.
Tata Services became Tata Airlines and then Air-India and spread its wings as Air-India
International. The domestic aviation scene, however, was chaotic. (Rajesh U. Kanthe, 2012)
3 2
When the American Tenth Air Force in India disposed of its planes at throwaway prices, 11
domestic airlines sprang up, scrambling for traffic that could sustain only two or three. In 1953,
the government nationalized the airlines, merged them, and created Indian Airlines. (Rajesh U.
3
Kanthe, 2012)For the next 25 years JRD Tata remained the chairman of Air-India and a director
on the board of Indian Airlines. After JRD left, voracious unions mushroomed, spawned on the
pork barrel jobs created by politicians. In 1999, A-I had 700 employees per plane; today it has
1
474 whereas other airlines have 350. (Rajesh U. Kanthe, 2012)The Indian Aviation Industry
2
has been going through a chaotic phase over the past several years facing multiple headwinds
– high oil prices and limited pricing power contributed by industry wide over capacity and
periods of subdued demand growth. Over the near term the challenges facing the airline
1
operators are related to high debt burden and liquidity constraints - most operators need
significant equity infusion to effect a meaningful improvement in balance sheet. Improved
financial profile would also allow these players to focus on steps to improve long term viability
and brand building through differentiated customer service. Over the long term the operators
need to focus on improving cost structure, through rationalization at all levels including mix of
fleet and routes, aimed at cost efficiency (Rajesh U. Kanthe, 2012). At the industry level, long
term viability also requires return of pricing power through better alignment of capacity to the
36 2
underlying demand growth Historically, the Indian aviation sector has been a foot-dragger
relative to its growth potential due to unnecessary, government ownership and regulations of
airlines and resulting high cost of air travel. However, this has changed rapidly over the last
decade with the sector showing explosive growth supported by structural reforms, airport
modernizations, entry of private airlines, adoption of low fare - no frills models and
improvement in service standards. Like elsewhere in the world, air travel is been transformed
into a mode of mass transportation and is gradually shedding its elitist image. (Rajesh U.
Kanthe, 2012)

20
Challenges in the Aviation Industry in India
1 7
The growths in the aviation sector and capacity expansion by carriers have posed challenges to
5
aviation industry on several fronts. Fuel prices: As fuel prices have climbed, the inverse
Relationship between fuel prices and airline stock prices has been demonstrated. Moreover, the
rising fuel prices have led to increase in the air fares Employee shortage: There is clearly a
shortage of trained and skilled manpower in the aviation sector as a consequence of which there
is cut-throat competition for employees which, in turn, is driving wages to unsustainable levels.
Moreover, the industry is unable to retain talented employees Local connectivity: One of the
biggest challenges facing the aviation sector in India is to be able to provide regional
connectivity. What is hampering the growth of regional connectivity is the lack of airports
Infrastructure: Airport and air traffic control (ATC) infrastructure is inadequate to support
7
growth(Rajesh U. Kanthe, 2012). While a start has been made to upgrade the infrastructure,
the results will be visible only after 2 - 3 years Reserves routes: The entry of new players would
ensure that air fares are brought to realistic levels, as it will lead to better cost and revenue
5
management, increased productivity and better services. This in turn would stimulate demand
and lead to growth. High participation expenditure: Apart from the above mentioned factors,
7
the input costs are also high. Some of the reasons for high input costs are:-Withholding tax on
interest repayments on foreign currency loans for aircraft acquisition. Increasing manpower
costs due to shortage of technical personnel (Rajesh U. Kanthe, 2012)

RECOMMENDATIONS
3
Low-cost carriers Use just a few types of aircraft, a strategy that cuts training and maintenance
expenses.. Another way to simplify operations is modifying the hub-and-spoke model, which
6
uses designated headquarter airports for transfers. Traditionally, the big airlines have sent many
of their flights through hub airports at peak business-travel hours(Rajesh U. Kanthe, 2012).
3
That way, since carriers typically charge heaps more for business fares, they can get more
revenues per flight. But many experts argue that it's time to give up on that model - especially
as low-cost carriers increase service along heavily travelled routes(Rajesh U. Kanthe, 2012).
6
More clear pricing The inheritance carriers have long had an unusual, almost incomprehensible
pricing system. However, these days, with the Internet allowing travelers to shop for the
cheapest tickets easily, and low-cost airlines offering uncomplicated set prices, traditional
carriers have to follow suit or risk losing more and more passengers(Rajesh U. Kanthe, 2012).
Most of the industry's improvement efforts have focused on whittling down costs. However,
boosting revenues also needs to be a priority. After all, people are willing to pay more if they
3 19
believe they're getting more value. Legacy carriers still offer certain advantages, especially to
the business traveller including airport lounges and more comfortable seating(Rajesh U.
Kanthe, 2012). This would sound like a new model for quality pricing (Rajesh U. Kanthe,
2012)
3
FROM BAILOUTS TO GOVERNMENT PARTNERSHIP

Although the Indian airline industry was largely deregulated in 1990, plenty of lingering rules
and regulations have made it nearly impossible for carriers to be efficient. Many believe that
restrictions on foreign ownership and labour laws have kept the indu stry from innovating. So
instead of lobbying for protective measures like bailouts, airlines need to work with
 12
government to tackle longer-term projects like building more runways, running airports more
efficiently, and reining in labour costs. (Rajesh U. Kanthe, 2012)

Research Gap

The aviation sector is integral to global transportation; nevertheless, it encounters substantial

operational issues that remain inadequately examined in current research. Although research
has investigated specific elements of airline operations, including flight delays, food safety,
46
and aircraft maintenance (Singh, 2022), there is an absence of holistic studies that amalgamate
these factors to assess their collective influence on passenger experience and airline efficiency.
Recent reports on aviation disasters underscore significant operational inefficiencies, including
food safety violations (Sharma, 2023), delays stemming from aircraft shortages (Patel, 2024),
and infrastructure failures including airport floods (Verma, 2023). Notwithstanding these
reports, current research fails to sufficiently examine the interconnections among these
concerns and their impact on airline performance, customer happiness, and financial stability.

although most studies emphasize financial and technological progress in aviation, the human
and structural elements leading to operational inefficiencies are inadequately examined
(Kumar, 2022). evidence about the responses of airlines and airports to these crises, as well as
the efficacy of current mitigation efforts, is scarce. Addressing these research gaps is crucial
17
for developing a comprehensive understanding of the operational difficulties confronting the
aviation sector and for proposing sustainable solutions.

Need for the Study

Rising passenger demand, legislative modifications, and global disruptions such as pandemics
and geopolitical crises have exacerbated operational challenges within the aviation sector
(Ghosh, 2023). Recent events highlight the necessity for prompt resolution of these issues:
aircraft diversions due to foreign object contamination (Reddy, 2023), emergency landings
caused by foodborne illness (Mehta, 2024), and substantial delays stemming from inadequate
infrastructure (Banerjee, 2023). Operational challenges in the aviation industry have intensified
due to heightened passenger demand, regulatory changes, and global disruptions, including
pandemics and geopolitical conflicts (Ghosh, 2023). Recent incidents, such as flight diversions
due to foreign object contamination (Reddy, 2023), emergency landings resulting from food
poisoning (Mehta, 2024), and significant delays due to insufficient infrastructure (Banerjee,
2023), underscore the necessity for prompt attention to these matters. These disruptions not
only bother travelers but also result in substantial financial losses for airlines and harm their
reputations.

A structured study is required to evaluate the fundamental causes of operational issues in

aviation safety and efficiency, as well as their effects on airline profitability and passenger
41
experience (Mukherjee, 2022). This study offers valuable insights into how airlines and airports
may improve resilience against unexpected interruptions. By pinpointing critical problem
areas, the research can inform policy recommendations that enhance operational efficiency,
mitigate financial risks, and guarantee passenger safety.
37
Scope of the Study

This study will look at various challenges faced by airlines and airports, such as flight delays,
poor infrastructure, in-flight service issues, and following regulations (Sharma, 2024). The
study will look at examples from well-known foreign and local airlines, focusing on common
issues and reasons for their operational problems.

The research will examine the function of aviation authorities and regulatory agencies in
alleviating operational issues. Particular focus will be directed into the efficacy of rules
concerning airline maintenance, food safety, and passenger management (Nair, 2023). The
45
study will also examine how various airlines tackle these difficulties, offering a comparative
analysis of optimal approaches in operational management.

The research seeks to provide a comprehensive perspective on airline operations, benefiting

43
airline executives, regulatory bodies, and policymakers. It will also offer suggestions for
improving operational efficiency and reducing the dangers linked to frequent delays in aviation.

Significance of the Study

20
The aviation industry plays a crucial part in facilitating global travel, significantly contributing
to economic growth and the tourism sector. Ensuring that operations work seamlessly is crucial
for fostering public trust, keeping the profitability of airlines, and supporting the sustainability
of the business (Desai, 2023). This research aims to uncover the fundamental elements that add
17
to operational challenges faced by airports and airlines. This study tries to provide valuable
insights for those involved in aviation by analyzing actual incidents, such as in-flight
contamination, equipment failures, and regulatory shortcomings (Kapoor, 2023).. This study
greatly influences policy development, as it aids regulatory authorities in creating more
effective monitoring systems meant to prevent operational errors.

This study aims to enrich academic literature by providing a thorough understanding of the
operational challenges in aviation, while integrating insights from business management,
logistics, and regulatory frameworks. This project aims to assist aviation professionals by
offering guidance grounded in factual information, which is intended to enhance service
quality, ensure financial stability, and uphold safety compliance.

Research Objectives

Objectives To identify and analyze the key operational and management problems faced
by airlines and airports in recent years. - This objective focuses on understanding the
common challenges that airlines and airports have faced, such as flight delays, staffing
35
shortages, infrastructure limitations, and evolving regulatory pressures. It aims to examine how
these issues affect overall efficiency, customer satisfaction, and financial stability.

To explore potential solutions and strategies that airlines and airports are implementing
or could implement to address these problems. - This objective seeks to investigate how
airlines and airports are tackling these challenges through innovations, policy changes,
technology upgrades, or process improvements. It also aims to explore future strategies that
could enhance operational performance and resilience

To analyze customer sentiments expressed on social media platforms regarding

operational challenges faced by airlines and airports: This objective helps By monitoring
travelers' social media posts about airline delays, cancellations, and other concerns, we can
comprehend their feelings and uncover prevalent issues. This knowledge helps airlines and
airports better serve passengers.
 Chapter 2

Literature Review

Issues in Aviation Industry

Later confirmation of these results came from Air India staff members (Gupta, 2024). The food
that was given to a passenger throughout their journey turned out to be a metallic item looking
16
like a sword. IndiGo Airlines has also been under fire after cockroaches were found in its food
storage room, therefore highlighting the company's poor cleanliness policies (Rao, 2024).

Passengers on an Akasa Air flight from Goa to Delhi who was delayed for more than eight
hours reported problems akin to those in the previous sentence (Iyer, 2024).Airlines have
frequently failed in their operations within the Indian aviation sector. Considering the severe
financial problems Jet Airways was facing, Patel said the Supreme Court mandated the firm to
be liquidated. Reflecting the consolidation in the industry, Vistara Airlines is on the brink of
merging with Air India due to the fragile financial situation (Singh, 2024). Regarding the safety
of their transportation, Indian airlines still have a great and continuous challenge. Ramesh (
2024) claimed that IndiGo Airlines had flown a flight with non-padded seats, which sparked
concerns regarding the passenger's safety. Smoke emissions discovered prior to a flight from
Chennai to Dubai aroused concerns about the maintenance and safety measures implemented
(Krishnan, 2024).

Many Indian airports suffer from issues including congestion and insufficient infrastructure.
Moreover, Das (2024) said that exceptionally heavy rain caused flooding on the Kolkata
Airport runway, which hampered flight operations. Similar system problems resulting from
IndiGo Airlines at Bengaluru Airport generated a lot of operational uncertainty and delays
(Nair, 2024). At Indian airports, there have been an all-time high number of security events.
Mukherjee (2024) claims that a visitor was found at Delhi Airport hiding one kilogramme of
gold in his trousers. Customs personnel at Mumbai Airport (Menon, 2024) arrested twenty-
two exotic animals imported from Thailand under control.

Like other airports all throughout the globe, Indian ones deal with various challenging technical
problems. Sharma (2024) claims that a glitch in a Microsoft system was the main cause of
disturbance in airports all around. This breakdown affected not only Indian airlines but also
many other nations and sectors. Another reason that contributes to delays and raises
maintenance concerns is the claims that the restrooms lack sufficient sanitation.
The Aviation industry has certain characteristic feature which makes it a very complex
industry. The unused seats can‟t be inventorised, the impact of seasonality and cyclicality is
very high in this industry(Chandrani, 2015). Long time taken for single decisions like aircraft
acquisitions makes the structure of the aviation industry very unique(Chandrani, 2015). One
example could be the seasonality issues. During peak season in a bid to capture customers‟
airlines buy more planes or hire more employees which increase the fixed cost. During the lean
season the high fixed cost affects the financial performance of the company. opines that “a
large jet aircraft costs in excess of US$200 million, and its procurement typically involves
significant lead time. Since an aircraft has an operating life span of 25 to 30 years and
depending on the average age of the company‟s fleet, airline executives may be committing
themselves to a time frame of decades, creating huge strategic commitments, when placing a
new aircraft order” (Chandrani, 2015). Existing assumptions regarding the regulatory,
economic or operating environments easily go awry over such a long period of time, increasing
the strategic risk for airlines(Chandrani, 2015).

The Global Food System is very complex and represents one of the critical elements that a
society depends upon and therefore needs to be maintained and protected [2]. Still, it is so
delicate and could be breached easily [16]. Food system can be described as a balance between
supply and demand, with consumers being the main driver of the system, regardless of the food
industry in focus. The industry developed and effectively implemented a number of food safety
standards and some of the globally recognised certification schemes are Hazard Analysis and
Critical Control Point (HACCP), International Food Standard (IFS), British Retail Consortium
(BRC), the National Sanitation Foundation (NSF), Foundation for Food Safety Certification
(FSSC 22000) based on the ISO 22000 and ISO 22002-1 and other. Until 2001, food safety
standards were considered to be sufficient in preserving and protecting our food supply. In
2002 the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 [8]
has been published. Its primary objec tive is the protection of food supply from intentional
contamination, and food defence was introduced. Food defence is a term that involves the
active effort to protect the food supply from deliberate contamination that is meant to
intentionally harm individuals or orga nizations . Wherever intentional contamination and food
fraud pose a serious threat to the consumers’ and public health or business, food defence should
1
be implemented [6]. In other words, intentional contamination has the potential to cause
significant public health consequences, devastating economic impacts, loss of public
confidence in the safety of food, effectiveness of government, and food insecurity. Food
defence is usually built up, integrated into an existing food safety system of a company. Even
though both use the same or similar tools and methods, potential con sequences are drastically
different. The levels of Food Defence are shown in. Food defence plan can be a basic or
enhanced, and its complexity is mainly determined by the size of a company. Food defence
plans, like food safety plans have four components that involve the development,
implementation, testing, and review of the plan. Verification of a particular food defence plan
lies in testing, and effective corrective measures need to be implemented accordingly .
Vulnerability assessment and mitigation strategies are integrated only into an enhanced food
defence plan. Food defence involves documentation and written pro cedures of the existing
food safety system, traceability, documentation and records of the management system,
corrective and preventive measures, internal audits, employee training, etc. It is mainly
implemented in agricultural production, pro cessing, storage and transport, wholesale and retail
distribution and tracing systems and recalls (traceability being one of the obligatory
requirements) . It is impor tant to note that the analysis of documented bioterroristic attacks via
food and/or water showed that the attacks that targeted raw materials (the field), manufacturers,
and retailers were less successful which reflects the high security standards that the food
industry have been embraced or have been required to implement .

Food Challenges

Flight kitchen production is a typical form of mass catering, but has some unique features
distinct from food preparation in restaurants and hotels. The time difference between food
production in the flight kitchen and finally serving it on board an aircraft with limited kitchen
facilities makes flight catering a high-risk food preparation operation. The com plexity of the
production procedures in the flight kitchen also increases the microbiologi cal hazards
associated with this type of food preparation. Major factors affecting the hygienic quality of
the food are the size of the operation, the complexity of the in-flight service, the number of
47
airlines catered for, the number of flights serviced during the day and the duration of the flights
to be serviced. Since each airline has its own specification, the management of multiple
contracts increas es the complexity of the planning and control. Production planning for flight
caterers equates to just in time production techniques (JIT), meaning producing the necessary
units, in the necessary quantities, at the necessary time (Briggs and Nevett 1995, Foskett 1995).
An airline company has to decide to what extent return catering will be carried out; whether to
utilise the flight kitchens of foreign airports and whether to use local suppliers. Frozen meals
may be carried if an aircraft is using food from its homeland during the return leg. In general,
implementations depend mostly on cooperation among all the stakeholders involved in airlines,
airports, and laws.

Conclusion

Rising operational inefficiencies, financial difficulties, and security issues describe the aviation
industry at a cross-roads. Although passenger demand is rising, systematic issues include
insufficient infrastructure, poor regulatory procedures, and insufficient human training impede
the industry from achieving these needs. Unless fast and targeted solutions are followed, these
problems will continue to affect general industry development, consumer satisfaction, and
airline profitability.

The aviation stakeholders might be proactive instead of reactive by means of bettering

technology, the security system, and financing for personnel training. If we want to keep long-
term stability inside the industry, government involvement will be the most vital need in
providing financial relief, policy change, and better regulatory monitoring. Modernized
infrastructure, advanced security measures, and people retention strategies will largely help to
minimize running failures, improve passenger experience, and raise financial sustainability by
means of their respective effects on running performance. By means of coordinated efforts
among airlines, legislators, and airport authorities, the sector will be able to overcome present
challenges and open the road for a more resilient and efficient future.