It will result in all Indian airlines witnessing cost escalation due to enhanced risk profile

The decision of the U.S. Federal Aviation Administration (FAA) to downgrade India to Category 2 under its International Aviation Safety Assessment programme will have cascading effect on Indian carriers though Air India and Jet Airways, which fly to the U.S, would be affected immediately.

Centre for Asia Pacific Aviation (CAPA) has come out with an exhaustive report stating that the downgrade will result in all Indian airlines witnessing cost escalation due to enhanced risk profile.

“All Indian carriers could potentially suffer from higher lease rates, more stringent maintenance covenants, and increased insurance premiums as a result of a perceived increase in risks,” said Kapil Kaul, CEO, South Asia, CAPA.

“The possibility exists that other jurisdictions (countries) may raise their own concerns about safety oversight in India (after the FAA action), which could have a much greater impact on Indian carriers,” he added.

According to CAPA’s report, the proposed Tata-SIA venture, though may be allowed to fly international immediately after its launch, cannot operate flights to the U.S. due to the downgrade.

“An opportunity was emerging for a well funded, premium Indian carrier such as Tata-SIA operating non-stop services to global destinations.

“The U.S. would surely have been an important component of those network plans,” CAPA said, adding that it might take many years for Indian [carriers] to achieve Category 1 status.

According to CAPA, the downgrade highlights deep systemic flaws in India’s aviation safety oversight. It wanted the government to come out with a white paper to identify the problems.

“The downgrade is a matter which rests solely at the government’s door.

“The FAA action will force one to recognise India’s regulatory shortcomings. Restoration of India’s aviation credibility is a serious goal,” CAPA said.

It wanted the aviation regulator DGCA to be strengthened immediately to address the safety concerns.

“An urgent, comprehensive and independent white paper on the state of aviation safety is critical to understand the depth of the problem. Only then, can appropriate long-term solutions be developed,” said CAPA.

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