Air India's deadly crash could set back its ambitious growth plans

NEW DELHI, India -- Just 10 days before Air India Flight 171 crashed into a medical college hostel in Ahmedabad, killing 270 people aboard and on the ground, company CEO Campbell Wilson held a briefing with the global aviation media, where he laid out the airline's grand ambitions.
"Anywhere we point an aircraft, I think we can probably fill it," Wilson stated confidently that morning here, where the IATA Annual General Meeting was taking place.
Indeed, in the three-and-a-half years since India's Tata Group acquired the long-neglected carrier from the Indian government, it has been investing aggressively. Its goal: to reinvent Air India as a service-oriented airline, ready to take advantage of the economic dynamics that industry insiders widely believe make India's aviation sector primed for a wave of growth.
Since being acquired by Tata, Air India has ordered 570 aircraft, including nearly 520 that have yet to be delivered.
The airline has also completed mergers with Vistara and AirAsia India, both of which were already owned by Tata.
Buoyed by the Vistara merger, Air India has more than doubled its international weekly frequencies since going private and has sharply boosted domestic flying.
But now, as accident investigators search for the cause of the Flight 171 crash, the airline faces a new and different challenge.
"No airline CEO wants to face a challenge of this magnitude," said John Strickland, director of London-based JLS Consulting. "But when you are trying to turn around an airline from decades of state ownership and revolving-door management and political interference, it makes it even harder."
Even before Flight 171 went down, the Air India transformation was a daunting project. Underinvestment during its long period of state ownership had left the carrier with antiquated cabin interiors and obsolete IT systems, Wilson said. There had been no recruitment of nonflying staff for 20 years. When Tata bought the airline, one-third of the fleet was grounded and being cannibalized for parts.
The airline has since put all but one of those 30 grounded planes back in the sky, spent $200 million to replace 43 IT systems and recruited 6,000 new employees.
Buoyed by the addition of Vistara's modern fleet and by deliveries of new aircraft, including six Airbus A350 planes, 50% of Air India's fleet now offers either new or upgraded interiors, Wilson said.
Still, there is much work to do. The airline has plans to retrofit 40 widebody aircraft by 2028, and in the meantime it is doing a lighter freshening of 13 Boeing 777s to tide it over while it awaits seat replacement availability.
Operationally, Air India is still a laggard. In May, the carrier was on time 71% of the time, placing it in the bottom 15% of global carriers, according to OAG. India aviation ministry records show that for the fiscal year that ended on March 31, Air India was on time just 68% of the time, according to the New Delhi-based magazine BW Businessworld.
The airline also continued to suffer net losses in 2024-25 fiscal year, though it did record an operating profit as turnaround efforts progressed, according to Indian media sources.
Indian macroeconomics have been behind the Tata Group's investment plans. IndiaNote is set to surpass Japan as the world's fourth-largest economy. And through 2050, growth will average 5.4% annually, according to a forecast by the London-based consultancy the Economist Intelligence Unit.
Meanwhile, even though India is the world's biggest country by population, Indian airlines are operating just 69 widebody aircraft, according to Bloomberg Intelligence fleet data -- a figure that is lower than the widebody fleet of Singapore Airlines alone. Lacking the capacity to meet demand, India has largely ceded international air service to foreign operators, especially the Gulf carriers. Indian airlines have just 21% of Indian international market share, Wilson said.
Also, while India does have the third-largest domestic airline industry in the world, it's still just one-seventh the size of similarly populous China's, IATA figures show.
"If the Indian traveler starts traveling at the same rate as the Chinese travelers, it's going to be enormous," Wilson said at the IATA conference.
But, for now, growth ambitions will take a back seat at Air India as it deals with the Flight 171 tragedy.
On June 16, the airline's chairman, N. Chandrasekaran, told employees at a company town hall that the tragedy should serve as a catalyst to build a safer airline, various media reported.
Investigators could take months to determine the cause of the crash. If mechanical or technical issues with the flight's Boeing 787 Dreamliner or General Electric GENx engine are ultimately found responsible, Air India's reputational damage would be less dramatic than if the airline's own safety protocols failed.
But no matter what, Strickland said, the accident dents the carrier's progress.
"It's not like the airline was top of the heap in terms of reputation and loyalty from customers," he said. "Whatever the cause, it means that management will have to redouble their focus to prove that they can deliver a safe, reliable and high-quality product."

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NetJets, Flexjet, VistaJet Executives See Plenty Of Room For Growth

Forbes

2 hours ago

Forbes

NetJets, Flexjet, VistaJet Executives See Plenty Of Room For Growth

After two years of small declines following record demand spurred by the COVID-19 pandemic, which peaked in 2022, top executives from the world's largest sellers of private jet flights – NetJets, Flexjet, and VistaJet - are providing a bullish outlook for the future. According to Aviation Week, the trio are already flying high. Over the three months from March to May, Flexjet saw an increase of 146% in "aggregate hourly utilization" compared to 2019. VistaJet was up 115%, while NetJets, already the biggest by a factor of nearly three, saw a 56% gain. Eric Martel, president and chief executive officer of Bombardier Inc., left, and Patrick Gallagher, ... More president at NetJets Aviation Inc., during a delivery ceremony for NetJets' first Bombardier Global 7500 private jet at the Bombardier Laurent Beaudoin Completion Centre in Montreal, Quebec, Canada, on Thursday, Dec. 2, 2021. Earlier this week Gallagher told CNBC that the market for private jet flyers remains largely untapped and demand continues to be strong. Photographer: Graham Hughes/Bloomberg Yesterday, NetJets Aviation President Patrick Gallagher, speaking to CNBC's Robert Frank, estimated that despite the industry's growth over the past five years, the addressable market for private aviation is largely untapped. "The pandemic unlocked a portion, but if the private aviation market expanded by 40%, you still have only 14% of the addressable market (flying privately)," he told the cable business channel. Gallagher cited a 2020 McKinsey study that showed before the pandemic, only about 10% of households with the financial means to be regular private aviation users were flying privately at the time. The unit of Berkshire Hathaway is expected to take delivery of around 90 new private jets this year. It currently holds options to purchase over 1,700 private jets from Textron Aviation, Embraer and Bombardier. While Gallagher declined to provide specifics, he said, "In terms of what we see in future demand, there have really been no signs of slowdown even in this period of market volatility, uncertainty, and tariff concerns," adding, "We watch all the leading indicators very closely. How much are our existing customers flying? Are they giving us less notice? Are they still booking with normal travel patterns? Are they going to different places? Is travel to Europe down compared to last year? So far, we have not seen any indicators of our business at NetJets slowing down." Flexjet, Inc. Chairman at the opening of the company's new world headquarters outside Cleveland, ... More Ohio, in September 2023. He says nearly all of the HNWs who joined the company's fractional and jet card programs during COVID have stayed flying privately hand have not returned to the airlines. Data from Wing X shows that U.S. private jet flights, which had been tracking at a 3.4% year-over-year growth rate before the tariff announcements, have accelerated with 4.1% year-over-year gains since then. Domestic private jet segments were up 16% year-over-year over the recent Memorial Day weekend. In a separate interview published this week, Thomas Flohr, chairman of Vista, the most global of the big players, told Spears Magazine about the prospect of engaging more wealthy individuals in private skies. "The addressable market is gigantic and growing usually at about double GDP." Earlier this year, Flexjet, Inc. announced a firm order for new private jets from Embraer valued at $7 billion. Co-CEO Mike Silvestro stated that the company anticipates doubling the size of its fleet to over 600 jets by 2031. NetJets, including its aircraft management arm, operates around 1,100 aircraft, which would rank it alongside American Airlines, Delta Air Lines, and United Airlines in terms of fleet size. So, what's driving the growth? Gallagher says it's a combination of factors. For executives constantly on the road, flying privately increases family time. In other cases, customers with mobility issues find navigating big and crowded airports increasingly difficult. For others, it's about visiting the grandkids. At the same time, being able to bring pets along can be a reason to choose private flights. Last year, NetJets flew 25,000 pets, mostly dogs and cats, but also parrots and pot-bellied pigs. Another reason for the optimism is the demographics of the flyers. Silvestro says customers are entering the private aviation market earlier, meaning a longer runway of usage. New customers are now in their late 30s and early 40s compared to a market that was previously driven by users who were 55+. The next generation of customers also want to visit more far-flung destinations, creating a need for bigger jets. He coined the trend, "younger, larger, longer." Vista Chairman Thomas Flohr recently told Spears Magazine, "The addressable market is gigantic and ... More growing usually at about double GDP." His VistaJet unit has grown 115% since 2019, according to recent Aviation Week data. (Photo by ERIC PIERMONT/AFP via Getty Images) For fractional and charter operators such as NetJets, Flexjet, and Vista's VistaJet, anonymity is also an increasing factor, the executives say. "We have clients who own their aircraft and use NetJets when they want to fly incognito," Gallagher told CNBC, noting, 'All anybody is ever going to see is that familiar NetJets stripe on the aircraft. They have no idea, no way to track who's onboard.' Both Gallagher, and Flexjet Chairman Kenn Ricci, speaking on a recent industry podcast, say the programmatic offerings they sell - fractional ownership and jet cards - are proving sticky for newcomers, meaning a broader base of core users, and few have stepped back to the airlines. Ricci told listeners, 'We are not seeing much attrition of that frugal wealthy group that showed up (during COVID).' A recent Forbes survey of billionaires found private jets as the top answer when they were asked to name the one luxury they could not live without. What's going to get 86% of the addressable market, which is still on the sidelines, to fly privately? Gallagher noted that $80 trillion is expected to be inherited over the next two decades. He says the next generation is more open to shared economy solutions, such as jet cards and fractional ownership than their parents. Similarly, the new rich are those who are making their money from tech-driven businesses. Gallagher says NetJets' highest market share is in Silicon Valley. He told CNBC, "The tech money is investing in the shared economy." A survey of Private Jet Card Comparisons subscribers who don't currently fly privately but are considering it found that 63% cited door-to-door time savings compared to airlines, 46% said private aviation would give them access to more convenient airports, and 31% cited the ability to fly nonstop instead of making a connection. Nearly 30% cited traveling with pets. Thirty-eight percent said flying privately would replace long trips by car, something that is driving more private flight providers to offer last-mile solutions. Enticing those who can afford to fly privately and drawing them in has always been challenging. Terrorist attacks and Covid drove new customers who wanted to avoid crowded spaces. Airline meltdowns, where passengers can't be rebooked for several days, cause a brief spike in demand. Product breakthroughs, such as fractional jet ownership, invented by NetJets, and jet cards, which date back to 2019 and created by Sentient Jet, now part of Flexjet, Inc., have made flying easier and more accessible, Cheap access often gets plenty of press but rarely meets expectations, and the business models usually prove unsustainable. Kenny Dichter, who founded both Marquis Jet Partners, which was sold to NetJets in 2010, and Wheels Up, which he exited in 2023, announced his return to the space last month with RealJet, an offshoot of a sports and entertainment platform he launched last year. Dichter is widely credited with helping expand the market via MarquisJet, which enabled its customers to buy jet card flights on NetJets in 25-hour increments instead of making a five-year, 50-hour-per-year ownership commitment. He also promoted a membership program using cost-effective King Air turboprops through Wheels Up. This time he is hoping the ability to offer private flights as a stylish and hassle-free way to travel with friends and business associates to his lineup of VIP events will help bring first-time flyers. Real SLX has already inked partnerships with BetMGM and FanDuel. In launching his charter brokerage, Dichter said, 'We think Real SLX's reach to over 22 million U.S. millionaires, of whom maybe 150,000 are regular private aviation users, creates a white space where we can help bring lots of new consumers into the market.'