To Vadodara - the "problem" is that no major country in the world doesn't balance low fares with local airline growth and nonstop connectivity. You will notice no one on net is against expanding BA's or LH's bilaterals or adding city pairs. The ME3 want to dump seats in BOM/DEL/BLR (which stops Indian airline growth) AND add a ton of other cities. So essentially Indian airlines have no where to run to get fares where they make money. So Indian airlines stagnate, India loses jobs, India loses nonstop connectivity, etc. India needs better nonstop connectivity to literally most of the world EXCEPT the ME. There should be a balance. I just don't understand why you feel the GOI shouldn't be actively creating an environment where Indian airlines can succeed (so low taxation, good infrastructure and fair competition is needed).
The one good news has been that global airlines have seen what happened when they exited India and needed to the ME3. So with Jet's collapse, we have seen probably the most new airline adds in a long time. From Korea and Japan to Netherlands and UK.
Again there is not enough money to build all the needed infrastructure; subsidizing likes of Air India and Jet ensures that the money that could have been used to build runways and ATC got wasted.
Having said that, ensuring connectivity to 2nd and 3rd tier cities where there is already existing infrastructure will go a great way in growing aviation as well as boosting economy.
I get it that some international fares have shot up; but that is not just Jet. EY has also pulled out of most N American cities as well. Not to mention the Pakistan effect as well as now hot/now cold drama over Iran.
There will be capacity addition as you pointed out and the fares will reach the mean.
I totally agree about tier 2 & 3 cities. They should have more connectivity. For tier 3 cities, I feel like they would benefit much more with connectivity to BOM, DEL & BLR plus what ever city they have the closest ties to then connectivity to DXB. This helps the domestic economy and ties the country together. As far as infrastructure, it is there in BOM, DEL and BLR. Can it be more efficient, hell yeah. But that is something all Indians need to own. All the checking of boarding passes (I think that is gone), crazy lines what ever. But the airports are designed for easy transfers and connections assuming the human element works. Add to that the fact that all three main terminals are real actively small when compared to global hubs, I would focus on improving the experience there than building anything new there.
As far as subsidizing AI, Jet or anyone, I have never been in that camp. I want reforms on taxation and govt interference and lack of clear rules. That said, I think shatting AI down now would be a mistake. Let any Indian airline get a decent international long haul presence and then shut AI down or sell it. To have AI shut down now would be too disruptive given JEt’s closure.
1. ME3 has dumped capacity on the Indian routes in the past when they were given bilateral caps that were multiples of the projected traffic between India and the respective airports. There is enough traffic from most tier-2 cities (and I am including cities like CCU in this) to warrant 2 narrow body flights, if we consider O&D passengers only. the fact that ME3 operate widebody flights to tier 2 cities is solely to carry connecting passengers to Europe, North America, and to a lesser extent Australia. These connecting passengers from India actually subsidize ME3 flights to North America. This has been proven when AI entered and started scaling up SFO, the ME3 were either in retreat, or quickly cancelled plan to enter the market. The day AI starts flights to LAX, the bumbling twins would be gone. It's not the ME3 subsidizing international flights, it's Indian passengers subsidizing ME3 flights, especially the long-haul flights.
2. International connectivity from India has been hampered by the GoI's stupid boneheaded policies. In spite of this AI has expanded international destinations on its own metal and via code-shares. It also has international connector flights from most cities to DEL where you complete your emigration at your local airports and seamlessly connect to the international flights at DEL. What more do you want AI to do, fly daily nonstop 788s to JFK, LHR and FRA from every podunk city? Grow up, most of the towns in India do not have the per-capita wealth to even fill a daily narrowbody to DXB. Having tier 3 airports is a pointless exercise in vanity. Instead of spending money to improve them, I'd rather the GoI spend it instead on building up Navi Mumbai airport quickly and with enough capacity to expand to let private airlines build fortress hubs at the airport.
3. And for all the brilliant financial minds who think shutting down AI would magically free up funds to expand local podunk airports, well, I don't see 6E, UK or SG rushing to offer direct flights to any of the Gulf area airports, what makes you think the ME3 will turn up? I'd love to see AI privatized, because any responsible financially minded management would immediately shut down all the pointless routes AI flies to connect tier 2 and tier 3 cities to DEL and BOM, and all the protestations of local politicians will not bring those routes back. That way, AI can focus on improving profitability by focusing on the international routes and domestic connections that actually make money.