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More low-cost airlines coming to India

Biman Mukherji in New Delhi | June 09, 2004 12:17 IST

Low-cost airlines are set to take to the skies over India with budget travellers happy to forego hot airline meals if it means cheaper tickets.

India's main international carrier, state-run Air-India, announced last month it will be starting next April a low-cost airline that will fly to the Middle East and Southeast Asian countries.

A top-ranked civil aviation ministry official also told AFP at least three airlines have applied for permission to fly domestic routes, offering fares expected to be around 20 to 30 per cent below prevailing market rates.

The private firms do not currently have airline operations in the country. One Middle East-based international carrier, Air Arabia, is also keen to operate low cost-flights to India, media reports say.

"I'm sure in the next year, India will have five-to-six low-cost airlines," said Kapil Kaul, a senior official of the Centre for Asia Pacific Aviation, a privately owned Singapore-based aviation consultancy service.

This would come as welcome news for Indian travellers as flights to destinations abroad are often cheaper on foreign carriers than travel within the country on domestic airlines.

"In a developing economy a low-cost carrier will always be successful. And India has a definite market for low-cost airlines," Kaul said.

He said low-cost carriers would be able to turn a profit within two years of their start-up.

So far, there is only one low-cost domestic carrier, Deccan Airlines, which operates mainly in southern India.

High fuel costs and other operating fees such as landing and parking charges, which account for up to 15 per cent on an airline's expenditure, have kept air fares high and grounded most of the carriers entering the domestic aviation sector when it opened up nearly a decade ago.

It is these high operating costs that are likely to doom future budget carriers, said a private domestic airline official who did not wish to be named.

"Low-cost airlines are successful overseas because they operate from secondary airports where the charges are very low. In India, the cost of landing and parking at all the airports is the same," he said.

Kaul agreed oil costs and parking charges were "definite dampeners," but said bargain airlines had plenty of room to cut costs.

"For example, you can go for e-ticketing and not be dependent on centralised reservation system. It can cut up to 15 per cent off costs in paying commission to agents," he said.

He also said airlines could operate short-haul flights with quick turnaround times which would ensure "higher aircraft utilisation."

Money could also be saved by packing more seats into an aircraft, cutting down in-flight services and using only one type of aircraft for a fleet to minimise maintenance costs.

Air Deccan, the year-old budget carrier, said it has been able to survive by such methods as Web-based ticket reservation and streamlining back office processing.

It has recently taken on lease three Airbus 320 planes to complement its fleet of seven French-made ATR 48-seater aircraft.

The airline's head, G R Gopinath, said the carrier would soon compete head-on with big private carriers on main routes with the new planes.

"We will remain a no-frills airline even on main routes," he said, adding that the airline would keep cutting ticket prices as its passenger numbers rose.

It said it is also exploring starting flights to nearby Sri Lanka.

-- AFP

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