Jet Airways has stopped the sourcing of on-flight meals from certain international airports and decided not to hire foreign pilots, to save costs. The airline is implementing these measures as the rupee dropped to a four-month low last week.
Said Nikos Kardassis, chief executive officer: "We are freezing all non-rupee expenses, including those on hiring of expat pilots and foreign advertising."'
He said the airline had begun doubling the meal uplift from India on certain routes to the Gulf and Southeast Asia. Kardassis estimates these measures could result in savings of about $20 million annually (a little over Rs 100 crore).
Jet has 183 foreign pilots, according to the civil aviation ministry. It had planned to hire more for its Boeing 737 and Airbus A330 fleets. There would be a saving in dollar costs, since foreign pilots are paid in this currency.
Additionally the Directorate General of Civil Aviation had given airlines a 2013 deadline to phase out expatriate pilots.
With a depreciating rupee, airlines troubles have deepened. Apart from salaries of expatriate pilots, they pay loan interest and lease and maintenance charges in dollars. Since last August, the rupee has fallen from Rs 44.08 to Rs 53.48 (last week) to the dollar. The rupee depreciation and rising fuel costs have knocked off revenue gains.
Jet Airways and its no-frills brand, Jet Konnect, together have a market share of 29.2 per cent. The airline has made losses for the past three quarters; that in the third quarter has been Rs 101 crore (Rs 1.01 billion).
Analysts feel fourth-quarter revenue would be better because of Kingfisher cancelling flights, pushing up domestic fares. But the impact of good numbers may not show in the financials due to a rise in operating costs. Compared to the last quarter of 2010-11, domestic fares were 15 to 18 per cent higher last quarter.
But operating costs rose, as the price of jet fuel was up 15 per cent and the rupee had depreciated by 11 per cent. Brokerages expect Jet to post a fourth quarter loss of Rs 278 crore (Rs 2.78 billion) to Rs 549 crore (Rs 5.49 billion).