National carrier Air India's strategy to cut full-service flights and replace them with low-cost services by Air India Express on its West Asian routes has backfired. The passenger load factor of the flag carrier's low-cost subsidiary for West Asia has fallen a steep 11 percentage points over the last six months as a result of competition from new low-cost entrants and fare wars by incumbents. The PLF on the Dubai-India route fell from 83 to 78 per cent in the same period.
The government is coming out with a policy for setting up greenfield airports for general aviation in the next three to four months. It is also planning to introduce an air cargo policy soon.The broad contours of the policy for general aviation, which includes private charters and corporate jet operations, are more or less in line with the merchant airport policy.
With both the Indian and Chinese governments agreeing to a full fifth freedom last month, the doors have opened for Indian carriers to tap the lucrative United States west coast market through the Middle Kingdom as well as tap China's growing tourism market. This will give Indian carriers the ballast to challenge established foreign carriers like Singapore Airlines and Cathay, which have picked most of the India-US traffic.
The Delhi government has requested airlines to come up with a detailed note on how decrease in sales tax on aviation turbine fuel (ATF) will lead to higher offtake of fuel from Delhi airport, before taking any measure for reduction in taxes. Airlines have been repeatedly making representations to the state government asking for a reduction in sales tax on ATF from the current 20 per cent to 4 per cent.
Sometime in the second half of this year, Vijay Mallya-controlled Kingfisher Airlines will start operating chartered flights with two helicopters in and around Mumbai. Later, it will also press into service a handful of very light jets.
The govt is likely to propose to the EU that it will validate security procedures in its airports before allowing passengers to carry duty-free goods to India. This is in retaliation to a similar proposal made by EU last year, which led to protests from companies operating duty-free shops in India. EU officials would have to validate the security systems at Indian airports before allowing transit passengers to buy at duty-free shops here, resulting in dispute between the two.
"The markets do not remain the same forever but still, anything that makes sense to Jet Airways' shareholders will make sense for the promoters as well," Goyal said. Together with JetLite, formerly Air Sahara, which Jet bought last year, the airline controls over 29 per cent of the Indian domestic market.
Private carrier Jet Airways is expected to further consolidate its international operations into a major revenue grosser in FY09, to overcome the growing turbulence in the domestic sector. The general economic scenario does not bode well for capacity expansion on domestic routes, with some of these struggling on account of overcapacity, and only yesterday some airlines were pushed to hike fares to make up for higher aviation turbine fuel prices.
With major predictions of a deceleration in domestic air traffic, airlines are lowering seat capacity by reducing the number of flights or dropping fares in order to fill up their seats. They have also begun the process of reducing the number of aircraft that they were planning to to induct in their fleet as part of their expansion plans. Management consultancy firm Ernst & Young recently estimated that domestic traffic would grow by 24.16 per cent this year
After Frankfurt, the airline may opt for Munich as its other base in Europe. "Air India would ideally want to have both Frankfurt and Munich as European hubs as the airline does not want to vacate Frankfurt and also wants to establish Munich as a hub for operations after network expansion plans come through," said an Air-India official close to the development, not wanting to be quoted.
GMR Hyderabad International Airport Ltd, the consortium operating the new Hyderabad airport, has offered to halve ground-handling charges even as the civil aviation ministry allowed the domestic carriers to undertake their ground-handling till January 1, 2009. This will give the two sides enough time to resolve the contentious issue, which almost jeopardised the opening of the new airport and forced a postponement once.
The Mumbai airport has decided not to allow additional flights this summer, thanks to infrastructure bottlenecks. This is likely to spoil the expansion plans of all carriers, including private players like Kingfisher, Simplifly Deccan and Jet Airways. However, airlines have been allowed to re-apply for additional flights as & when they get delivery of new aircraft during the summer. Kingfisher had to shelve 11 additional flights out of Mumbai while Deccan has rescheduled too.
Aviation experts say the existing airports cannot be viable.
"We are definitely planning a multi-modal connectivity to certain places apart from destinations we operate. Though we are primarily looking at railways, we might also look at other means of transport such as roads," said Edgardo Badiali, CEO, GoAir to Business Standard. When a passenger books his ticket on the GoAir website, he will also have an option to book a railway ticket for a place of his/her interest close to the destination at the same time.
Global equity companies have no plans to put their money in the Indian aviation industry even though the carriers are seeking $2.5 billion in cash for expansion. Most players are looking at investing in into large established airlines, but right now are in the wait and watch mode. It will therefore be difficult for low-cost carriers to get funding. The losses of the Indian aviation sector and high valuation expectations are the reasons why investors are not interested.
India's largest private sector airline Jet Airways has postponed its $400 million (Rs 1600 crore) rights issue slated for March this year by three or four months, the third postponement since the board approved it in June, owing to poor market sentiment.
With carriers such as Jet Airways and Kingfisher Airlines all set to battle it out on international routes, leading expatriates with years of experience in global airlines are now being wooed for top management posts.
With the Bangalore airport announcing stiff user developmental fee on domestic passengers, low-cost carriers -- JetLite, SpiceJet and Simplifly Deccan (formerly Air Deccan) -- have decided to drastically cut their flight schedules to the city and other new airports like Hyderabad.
With the Bangalore airport announcing stiff user developmental fee on domestic passengers, low-cost carriers JetLite, SpiceJet and Simplifly Deccan (formerly Air Deccan) have decided to drastically cut their flight schedules to the city and other new airports like Hyderabad.
An 18-month to two-year delay is expected in the Mumbai airport slum rehabilitation programme to find alternative land to relocate and resettle approximately 80,000 slum-dwellers, who have encroached on 276 acres of airport land.
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