Tuesday, January 16, 2007

Seat expansion grounds airlines

New Delhi: The rapid expansion of seat capacity in the domestic aviation market is taking its toll on the players. Jeh Wadia's GoAir is undergoing a churn with some senior management people quitting, and its fleet size reducing from seven to five in the next two months. Further, there would be no network expansion over the next six to eight months, with at least two destinations going off air.
The top management of the company terms the downsizing of operations, as “fleet optimisation” which would help reduce cash-burn in the lean travel months.
The short-term operating lease of two aircraft in the fleet — whose contracts end by March — will not be renewed and their replacements would only come in October when the first of the 20 - A320 aircraft joins the fleet. February and March are lean travel months for the industry.
While conceding that there is some top management level churn in the company, Mr Wadia said most of them are “non-performance related”. Industry sources said among others, GoAir’s chief commercial officer Raj Halve is said to be have put in his papers.
Over the last three months, private carriers such as Air Deccan, Kingfisher and IndiGo have added over 35,000 fresh seat capacity.
This has put pressure on passenger yield per seat for all airlines.
16/01/07 Sudipto Dey/Economic Times
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