No `true` LCCs in India says expert

Providing the keynote address at CAPA`s 4th annual India and Middle East Low Cost Airline Symposium, Bill Franke, Managing Director of leading airline investment firm Indigo Partners, offered a frank assessment of the present shape of the Indian low cost sector, saying government must do more to provide a setting in which the model can work.
Mr Franke stated that the viability of the low cost model cannot presently be judged in the Indian setting as “there is not a single airline in India that operates a true low cost structure. Under the current conditions, it’s not possible”.
Looking at the systemic differences between the giant Subcontinent nation and the rest of the world, the respected investor noted that no Indian operators had deals in place with base airports to lower costs in exchange for passenger volume and that the lack of skilled manpower and infrastructure precludes high rates of aircraft utilisation, both critical elements of the model in Europe and the US.
These failings, he explained, combine with a situation where prevailing fuel taxes to push operating costs well over the low cost thresholds – with unit costs 50-75% higher than practitioners in the rest of the world.
14/06/07 Travel Daily News International, Greece

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Categories: Low Cost General Jun 2007