Airlines dragging their feet on fleet expansion

Bangalore: After scaling up aggressively last year, airlines in India are going easy on fleet expansions. Most airlines will be adding fewer aircraft this fiscal, compared with the last, as they try to wipe out the red on their balance sheets. Some are even retiring old aircraft as new ones join the fleet to improve operational efficiency.
Jet Airways, which grew its seat capacity by just 38% in the June quarter, as compared to 48% last year, will stick to the trend through the year.
Other airlines are also exercising restraint in swelling capacity. Kingfisher Airlines, Jet’s rival, will induct 12 aircraft as against 15 last year.
IndiGo, which had ordered 100 A320s, has also planned a slower capacity growth.
SpiceJet’s fleet expansion will be at six aircraft like last year. It will also be returning two of its aircraft.
As Air Deccan brings in 10 new aircraft, it will be getting rid of eight of its old ATR 42-320 and ATR 42-500. This, the airline says, will improve its on-time performance.
So, what is it that is driving carriers to trim their capacity?
Analysts say one of the main reasons is their desire to improve profitability.
Last year, as airlines indulged in cut-throat competition, Indian aviation industry lost Rs 1,620 crore ($400 million). The industry lost heavily despite robust demand growth because supply outstripped it.
15/08/07 Praveena Sharma/Daily News & Analysis

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Categories: General Aviation Aug 2007