Airlines may have to reduce 25% capacity to check losses

New Delhi: With crude continuing its ascent, airline companies in India are facing the nightmarish task of having to ground 100 aircraft.
Considering that the total fleet of Indian airline companies was in double figures till the low-cost revolution, the move means downsizing by a huge 25%.
The largest-ever in India’s aviation history, the grounding would lock up equipment worth Rs 20,000 crore, according to industry estimates.
As of now, the total number of aircraft used by Indian airline companies is around 400. Industry leaders feel that 25% overcapacity has to go out of the market. What makes matters worse is the inability to lease out aircraft as there is no demand in most markets abroad.
Average aircraft utilisation has already come down by 25-30% to nine hours a day compared to 12 hours a day till recently. Unless crude prices decline dramatically, it will be a nightmare for the airline business in India.
“We have reduced capacity by 10% in the domestic market in the last few months. Going by this and considering that we operate 54 aircraft in the local market, around 5-7 aircraft are not in operation. However, this doesn’t mean physical grounding of aircraft as we operate these aircraft in peak time,” Jet Airways CEO Wolfgang Prock-Schauer told ET.
16/07/08 Nirbhay Kumar/Economic Times

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Categories: Indian Aviation- In General Jul 2008