Airlines run charters to plug the leak

As the load factors on scheduled flights dip, many carriers are turning to the charter segment to prop up earnings and offset losses from scheduled operations.
Fuel hedges prove costly gamble for Asian airlines
New Delhi-based regional carrier MDLR Airlines has exclusively deployed one of its three Avro-RJ-70s for charter services.
Koustak Dhar, executive director - commercial, MDLR Airlines said, "Since early this year, one of our three aircraft is being used for only charter services. We have altered our business model to cover up losses that we were making on scheduled flights."
The regional airline, which began operations in April last year, has been logging negative yields on its commercial flights since inception.
In contrast, margins in charter services are as high as 70-80%, giving the carrier a healthy revenue mix.
"We launched structured charter services to improve our margins. Yields on scheduled flights are dependent on how many passengers you fly, while for charter, we charge by the hour. This gives us assured returns on every charter flight," said Dhar. Budget carrier SpiceJet has also been utilising its spare aircraft for operating charter flights as and when requests comes in.
Even Capt Gopinath, former owner of Deccan Aviation Ltd, was making profits in his general aviation business when his commercial aviation business was bleeding profusely.
Sources said Jet Airways' value airline, JetLite, is also operating charter flights.
Noel Swain, vice-president - marketing, Cleartrip said airlines prefer charter services because they don't have to worry about the load factor there.
08/08/08 Praveena Sharma/DNA MONEY/Sify

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Categories: Indian Aviation- In General Aug 2008