GoAir-MDLR pact comes under scanner

New Delhi: Wadia Group-promoted GoAir’s arrangement with MDLR Airlines to outsource mandatory deployment of seats on non-profitable routes (category II, IIA and III) has come under the government’s scanner.
The government is unlikely to allow a scheduled carrier to buy the capacity on these routes, measured in terms of ASKM or average seat kilometres, from a regional airline.
The civil aviation ministry may tweak civil aviation requirements (CAR) on regional airlines to bar airlines from entering into an agreement with regional carriers to trade mandatory capacity deployment on commercially unviable routes.
When an airline is unable to deploy capacity on unviable routes in line with route dispersal guidelines of the government, it can ‘buy’ the ‘surplus’ capacity deployment available with another airline.
Kingfisher Airlines, for example, initially bought ASKMs from Indian Airlines to meet its obligations. When it merged with Air Deccan, which deploys significant capacity on non-trunk routes, the obligation was met through the surplus available with the low-cost carrier.
In the Go-MDLR deal, the regional airline does not have any obligation under the route disbursal guidelines since it does not fly on trunk routes. The Wadia family-promoted airline, on the other hand, has cut down capacity and is looking to meet its obligations by ‘trading’ ASKM with MDLR.
15/09/08 Nirbhay Kumar/Economic Times

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Categories: GoAir Sep 2008, MDLR Sep 2008