Airlines need to cut fleet, more jobs to stay airborne

New Delhi/Mumbai: Jet Airways’ aborted plan to cut 1,900 staff partially reflected the crisis in the aviation industry. Analysis by Business Standard shows that Indian carriers will need to cut their domestic fleet and manpower by a fifth in the next few months to fully align themselves with the slowdown in passenger growth.
Domestic carriers, which include Jet Airways, Kingfisher Airlines, Air India (for aircraft that fly domestic routes) and the low-cost carriers, have a combined fleet of over 300 aircraft. Some 60 aircraft will have to be withdrawn from this fleet if airlines hope to increase the passenger load factor (PLF) — a measure of capacity utilisation in aircraft — to around 80 per cent, which is required to break even.
The average PLF over the last few months has been 50 per cent. According to the Centre for Asia Pacific Aviation, in the opening busy-season month of October, the average PLF was 60 to 65 per cent, at least 10 per cent less than last year's numbers. A decrease in capacity by 20 per cent on key routes assuming air fares and demand are constant would lead to PLF rising 20 per cent.
Airlines have already cut passenger capacity by 10 to 15 per cent according to aircraft manufacturer Boeing in the last few months but that, of course, is not enough.
The carriers also need to cut manpower by around 12,000 people out of the 60,000 employees working in domestic aviation if they are to stop making losses. The number is based on the fact that the average employee-to-aircraft ratio in India is1: 200 (this number might be slightly skewed because state-owned Air India’s ratio is 1: 300).
In fact, analysts said, the job cuts need to be higher if the airlines want to achieve global aviation standards of 150 employees per aircraft.
21/10/08 Surajeet Das Gupta/Business Standard

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Categories: Indian Aviation- In General Oct 2008