Aviation in India expects 15% growth

As the aviation industry faces its biggest crisis in recent history because of high fuel prices and the economic slowdown, airlines are forced to do business differently as they seek to trim operating costs ruthlessly to brace themselves for tough times ahead.
“Jet Airways is working on all areas to streamline operations, including cutting loss-making routes,” says Wolfgang Prock-Schauer, CEO of Jet Airways, India’s largest private airline.
India’s aviation industry lost $1 billion (Dh3.6bn) last financial year ending March 2008 and it expects to lose another $2bn this financial year.
Jet Airways’ fuel bills have increased by $50 million a month.
The problem in India is compounded by the fact that fuel costs are much higher there than in other countries because of high taxes and excise duties.
The airline has a cost-saving programme in place and is eliminating loss-making routes. These measures will save the airline some $50m during this financial year and an additional $75m next financial year.
The airline is also working to reduce its global distribution system costs.
Another measure being taken is to reduce agencies’ commission.Wolfgang Prock-Schauer says airlines in India have told travel agencies they will migrate to a zero commission scheme as in North America and Europe.
But airlines in India are not just seeing operating costs increase. For the first time in five years, there’s been a drop in demand for air travel in India.
As the demand for air travel declines, more Indian middle-class travellers are reportedly turning to the country’s rail network. Will the trend last? Prock-Schauer says that with the emergence of low-cost carriers in the last four years, airfares have dropped to levels close to rail fares. As a result, the aviation sector had seen 30 per cent to 40 per cent growth per year in the last three years.
The sector, however, has now been plunged into losses due to irrational pricing.
26/10/08 The New York Times Syndicate/Emirates Business 24/7, United Arab Emirate

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Categories: Indian Aviation- In General Oct 2008