Losses force airlines to return leased aircraft

Bangalore: Airlines have been aggressively slashing capacity over the last one year, but profits still elude them. Over the past 3-4 months, all airlines, except Air India and IndiGo, have cut capacity and added no aircraft to their fleet, but the industry is still saddled with around 1% excess capacity.
“If the industry has pruned capacity, higher fares due to higher aviation turbine fuel (ATF) prices pulled down demand (or seat factor). This is keeping profits beyond the reach of the airlines,” said an analyst with a foreign broking house, who did not wish to be named.
Going forward, industry supply is expected to fall further as most airlines are planning to return leased aircraft without adding new ones.
For instance, Jet Airways, the largest domestic airline, will be returning five Boeing 737s in the coming months when their lease expires. Its value carrier JetLite’s fleet will also be lighter by three aircraft.
Vijay Mallya’s Kingfisher Airlines, which cancelled three of its five ordered A340s, is planning to return 6-8 aircraft when their lease expires.
Even the all-business airline Paramount will not be adding any new aircraft to its fleet of seven aircraft.
But budget airline IndiGo, which was adding one aircraft every month about a year back, has staggered its order and will take only seven aircraft in the next calendar year.
Another carrier, which is going against the trend, is the state-owned Air India. The airline has taken delivery of 40 aircraft between July 2007 and September 2008.
10/11/08 Praveena Sharma/Daily News & Analysis

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Categories: Indian Aviation- In General Nov 2008