Foreign airlines pull out of India

New Delhi: A severe squeeze on margins has prompted leading international airlines such as Virgin Atlantic, Sri Lankan Airlines, Austrian Airlines, Delta, KLM, Syrian Airlines, Aeroflot, All Nippon Airways, Singapore Airlines, Lufthansa and Finnair to withdraw over 100 flights in the last six months.
Rising airport charges (although they are falling globally), the growing gap between fuel costs in India and globally, pressure from travel agents threatening to boycott ticket sales and a 20 per cent fall in inbound premium passenger travel have forced international carriers to reduce their exposure in the country.
According to estimates by the Centre for Asia Pacific Aviation (CAPA), international carriers’ margins have dropped to single digits and even turned negative in some cases, from 10 to 20 per cent early last year.
European carriers, which carry a large proportion of outbound Indian passengers to the US and Canada, have been hit the hardest.
KLM pulled out of Hyderabad last October and operates only to Mumbai and Delhi currently. The airline has no plans to deploy additional flights to India for the time being. Its partner Air France recently pulled out of Chennai. KLM will deploy 5 per cent less capacity in India this summer against last summer.
Singapore Airlines has cut capacity 11 per cent globally but the India cuts at 19 per cent are far steeper. The number of weekly flights is down from 55 last year to 45.
Singapore Airlines has also been hit by the travel agents’ protests, since the agents, who account for 70 to 80 per cent of ticket sales, have stopped selling the airline’s tickets in India because it is not paying them commissions.
For Virgin, 80 per cent of its traffic flies from India to London and the rest to north Atlantic routes like the US. Experts said all these segments had been adversely affected.
An executive from a European carrier that recently pulled out of Mumbai said costs in India had definitely risen more than they had in other countries.
17/04/09 Anirban Chowdhury/Business Standard

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Categories: Foreign Apr 2009