Airlines shed costs to keep flying

With a loss of over Rs 10,000 crore in a year, airlines in the country are trying new ways to remain afloat. To cut cost large operators are moving more seats to no-frills service, writes B S Arun,DH News Service.
Seven years after the first budget airline took off from the Indian soil, low cost air travel has come to stay in the country. The no-frill airlines occupy about 55 per cent of the market share and are set to gain more owing to a combination of factors.
It was on August 23, 2003 that the country’s first budget carrier — Air Deccan — took off from Bangalore to fly to Hubli. Almost seven years later, the last of the full service carrier left to turn low cost carrier or LCC — Air India — announced this month its plans to launch a budget airline. The other two legacy carriers— Jet Airways and Kingfisher Airlines — already have their own budget subsidiaries.
As the state-run airline’s international low cost arm — Air India Express — will run the domestic LCC, both Jet and Kingfisher are already expanding the operations of their LCCs. More aircrafts of these three FSCs (full service carriers) will be converted into no-frills carriers in the days and months to come, taking space in the budget pie. Thus, Jet Konnect and Kingfisher Red will have an additional number of budget aircrafts. All the legacy carriers will, however, maintain their original full service character.
The popularity of the LCC should be seen in the background of the cost-conscious Indian. Adding to this is the current economic downturn which has forced corporates away from executive class travel .
The cost of running an airline continues to be high, such as prices of jet fuel. There is excess capacity in the market. The continued losses of the three FSCs played a major part in their decision-making, attempting to make good at least some yield which was otherwise not there.
31/08/09 Deccan Herald

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Categories: Indian Aviation- In General Aug 2009