Air India shelves lowcost carrier plans; peers rally

Air India has shelved plans for a domestic low-cost carrier, sources told CNBC-TV18. This low-cost carrier was a part of Air India's turnaround plan. The Directorate General of Civil Aviation (DGCA) was reluctant to approve this launch, called AI Express Domestic Services. Also, the Air India board was no longer considering this. The board may re-look this after a year.
After being in doldrums for a long time, things seem to be looking up for the sector. This development is positive for existing airlines as the entry of Air India into low cost services would have meant further competition and reduced fares. Already, airlines like SpiceJet, JetLite, and GoAir are suffering from lower passenger load.
A drop in crude prices from its 2009 highs, coupled with a weakening dollar, could bring Aviation Turbine Fuel (ATF) costs down. Airlines have been seeking a declared goods status for ATF but this has been repeatedly rejected by the government. Airlines hope with the onset of the festive and marriage season from October to December will usher in higher passenger loads as compared to previous quarters.
26/11/09 Moneycontrol.com

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Categories: Low Cost General Nov 2009, NACIL Nov 2009