Overcapacity flies to airlines' rescue

New Delhi: Overcapacity has turned out to be a blessing in disguise for India’s loss-making airlines. Two of the country’s full-service carriers – Air India and Jet Airways – are earning a fortune by leasing out excess capacities.
What works in their favour is that income from such lease rentals is generally around 1.25 per cent of the cost of a new aircraft. In other words, leasing out a plane fetches an airline around Rs 55 crore per aircraft annually. Jet Airways has leased out seven aircraft while Air India is in talks to lease out six.
Jet has already tied up an annual rent of over Rs 220 crore for four aircraft and will start earning from three more soon. Last year, the private carrier had leased out four Boeing aircraft to Turkish Airways. It recently leased out another three to Thai Airways.
With a fleet strength of 82, Jet Airways, after losing in the first two quarters of the last financial year, earned a profit of Rs 106 crore in the third quarter. In 2008-09, Jet suffered a loss of Rs 402 crore.
National Aviation Company Ltd, which runs Air India, is also in talks to lease out three Boeing 777 aircraft. It plans to lease out another three soon.
The national carrier has a fleet of 110 and has already leased four freighters for around $200,000 (around Rs 90 lakh) per month per aircraft. It is also negotiating for other freighters. Currently, these fetch the airline Rs 43 crore annually per aircraft.
Vijay Mallya-owned Kingfisher Airlines, however, has not leased out any aircraft.
Low-cost carriers like GoAir, SpiceJet and Indigo have also not leased any aircraft as they are doing relatively better and have been utilising their capacities in full.
11/04/10 Mihir Mishra/Business Standard

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Categories: Indian Aviation- In General Apr 2010