Match capacity with demand: IATA advises Indian carriers

Berlin: The number of aircraft in the Indian sky should be controlled to match the demand of air travellers if the Indian carriers want to come out of the financial rut, global airlines' body IATA has recommended.
"In India, there is a problem of managing capacity in a more effective way -- you have put too many planes at a time when you were caught in a crisis. The market was in difficult situation," IATA Director General and CEO Giovanni Bisignani told Indian journalists in Berlin.
Asked why Indian airlines were not as profitable as those in Latin America despite a high GDP growth, he said "one of the issues is the capacity problem".
IATA has estimated that Latin American carriers will show a profit of $900 million, making it the only region to post two consecutive years of profit.
The IATA chief indicated that in a race to capture the emerging market, the Indian airlines competed among themselves to introduce more planes and flights leading to an excess capacity and low fares, which hit their financial bottomline. "One of the problems we have is we go for capacity. Capturing market share is a short-term strategy, being profit centric is required in the medium term. Market share cannot be the only motive of the industry," he said on the sidelines of the just-concluded IATA Summit.
13/06/10 Press Trust Of India/Hindustan Times

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Categories: Indian Aviation- In General Jun 2010