The penny-pinching airlines

New Delhi: Amid surging oil prices and depreciating rupee, Indian carriers are becoming frugal.
Chief financial officers neither let an opportunity to save nor leave waste on the table in budget meetings. But when a top airline chief executive recently started signing nearly half the cheques issued by his company, he had no doubts about the CFO’s ability or integrity. In fact, he was trying to evaluate every area of operations, however small, questioning every aspect of the established procedures and looking for better and more efficient ways of doing things — with an eye on minimising costs.
With fuel bill accounting for 50 per cent of operating cost, and lease rentals and staff cost making up another 20 per cent, struggling Indian airlines like SpiceJet, Kingfisher and Jet Airways are left with little choice but to pinch every penny to somehow keep business solvent, even as they await policy clearance that may allow foreign airlines to pick up stake and inject the much needed cash.
SpiceJet and Jet Airways, which reported profits in the first quarter of 2010-11, posted losses of Rs 72 crore and Rs 123 crore, respectively, during the same period this financial year. Kingfisher Airlines’ losses in the first quarter of this financial year widened to Rs 263.5 crore, from Rs 187 crore. However, IndiGo ended the last financial year with a profit of Rs 650 crore.
Amid surging oil prices, depreciating rupee, cut-throat competition, threats of another slowdown, these airlines are combing through every little nook and cranny to cut fat and maximise ancillary revenue — starting from reducing quantities of brochures printed and doing away with disposable coffee cups to taking the green routes to save aviation turbine fuel and generating revenue from advertisements on boarding passes, baggage tags and on in-flight entertainment channels, and fees from excess baggage.
27/10/11 Mihir Mishra/Business Standard

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Categories: Indian Aviation- In General Oct 2011