New Delhi: Most people want to fly cheap and every day three out of four flights offer low fares. So, low cost carriers (LCC) should ideally be making money. But all LCCs except IndiGo have been flying at a loss.The reasons are many: steady rise in the cost of aviation turbine fuel (ATF), no low cost airports and the manpower requirement for every flight is same as that of full service carriers.
Also, the absence of robust online booking system forces airlines to open booking counters and employ additional staff — in effect expenses shoot up. The final problem is operating on crowded metro routes instead of concentrating on regional routes.
To make matters worse, most capacity addition happens in the LCC sector (see box for reasons). While announcing his decision to pull out of the LCC sector, Vijay Mallya, chairman of Kingfisher Airlines, said the “low cost segment isheaded for a bloodbath”. “It makes sense to operate only in the full service sector as it offers better margins and the competition is low,” he said.
There are separate airports for low cost carriers in foreign countries, an aviation analyst said. “There are no fancy carpets or the best air conditioners; chairs are few in the waiting area,” he said. “These airports offer just the basic services. As a result, LCCs have to pay less.”
19/11/11 Sindhu Bhattacharya/Daliy News & Analysis
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