Wednesday, August 30, 2017

Air India arm Alliance Air to induct 8 ATR-72 planes for big low-cost RCS push

Alliance Air, which is the low cost regional subsidiary of Air India, will launch three new routes under the government’s regional connectivity scheme by the end of September and will induct eight ATR – 72 aircraft by the end of FY18 to further consolidate and expand its operations. According to two senior officials, the airline may report operating profit for the first time in the current fiscal if aircraft acquisitions remain on track and operations are conducted efficiently. Alliance Air started the UDAN scheme with the first flight on the Delhi-Shimla route and subsequently the airline also started flights on the Delhi-Gwalior and Indore-Gwalior routes. By the end of September it will launch flights on the Ludhiana, Pathankot and Bikaner route depending on the some technical approvals.
“As of now our experience of flying under the RCS route has been satisfactory though we can’t tell you how profitable it is since it has been just few months since we started our operations. Our Delhi-Shimla flight has an occupancy level of 98-99% and other flights also have descent occupancy levels depending upon the period,” said one of the officials. Though the viability gap funding will prevent losses on the RCS flights but due to the fare cap yields will be under pressure. According to the officials mentioned above, some of the routes may never become profitable due to the location and the lack of connection from the metro airports like Delhi, Mumbai, Hyderabad and Bangalore due to the lack of slots.
“There has been a compromise on yields since half the seats under the scheme is capped. So I cannot sell the remaining ones at exorbitantly high fares. There are no slots from the metro airports since passengers mostly want to fly from small town to the metro cities. As a result of the subsidy, airlines are not losing any money,” said one of the above mentioned officials.
30/08/17 Malyaban Ghosh/Financial Express