Click to play videoMumbai: Airlines have been giving away tickets at ridiculously low prices to fight competition.
In July Indian aviation industry created history when 3.1 million seats were made available to the market. However, only 2.5 million passengers traveled on those seats. And out of this about 70 per cent travelled on discounted fares. Result, account books of all airlines are in deep red.
Boeing VP sales, Dinesh Keskar says, “They are selling it at unrealistic prices and sometimes at fares below railway charges."
Domestic carriers have always grappled with expensive Aviation Turbine Fuel (ATF) and other operational costs. But the compulsion to offer heavy discounts to stay in the reckoning is beginning to bleed them dry.
In July again, 70 per cent of Jet, 75 per cent of Kingfisher, Indian and Sahara and 80 per cent of Deccan, Spice, Go and Paramount passengers availed of discounted fares. While the passenger load stood at – 66 for Jet, 63 for Kingfisher, 65 for Sahara, 61 for Indian, 74 for Deccan, 78 for Spice, 70 for Go and 44 for Paramount.
Coupled with it, the Air Traffic control delays continue to add to their woes. For one minute of delay an aircraft burns Rs 2500 worth of fuel. So where is the industry headed?
Jet Airways CEO Wolfgang Prock Schauer says, “We guess that six aircrafts coming into the Indian aviation scene every month now, by all airlines together, so in a year now 70-80 aircrafts additionally. This will not help very much to ease the traffic congestion because, infrastructure development can’t cope with the additional influx of capacity."
This despite the fact the industry has been growing over 40 per cent in the last few months.
But this has not dampened the enthusiasm of either six incumbent airlines that are waiting to enter the domestic skies or aircraft manufacturers who are gung ho about India.
After all, in the next two years the number of aircrafts will increase from present 260 to 500. And despite the impending bloodbaths and consolidation the number of players is also bound to grow.
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