The Hindu : National : Airlines urged to look at fleet rationalisation

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Airlines urged to look at fleet rationalisation

Mumbai: The Indian aviation industry, faced with falling revenues and high fuel costs, will have to seriously deal with over-capacity on certain routes, the former Air India chairman and managing director, V. Thulasidas, has said.

Over-capacity on certain routes, coupled with intense competition, had resulted in falling revenues. At the same time, there was an unusual rise in fuel prices. “The two together are pressing the airlines from both sides,” Mr. Thulasidas told PTI.

“The ATF cost in India is much higher... therefore, the problem in India is much more serious than any where else in the world,” he said. “The domestic airlines will have to look at fleet rationalisation.”

The over-capacity in India was not only on domestic trunk routes, but also on some international flights, he said. “All the domestic air-carriers will have to look at innovative methods to ensure that their revenue is more than the cost… The excess capacity is a global problem and not just in India.”

Because of the falling demand, several U.S. carriers had grounded their flights. In India, the problem was magnified because this happened suddenly. “Globally also, capacity rationalisation is something which the airlines are resorting to, besides innovative methods to boost their revenue,” he said. “How they do it is entirely up to them.”

Mr. Thulasidas, who retired as CMD of the state-run airline this March, said that Air India and Indian (erstwhile Indian Airlines) were in a slightly difficult situation as both had extreme capacity constraints and the on-going aircraft acquisition was mainly for replacement. “The fleet acquisition is more to phase out the older aircraft than for growth. Only 40 per cent of the acquisition is for the purpose of growth.”

On the recent delay in Dreamliner’s delivery by Boeing, Mr. Thulasidas said the delivery would have compounded the problem. “So, in this kind of a situation, the delay is a boon. To that extent, Air India has gained in a sense,” he said.

Long-term plans

Mr. Thulasidas said that fleet renewal should be governed by the long-term plans of the industry and not the short-term ones. There should be a plan for adding aircraft in smaller numbers every year to phase out some old aircraft and meet the aircraft demand. “If such a plan is there, an airline will not only have a definite scheme for renewal of its fleet but also giving a good product to the passengers,” he said.

On the rising airlines’ fares, he said that there should be a limit below which the prices should not go.

“I think unusual situations call for unusual remedy. The airlines fares can’t be like Newton’s apple, they can’t keep falling. If they keep falling, airlines will also fall.” — PTI

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