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Costlier air travel round the corner

Are happy days over for the country’s civil aviation sector? Times of Re. 1 ticket and surprise offerings of Rs. 99 per ticket by low-cost domestic carriers are fast becoming relics of the past. With all major airlines bleeding and operating in losses, the estimated cumulative losses of all the carriers during the year can mount to Rs. 10,000 crore.

With increasing air fares due to high prices of aviation jet fuel dealing a fatal blow to the profitability of Indian carriers which were till the other day singing songs of impressive growth, the overall scenario in the civil aviation sector is ‘grim’ to say the least.

Industry sources said that the situation might offer very little respite in 2008-09, making matters tough for the carriers as well as airport operators who would have to put up with lesser growth in passenger traffic.

All major carriers have shutdown their short-haul operations, cut down expenses and are finding newer ways of cutting costs by doing away with freebies, rationalising several routes and withdrawing flights from non-profitable sectors.

Airlines are suffering not only due to high international prices of aviation turbine fuel (ATF) but also due to fall in passenger traffic and high maintenance costs.

Public sector Air India too is aiming for saving about Rs. 1,000 crore over the next year through a slew of measures and this year the Maharaj may save about Rs. 500-600 crore, sources in the Civil Aviation Ministry said. It has restructured several flights on international sectors like Toronto and New York, and withdrawn flights to Jakarta and Kuala Lumpur and preferring to fly to the Malaysian capital from Mumbai and Delhi via Bangkok.

Air India is also looking at the government to secure a bail-out package to the tune of Rs. 2,300 crore. It may include Rs. 1,300 crore as equity and another Rs. 1,000 crore in the shape of soft loan.

Officials feel that this kind of mix of equity infusion and soft loans may allow Air India to breathe easy during the year.

The national carrier had suffered a loss of Rs. 2,114 crore during 2007-08, mainly due to high jet fuel prices and rising operational costs.

Industry insiders estimate that combined daily loss of all major airlines, including Air India, Jet Airways, SpiceJet, IndiGo and Kingfisher, could be about Rs. 25 crore.

With major metro airports in for renovation, modernisation and upgradation, even airport operators are said to be an anxious lot. The new Hyderabad airport has already imposed User Development Fee (UDF) on every departing domestic and international passenger. However, Civil Aviation Ministry is yet to finalise any decision on the levy of UDF by the new Bangalore airport.

Aviation industry watchers say that full-fledged service carriers such as Air India and private Jet Airways may feel the impact of slowdown more than the low-fare, budget carriers as many of the companies would still want to save on time and money by asking their executives to fly no-frills carriers.

Already, passenger traffic of airlines is showing a tendency to shift to superfast express trains such as Rajdhani and Shatabdi which have seen a sudden surge in ticket bookings.

Railways have reported a healthy growth in sale of tickets of certain Rajdhani Express trains in which first class AC and second AC classes were considered too costly in comparison to low-cost air fares but not any more.

Aviation analysts feel that stabilisation could come in the civil aviation sector during October-March if jet fuel prices and operational costs do not play spoilsport.

VINAY KUMAR

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