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Domestic Airlines may restrain flight services
June, 17th 2008

The Federation of Indian Airlines (FIA) on Friday meeting has decided to curtail the flight service in some saturated routes to fight against the rising Aircraft Turbine Fuel (ATF) that have raised 4 to 35 percent costlier than previous months and have badly affected the profit.

The Chief of domestic airlines in this regard held a meeting in the chairmanship of Vijay Mallya, the Chairman of UB group and Kingfisher Airlines in Mumbai.

 The FIA has decided in the meeting that private players would urge the Civil Aviation Ministry to cut the sales duty in ATF to bring down the ATF prices.

In case, the government wont agree to cut the sales duty on fuels, FIA can also directly import it to save the heavy sales tax, which state government charges from airlines ranging 4 to 30 percent that translates into heavy burden over the operators and their margins suffer a lot, as per a sources from FIA said.

The sales tax in India are most expensive in the world that transform into almost half of the operational costs while in abroad it is only 20 to 25 percent of total operational costs, said FIA.

The federation is also asking to negotiate the parking and landing charges ask from the private operators at new airports and to allow the airlines to do their own ground-handling, not from the appointed agencies, which also asks additional charges for it.

Finally, the FIA has decided a unique method to face the spiralling fuel charges by cutting the number of flight in some very busy route and to sort out new destination especially long distance route. The per-km operational charge reduces in long destination route.

For instance, GoAir, one of the cheapest flight service providers, has decided to opt new route from Mumbai to Jaipur while to cut the short route of Mumbai-Bangalore and Mumbai-Hyderabad, as per sources.

While on the other hand, Jets subsidiary Jetlite, formally Sahara brand has decided to opt for cheap route like entire North-East and Jammu-Kashmir as well as Chennai-Pune and Chennai-Port Blair route while it has decided to cut the 20% in terms of numbers of flights by the end of the next month. It has already stopped the flights in Delhi-Chandigarh, Ahmedabad-Jaipur, Mumbai-Bhuj and Bangalore-Hyderabad route.

Deccan Airways, the cheaper service of Kingfisher airlines have also decided to follow the same path to ease the pressure of sales tax and to reduce the increasing losses with Kingfisher airlines. The Kingfisher is going to cut the flight by 15 percent by the next month.

The SpiceJet that daily operates 117 flights has decided to reduce it to 100 flights per day. This would increase the average load factor to 2-3 percent and yields Rs.70 per passenger, as per SpiceJet CEO Siddhanta Sharma informed.

This signals the end of cheap airfare era, and if the government for whatever reason, is unable to provide adequate relief, then we will have no option but to review our flight schedules; and connectivity will suffer, Vijay Mallya said after the meeting.

Meanwhile, from the government sources the Centre has indicated to ask states for reducing the levied sale taxes on ATF, in order to prevent any sort of inconvenience to passengers.

The FIA is likely to wait till the end of next month before taking any decision in this regard, as per sources.

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