Season blues: Indian aviation industry reeling

Domestic carriers have resorted to ad-hoc measures and last minute cancellations to improve loads as a lean season and high input costs have left the Indian aviation industry reeling.

For the first time in three years, the number of passengers flying in India saw a fall of 4 per cent in June this year.  

"I have not seen such low load factors ever, even during the lean season. Nor have I seen such a huge number of ad-hoc cancellations happening everyday at most airports," said Kamal Hingorani, vice-president, sales and marketing, SpiceJet.

Agreed an executive of another low cost carrier (LCC), "This being a low season, most carriers are getting load factors of around 50 per cent compared to 60-70 per cent earlier. With most of our flights only half occupied, it is a better option to combine two flights which are closely scheduled."

The executive said that on an average, every airline was cancelling around six to eight flights every day.

Take the case of Delhi airport. Around 200 flights were cancelled last week. Interestingly, LCCs accounted for as much as 73 per cent of the total last minute cancellations.

IndiGo cancelled 40 flights, while Simplifly Deccan cut 50. Normally, there are no more than 15-20 cancellations a week.  

Even though some flights were cancelled due to technical faults, fewer passengers was the sole reason for many of the others, said airport executives.

According to sources, Mumbai airport also saw around 25-30 ad-hoc cancellations on a daily basis.

Ad-hoc cancellations have meant more problems for passengers. For instance, if an aircraft is doing a Delhi-Ahmedabad-Mumbai-Delhi flight, the airline will decide to do a direct Delhi-Mumbai-Delhi flight and transfer the Ahmedabad passengers to the next flight to that destination, which means that the passenger has to wait.

"If the passengers cannot be shifted to other flights, we try to ensure that they are not stranded by informing them beforehand that their flight has been cancelled. Also, we try to re-jig our flight schedules at the last minute so that no aircraft is idled too much," said the executive.

The ad hoc cancellations come over and above the airlines' actually reducing capacity.

In the last couple of months, airlines have reworked the remaining portion of their summer schedule ending in September by cutting 10 per cent of their capacity.

Around 160 of 1600 daily flights have been cancelled for the next two to three months.

Besides, no airline other than Kingfisher and Jet Airways, have increased the fuel surcharge for this month because of the lean season.

Travel portals were of the view that unlike past low seasons, airlines are focusing more on value-added offers than rock-bottom fares.

"In a change from the last low season,  airlines are not touching the fares, but giving value-added offers such as a discount voucher or a transfer from the airport," said Bhavna Aggarwal, co-founder and head of aviation business for travel portal Yatra.com.

Boeing, in its 2008 market outlook on the Indian aviation industry released last week, estimated that despite the fares having nearly doubled over the past year, the airlines still can't realise their total costs.

For instance, the total fare on the Mumbai-Delhi sector for July is estimated to reach $121 (about Rs 5000) this season, but this will still be around 22 per cent lower than the breakeven fare of $154 (about Rs 6400).