Air traffic dips 5% in 2008 on ATF price rise

NEW DELHI : Spike in fuel prices cast its shadow on the country�s aviation sector in 2008 which witnessed a decline of nearly 5% in passenger
traffic, according to government data.

This is the first time in several years that passenger traffic witnessed a dip. The last decline was witnessed in 2001-02 following the 9/11 terrorist attack in the US. Domestic airlines such as Air India, Kingfisher Airlines and IndiGo flew 40.77 million passengers in 2008 compared to 42.85 million passengers in 2007. Low-cost airlines IndiGo and SpiceJet among others, however, bucked the recessionary trend during the year. IndiGo registered a 46.53% jump in its customer base during this period.

Double-digit growth in the aviation sector began to fumble since April, as airfare climbed north following a spike in prices of aviation turbine fuel (ATF). In the following months, fare on most of the sectors witnessed a jump of 60% jump and in some cases even 100%.

With consolidation in the domestic skies, cheaper fare options offered by budget airlines such as SpiceJet, IndiGo and Deccan almost vanished. Mounting losses mainly on account of high fuel price and excess capacity also forced airlines to keep their tariffs high. Besides, air-carriers also cut capacity to rationalise their operations.

�Nearly 23 aircraft operated by scheduled carriers got de-registered from India in 2008. Non-scheduled carriers also sent back their aircraft to the lessors during this period. The country�s largest private carrier Jet Airways wet-leased four of its aircraft last year,� an official in the directorate general of civil aviation (DGCA), who did not wish to be named, said.

However, lately domestic carriers have begun to witness improvement in their financial health with fuel prices plummeting by nearly 54% since September last year. After showing resistance to bring down fare, airlines have begun to pass on the benefits of lower fuel prices to customers. National carrier Air India slashed its basic fare in the range of 35-82% across various domestic sectors. Other airlines such as Kingfisher, SpiceJet and IndiGo also followed suit later.

But, these fare cuts have not brought back passengers to these airlines with the slowdown looming large on the economy. In fact, domestic air traffic declined sharply by 17% in December, 2008 to 3.23 million.

�Even the massive cut in airfare is not creating enough demand. This is despite budget airlines offering an average fare of Rs 3,000 on most of the sectors. Network carriers are charging a little over Rs 4,000 for the same sector. Business sentiment is down due to a downturn in the economy. The Mumbai terror attack has also affected the traffic to some extent,� a top airline official, who did not wish to be quoted, said.

Domestic air traffic down 5% in 2008

The Kingfisher-Kingfisher Red grouping ousted Jet-Jetlite from the top spot in the Indian aviation market in December, according to data released by the ministry of civil aviation today. Confirming the airline industry\'s estimates, domestic passenger traffic for the calendar year 2008 showed a decline of five per cent compared to the previous year.

Total air traffic carried in 2008 stood at 40.8 million, compared with 42.9 million in the previous year. The slowdown occurred in the second half of 2008, when air traffic fell by 16.20 per cent compared to the same period a year ago, while it increased by around eight per cent in the initial six months.

The steepest fall came in the fourth quarter (October-December), when air traffic fell by 17.39 per cent. The price of aviation turbine fuel (ATF) rose by around 56 per cent between January and August, with a consequent rise in air fares. But though the prices fell by around 54 per cent from August to January, this was not matched with a similar cut in fares.

Domestic air traffic for December 2008 fell by 17.17 per cent compared to the same period last year. While average yearly market share figures for most of the carriers remained constant in 2008 compared to 2007, Kingfisher Red (previously Air Deccan) saw its share dip from 17.1 per cent to 12.2 per cent in 2008.

Delhi-based low-cost carrier IndiGo garnered 11.6 per cent of the market, compared with 7.6 per cent the previous year. Full service carrier Jet Airways\' share of the market shrank from 19 per cent to 16.7 per cent, while national carrier Air India\'s share decreased from 18 per cent to 16.8 per cent. Full service carriers lost some market share to low-cost carriers, mainly because the latter introduced fresh capacity.

Excepting Paramount, which has a very slight presence in the market, IndiGo had the highest loads of 75.5 per cent. The industry average loads for the month stood at around 69 per cent.

Jet Airways group remains India\'s largest airline

New Delhi (IANS): Private carrier Jet Airways, together with its low-cost airline JetLite, was India\'s largest domestic air services operator in 2008, ferrying some 12.01 million passengers for a market share of 29.5 percent, latest data showed on Tuesday.

Vijay Mallya\'s Kingfisher Airlines, along with its budget carrier Kingfisher Red, was next, flying 11.26 million passengers to capture a 27.6 percent market share, as per data released by the civil aviation ministry.

The state-run Air India\'s domestic operations, which earlier operated under the Indian Airlines brand name, continued to lose market share and flew just 6.63 million passengers for a market share of 16.3 percent. It had a 19-percent market share in 2007.

�We have been the market leader since 2000 and we continue to maintain that lead. The acquisition of Air Sahara, which now flies under the JetLite brand name, our market share has only improved,� said a spokesperson for Jet.

Air India, which was formed after the merger of another state-run carrier Indian Airlines - that now ceases as a brand name - said they hope to regain a lot of their market share in the current year.

�Last year, we were third. Now we rank second after Jet Airways and ahead of Kingfisher, that is, if you consider the airlines individually,� said an Air India spokesperson.

�As new aircraft join our fleet at regular intervals, you will see our market share improve further.�

Interestingly, despite the proliferation of low-cost carriers like SpiceJet, GoAir and IndiGo, the scheduled carriers continued to dominate the market with a 54.7 percent share.

Overall, Indian domestic carriers ferried 40.7 million passengers in 2008, a marginal drop of 5 percent over the previous year. Indian carriers carried 42.8 million passengers in 2007.

Low-cost airlines may get more peak-time slots in metros

Low-cost carriers may soon pull a large number of corporate customers away from the full-service carriers. The civil aviation ministry and the Directorate General of Civil Aviation (DGCA) are planning to award the low-cost carriers some key morning and evening peak-time slots (a fixed time for departure or arrival of a particular flight) lying unused with the full-service carriers at metro airports like Delhi and Mumbai.

DGCA officials and airline officials confirm that airlines like Jet Airways and Kingfisher are not using around 10 per cent of their slots during the peak periods.

Slots are given to airlines for all airports collectively and on a six-month basis (summer and winter schedules). Each airline puts in its request for slots, which are then decided by the DGCA, civil aviation ministry and the airport operator. The award of slots usually follows a historical trend wherein an airline retains the slots it had operated in the previous schedule.

Both Delhi and Mumbai handle 550 flight movements each daily, with around 140-160 prime-time departure slots and an equal number of arrival slots.

A low-cost airline executive also said that airport executives of both Mumbai and Delhi airports had unofficially informed them that there were slots in both airports that were lying unused. Ajay Singh, director in SpiceJet, a low-cost carrier, said: “We have decided not to downsize and are adding flights. There are unused slots available in prime time, when corporate travellers go, which we have asked the government to give.”

“This has become a practice of late when the airlines combine a lot of flights during the day. If an airline has around five flights in two hours, it usually combines the flights and cut them to three. Since this is a regular practice, we might give some of the slots to other deserving airlines like IndiGo and SpiceJet who have asked for them,” said a civil aviation ministry official.

Industry experts say around 80 per cent of the domestic corporate travellers in the country are mostly carried by full-service airlines like Jet Airways and Kingfisher or their low-cost affiliates.

For instance, in the Bangalore-Chennai sector, the KFA-KF Red combine operates six out of the nine flights in the key prime-time slots of 6 am-9 am and 6 pm-9 pm. Similarly, the combine operates around 7 out of around 13 flights in the key morning and evening slots in the Bangalore-Hyderabad sector.

Similarly, in the Mumbai-Delhi sector, which is the single largest revenue generating sector in the country, the Jet-JetLite combine controls almost 35-40 per cent of the prime-time slots.

“This move will add a significant amounts to the corporate traveller base of the low-cost carriers. And this in turn will enable them to raise their ticket prices and not pull them back for the leisure traveller,” said Keyur Joshi, COO of travel portal Makemytrip.

While corporate travellers account for around 30 to 40 per cent of a low-cost carrier’s total customer base, they account for around 60 per cent of the total customer base of a full-service carrier. The revenue chunk from corporate travellers would be more than 75 per cent for full-service carriers since that includes business and first-class fares as well as corporate travel contracts with companies.

The award of unused or under-used slots will be a boon for the low-cost carriers especially in an airport like Mumbai which has paucity of slots.

“While getting additional slots is easier at the Delhi airport now with the opening of the third runway, it is impossible at the Mumbai airport. If we get some existing unused slots at the Mumbai airport, it would mean much higher loads for us,” said a low-cost carrier executive.

The Mumbai airport did not allot any additional slot last year. Sources said that with the land constraint which the airport is facing, no airline should expect additional slots for the coming summer schedule either. Jet Airways already has more than 80 daily departures out of Mumbai while Kingfisher has more than 60.

Giving away unused slots to more deserving carriers would also be good news for airport developers at a time when their passenger and airport charges have taken a hit due to declining air passenger traffic.

“Unused flight slots lead to lower revenue for us. We would want flight slots to be operated by an airline that can make more efficient use of them through better capacity management. We would also prefer more slots operated by regular narrow-bodied aircraft like the A320 rather than turboprops,” said a spokesperson of Mumbai International Airport Ltd (MIAL), the GVK-led consortium that currently operates the Mumbai airport.

Low-cost airlines may get more peak-time slots in metros

New Delhi: Low-cost carriers may soon pull a large number of corporate
customers away from the full-service carriers. The civil aviation ministry and
the Directorate General of Civil Aviation (DGCA) are planning to award the
low-cost carriers some key morning and evening peak-time slots (a fixed time for
departure or arrival of a particular flight) lying unused with the full-service
carriers at metro airports like Delhi and Mumbai.







DGCA officials and airline officials confirm that airlines like
Jet Airways and
Kingfisher are not using around
10 per cent of their slots during the peak periods.Slots are given to airlines
for all airports collectively and on a six-month basis (summer and winter
schedules). Each airline puts in its request for slots, which are then decided
by the DGCA, civil aviation ministry and the airport operator. The award of
slots usually follows a historical trend wherein an airline retains the slots it
had operated in the previous schedule.





Both Delhi and Mumbai handle 550 flight movements each daily, with around
140-160 prime-time departure slots and an equal number of arrival slots.A
low-cost airline executive also said that airport executives of both Mumbai and
Delhi airports had unofficially informed them that there were slots in both
airports that were lying unused. Ajay Singh, director in
SpiceJet, a low-cost carrier, said:
�We have decided not to downsize and are adding flights. There are unused slots
available in prime time, when corporate travellers go, which we have asked the
government to give.�



�This has become a practice of late when the airlines combine a lot of flights
during the day. If an airline has around five flights in two hours, it usually
combines the flights and cut them to three. Since this is a regular practice, we
might give some of the slots to other deserving airlines like
IndiGo and SpiceJet who have asked for
them,� said a civil aviation ministry official.



Industry experts say around 80 per cent of the domestic corporate travellers in
the country are mostly carried by full-service airlines like Jet Airways and
Kingfisher or their low-cost affiliates.For instance, in the Bangalore-Chennai
sector, the KFA-KF Red combine operates six out of the nine flights in the key
prime-time slots of 6 am-9 am and 6 pm-9 pm. Similarly, the combine operates
around 7 out of around 13 flights in the key morning and evening slots in the
Bangalore-Hyderabad sector.



Similarly, in the Mumbai-Delhi sector, which is the single largest revenue
generating sector in the country, the Jet-JetLite
combine controls almost 35-40 per cent of the prime-time slots.

�This move will add a significant amounts to the corporate traveller base of the
low-cost carriers. And this in turn will enable them to raise their ticket
prices and not pull them back for the leisure traveller,� said Keyur Joshi, COO
of travel portal Makemytrip.



While corporate travellers account for around 30 to 40 per cent of a low-cost
carrier�s total customer base, they account for around 60 per cent of the total
customer base of a full-service carrier. The revenue chunk from corporate
travellers would be more than 75 per cent for full-service carriers since that
includes business and first-class fares as well as corporate travel contracts
with companies. The award of unused or under-used slots will be a boon for the
low-cost carriers especially in an airport like Mumbai which has paucity of
slots.



�While getting additional slots is easier at the Delhi airport now with the
opening of the third runway, it is impossible at the Mumbai airport. If we get
some existing unused slots at the Mumbai airport, it would mean much higher
loads for us,� said a low-cost carrier executive.



The Mumbai airport did not allot any additional slot last year. Sources said
that with the land constraint which the airport is facing, no airline should
expect additional slots for the coming summer schedule either.
Jet Airways already has more
than 80 daily departures out of Mumbai while Kingfisher has more than 60.



Giving away unused slots to more deserving carriers would also be good news for
airport developers at a time when their passenger and airport charges have taken
a hit due to declining air passenger traffic.



�Unused flight slots lead to lower revenue for us. We would want flight slots to
be operated by an airline that can make more efficient use of them through
better capacity management. We would also prefer more slots operated by regular
narrow-bodied aircraft like the A320 rather than turboprops,� said a
spokesperson of Mumbai International Airport Ltd (MIAL), the GVK-led consortium
that currently operates the Mumbai airport.

IndiGo bucks trend, plans to hire 50 pilots

MUMBAI: IndiGo, the country�s largest budget carrier, has decided to hire
nearly 50 pilots for its Kolkata, Bangalore, Hyderabad, Pune and Jaipur
operations.



When contacted, IndiGo president
Aditya Ghosh confirmed the development to ET. �We are looking to hire 30-50
captains. These are near-term requirements and we will complete the process in
the coming weeks,� Mr Ghosh said.



Delhi-based IndiGo will pay around Rs 5 lakh per month to the pilots, including
accommodation allowance, depending on the experience and positions of them.The
country�s third largest carrier employs 228 pilots for its fleet of 19. Of this,
104 pilots are also CAT III qualified and trained.



The Indigo Airlines
needs more pilots as it plans to increase the number of flights over the next
fiscal and raise frequency at Delhi, Kolkata, Mumbai, Hyderabad, Chennai
sectors. The airline plans to add 30 destinations in the country by 2010. It has
more than 100 flights, connecting 20 destinations and controls 14.7% market
share.



The fresh recruitment of pilots by IndiGo comes at a time when
Kingfisher Airlines and
Jet Airways had asked their
pilots, among others, to leave. Jet had offered a voluntary retirement scheme (VRS)
to more than 300 staff.

Oil strike begins to pinch new

The oil officers strike entered the third day today as talks between the
government and striking officers association failed to arrive at a settlement,
amidst visible signs of fuel shortages, the liklihood of officers from other
public sector units joining the oil officers strike and reports of the
government having ordered oil companies to sack the striking officers.



So far 64 officers, belonging to the Oil Sector Officers Association, which is
spearheading the strike, had been terminated yesterday even as the strike is
expected to escalate to other public sector units in the in power, steel and
engineering sectors. Reports also say senior oil company executives being
sympathetic to the striking officers.



With only Hindustan Petroleum Corporation supplying fuel, and exisitng stocks
being rapidly depleted, the situation has turned grim with prospects of
scarcities looming large. According to reports snaking queues are seen outside
HPCL petrol pumps.



A large number of petrol pumps and CNG outlets operated by Indian Oil and Bharat
Petroleum have run out of stock and consumers are beginning to feel the impact
of the strike as cabs and autos go off the roads as tanks run dry.
Domestic Airlines



Shortage of petrol, diesel and cooking gas has been reported from various parts
of the country as the indefinite strike of state-owned oil companies\' officers
enterd its third day. A number of pumps had reduced their stocks in anticipation
of a further cut in fuel prices.



After a marathon two-hour negotiation, petroleum minister Murli Deora and the
striking officers had failed to arive at a settlement as both refused to budge
from their demands.



The impact of the strike is expected to magnify as the government has so far
refused to relent to the striking officers demand for better pay packages, on
the grounds that the recently revised salaries are among best at a time when the
economic slowdown is leading to job losses.



Deora is likely to meet Prime Minister Dr Manmohan Singh later in the afternoon
on the strike after the union cabinet morning.



Flights have been delayed and cancelled at all major cities, with the worst
affected being Indian Airlines,
Jet Airways and
Jetlite as they source their
aviation turbine fuel from Indian Oil Corporation, whose officers have
alsojoined the strike. However,
Kingfisher had had a relatively smoother time as it tanks up from Hindustan
Petroluem, whose officershave not joined the strike.



The country\'s main gas trunk pipeline Hazira-Vijaypur-Jagdishpur (HVJ), run by
GAIL, continued to remain out of operations as ONGC has failed to supply natural
gas.



The impact is now also being felt on the power sector, with the gas-based power
units across the country facing shutdowns on Thursday. According to the
\'northern region load despatch centre\' data, around 1,500 MW of gas generation
was \'\'affected due to non-availability of fuel.\'\'



The shortages have affected power generation at power plants operating on
natural gas as feedstock, across states.



Over 9,000 officers of National Thermal power Corporation are expected to join
the approximately 40,000 oil sector officers, raising the spectre of power cuts.



The BHEL Executives\' Associations, which supports the OSOA\'s srike plans to join
the strike if the government does not implement the Justice M J Rao Committee\'s
recommendations for central public sector enterprises.



Oil officers being sacked

The government has asked PSU chiefs to sack the striking officers. It is
reported that upto 64 officers from ONGC may be sacked. ONGC\'s Association for
Scientific Technical Officers (ASTO) secretary Manoj Bhagawati said that
including him three other officers from Assam Assets were placed under
suspension for participating in the nationwide strike since Wednesday.



Another three suspended officers include A K Barua, Diyajuddin Ahmed and
Safaruddin Ahmed.



Impact of the common man



* Fuel scarcity for private car owners

* Taxis and autorickshaws have been going off the road as their tanks run dry

* Commodities will get dearer if they cannot reach market, particulalry
perishables like vegetables and fruits

* Cuts in power supply

* Flights affected

* LPG and pipeline gas supplies fall