June 21, 2008

Post Merger, Fewer Fliers Opt for IA

By Saurabh Sinha

NEW DELHI: Poor implementation of Air India and Indian Airlines merger is costing the national carrier's domestic operation dear. According to DGCA figures, former Indian Airlines-now-Air India (domestic) has consistently recorded the lowest seat load factor among all domestic airlines this year despite the fact that brand new planes are joining its fleet now.

Before consolidation took place in the aviation industry last year when Jet and Sahara, Kingfisher and Deccan were still separate airlines, former IA was among the front runners in load factors among domestic carriers.

For instance, in May, AI (domestic) had a load factor (average passenger per flight) of 61.2%, while all other domestic airlines fared better amid tough times when overall traffic growth has fallen to single digit. From January to May, the airline's load factors have been in the range of 61.3% to 58.3% but each month's figure has been the lowest in the industry. Other airlines had a load factor of around 78% on an average in this period.

The airline admitted that there has been a drop in capacity despite induction of new aircraft. It said: "The merged airline's capacity in the domestic market has more or less remained stagnant for past two years whereas industry capacity has consistently gone up. This has resulted in drop in capacity share," while hinting at the fact that the airline has only recently started getting new planes while other players were growing aggressively earlier.

"Being a national carrier, we are required to deploy capacity in remote areas.... As a result, our domestic capacity is thinly spread over 60 airports within India." Also the new duty time limitation rules reduced crew availability and the merged carrier reduced operations by 3% despite getting new planes.

However, the aviation ministry is getting worried at the overall health of the merged national carrier. Last fiscal, domestic carriers' loss is expected to be to the tune of Rs 4,000 crore with AI's share being about Rs 2,100 crore. The loss this fiscal is expected to be at least double with AI leading the pack.

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