On a wing and a prayer
Jab sey yeh low-cost carriers ayee hain, pata nahi kaise-kaise log travel karney lagey hain (Ever since these low-cost carriers have come, all kinds of people have started travelling).” It’s a dialogue from Amitabh Bachhan’s not-so-old film, Cheeni Kum. Screened first in 2006, the line reflected the fact that the common man in India had got wings.
But not any more.
The Indian budget traveller is no longer flying high, thanks to the cruel hikes in airfares that took effect recently. Though the airlines have a raft of reasons explaining the hikes, the common man is nonplussed.
The whole phenomenon is clearly captured with statistics. The number of first-time air travellers is estimated to have gone down to a mere 20 per cent of the total in the first six months of 2008. When the low-cost boom took off in 2003, the number of first-time flyers was at around 40 per cent. As with the boom, the bust is also pegged to costs.
Aviation turbine fuel (ATF), one of the largest cost components for airlines, has zoomed from Rs 45,495.84 a kilolitre (in Delhi) this January to an all-time high of Rs 69,097 this month. This has forced airlines to take a re-look at their entire operating models. An AC two-tier Delhi-Mumbai Rajdhani ticket costs Rs 1,975, far lower than the lowest airfare of Rs 3,870. This is in sharp contrast to a few years ago when the difference was less than Rs 1,000. The difference is so glaring now that a top airline executive admits: “We have little to offer by way of prices now.”
The high costs have led the airlines to cut flights on economically unviable routes.
Siddhantha Sharma, executive chairman, SpiceJet, says, “We are cutting down on operations short-haul and on the not-so-viable routes, and our break-even has been pushed back by a year.” From 117 routes per day, Spice has cut down to a mere 97 now.
Other airlines, too, are also formalising their route rationalisation programme. Go Air has already asked seven of its 70 employees in the Delhi office to move on and more are likely to be meted the same treatment soon.
Jitendra Bhargava, head of corporate communications at Air-India, says, “We are taking a hard look at our flight schedules, with economic viability being a determining factor.”
Jet Airways, the largest player, has already stated it would put its overseas expansion on hold. Unconfirmed reports suggest Jet will close operations on six routes this month and reduce capacity by 5 per cent. This is equivalent to grounding six mid-size aircraft.
Kapil Kaul of the Center for Asia Pacific Aviation says, “The situation will stabilise over 12-18 months. What the airlines need to do is operate with smaller aircraft, defer expansion and rationalise for now.”
Keyur Joshi, co-founder of travel portal Makemytrip.com, also offers a ray of hope by saying, “Once the fuel surcharge stabilises, things could be better.”
All the traveller needs to know is when.