Landing delays causing losses to airlines

Every minute an aircraft hovers over an airport, waiting in an air-queue to land, the airline it belongs to loses Rs 2,500. That is if the aircraft is a Boeing or an Airbus. If it’s an ATR, the cost is about Rs 750 a minute. The collective fleet of various Indian carriers today stands at 1,200 aircraft. Half of them have to circle above airports for an average 30 minutes every day. That is a loss of Rs 135 crore per month for the airline industry - for no fault of theirs. The daily losses on account of airport jams are, by conservative estimates, pegged around Rs 5 crore. But it is not just higher jet fuel costs that have hit the airlines. Air clogs also bulk up personnel costs because airlines shell out overtime money to pilots and cabin crew. It also squeezes their cargo revenues. This is because airlines are forced to carry more fuel - about 30 to 40% more since. This, in turn, increases the weight of aircraft, which automatically limits the cargo that an aircraft can carry. “We usually fill five tonnes of aviation turbine fuel (ATF), but due to congestion, we now fill around 7-7.5 tonne of fuel. Due to this increased load, the engine uses more fuel. This also forces us to reduce the cargo onboard,” informs a SpiceJet Ltd executive.

An Air Deccan spokeswoman complained the congestion also led to lower levels of aircraft utilisation. And such operational inefficiencies were indirectly impacting the bottomline of the airline operators. With so much at stake, even the biggest price warrior Air Deccan, which usually shies away from any sort of price hike, is considering to levy a congestion surcharge (around Rs 150 per passenger) on the passenger, along other players such as Jet Airways, Kingfisher Airlines, SpiceJet, Air Sahara, Indian Airlines and Go Air. “We are looking at imposing it. When and how has not yet been decided. Just today, our Bangalore-Delhi flight was hovering for around 55 minutes near the airport. The additional cost that we are incurring due to congestion is hurting bad. We have to recover this cost or else it will adversely impact profits,” says Air Deccan managing director G R Gopinath. Analysts are viewing the levy as pricing action, which was long overdue. “That even the low-cost carriers are mandating the levy shows that losses due to congestion must have hit them very hard,” says an analyst.

A Mumbai-based analyst with a foreign brokerage said the total surcharge of Rs 900 (including Rs 750 for fuel and Rs 150 for congestion) has ensured that the airlines earn Re 1 per kilometre irrespective of what promotional fares they offer. “This way, they have indirectly fixed a floor price for all airlines. This is expected prop up their bottomline to some extent and improve the health of the aviation industry a touch.” The bad news is, congestion and delays will remain of epidemic proportions in the foreseeable future, if passenger traffic - and by therefore, flight traffic - is anything to go by. Take a look at the statistics: Last year, 16.2 million people flew from and into the New Delhi airport. This year, 20 million already had by October. Passenger growth at airports are rising at around 20% a year. Meaning, the number of passengers flying in or out doubles in less than four years. And in under four years, the new New Delhi airport will be ready (by late 2010). It will have a capacity to handle 37 million passengers per annum. Considering the current growth rate, the new airport will be stretched at the seams at take off point itself.

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