SpiceJet in talks with Tata-AIG for fog coverage

Forget about losses due to low fares and stiff competition, now fog delays have further left the aviation industry bleeding. Only a few days after Air-India became the first airline in the country to invite bids from insurance firms for coverage against losses arising out of foggy conditions, the low-cost airline, SpiceJet, is also in advanced talks with Tata-AIG for an all-delay cover to minimise losses due to fog delays. SpiceJet is likely to charge between Rs.15-50 per ticket for providing insurance for delays, a source said. However, the insurance cover will be optional for passengers. The airline has already got in place an insurance cover for loss of baggage but passengers, at present, are not being charged for it. SpiceJet has a fleet of 10 new generation Boeing 737-800 aircraft. Industry sources say the fog-related delays are particularly hurting the low-cost carriers as they have higher flying hours and tight schedules.

A low-cost career loses anything between Rs.4-7 lakh per aircraft per day due to fog-related delays. "Usually an aircraft is utilised by low-cost careers for 12 hours in a day. During fog days the utilisation comes down to eight hours, which means loss of four hours of flight time with two-hour flights getting cancelled," the source said, adding, "For busy routes like Delhi, Mumbai and Hyderabad, the losses can go up to Rs 9 lakh per aircraft." This winter season is expected to have a longer fog span, spanning December and January. The industry is expected to make losses to the tune of Rs 2,500 crore in 2006, of which Rs.150 crore losses is likely to be because of fog-related delays. International public sector carrier Air India for its fog insurance coverage has sought a risk coverage of Rs.10-15 million with an average daily losses to the tune of Rs two million.

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