Air India to Remove Unprofitable Routes
Tuesday, 12th June 2012 at 01:29am
Sources said that the state-run airline may either decrease frequencies or divert some of its loss-making operations, depending on the best interest of the company.
The downgrading of these operations will surely adversely affect the need for pilots and aircraft plying on these routes.
Of the flag carrier's 175 route network, only two routes reportedly recover the whole flight cost. The remaining 173 routes, which are deemed unprofitable, are considered loss-making routes primarily because they don't even recover the total costs of their operations.
The current strike by 300 pilots has entered its 29th day yet no settlement has ever been seen. This affects the route restructuring plan of the airline which is seen to bail out the carrier from getting further into a severe financial mess.
The flag carrier has already lost Rs.365 crore due to strike, said to be one of the worst in commercial aviation history.
The airline hopes to normalize its international operations with the interim plan in place while at the same time, canceling seven of its routes including Hong Kong, Toronto, Osaka and Seoul. This action, according to the officials, would cut losses down to Rs.5 crore or less per day from its current rate at Rs.10 crore a day.
Airline officials said that employees were not able to receive their March basic salary, which is supposed to be paid by May 15, but got snagged due to the strike. Hopefully, they will receive it this month.
The ailing airline's domestic flights, reportedly, have 82% load factor in May. This was an increase of 4% over the previous month when it achieved a 78% load factor in April. The on-time departures of flights on most of its major routes helped keep the passengers from patronizing other carriers.
The airline has bookings full until the middle of June on most of its domestic routes. The booming tourism industry in the country also helped the airline fill its seats on most of its flights.
The rosy picture in the domestic scene makes the airline projects an increasing market share. A senior Air India official, however, lamented that many of its feeder flights for international routes did not fare well. For instance, its Delhi-Amritsar-London feeder flight suffered badly, so did other domestic feeder flights. But they are trying very hard to lessen the losses from these routes.
Air India registered a market share of 17.6% in April, the fourth largest in the country. IndiGo, acquiring 23.8% of the market share, is India's largest airline followed by Jet Airways in the second spot with a 21.4% market share. SpiceJet, which is the newest airline in the country, has a market share of 17.7%, slightly bigger than the flag carrier.
By: Pete Lee.