How has domestic airlines affected aviation industry?

Question

How has domestic airlines affected aviation industry?

Answer 1

demand-based pricing.

frequent-flyer loyalty programs.

world's first wide area network (SABRE)

jobs, jobs, jobs.

stimulated demand for air travel

facilitated invention of microburst and other localized weather phenomenon detection systems.

created a network of fully equipped airports and a national air traffic control system.

Answer 2

The unrelenting increase in crude oil prices and its deadly impact on aviation turbine fuel (ATF) seem to be killing the aviation industry, especially the airlines. Though airlines across the world have been crippled by the rise in ATF prices in the past six months, its impact on the low-cost, no frills domestic airlines operating in India may well be fatal for a few. Most if not all airlines in the country have reported losses not just for the third and fourth quarters, b ut the whole of 2007-08.

The future of Deccan, Spice Jet, Indigo, and Jetlite may hang in the balance till the oil prices stabilise and begin moving downwards. Thanks to the merger of Sahara with Jet and its rechristening of Jetlite, they can manage the turbulence.

Similarly, the take over of Deccan by Kingfisher provides some breathing space and flying space too.

Combination of factors

On the whole, a combination of rising ATF prices, its effect on pricing and the consequent dip in the domestic passenger traffic, the higher operational and overhead costs for the airlines, and the difficult choice they have to make between reasonable fares and occupancy or load factor, have all taken a toll on the airlines.

And this has come at a time when most of them have placed bulk orders for new aircraft, announced major plans for expansion of operations, and even hired pilots and engineers from abroad to meet the shortage of trained manpower in the aviation sector.

Further, two greenfield airports have been commissioned in Hyderabad and Bangalore, and the Airports Authority of India (AAI) has embarked on a massive project to expand and modernise about 35 non-metro airports in the country. The question is can all these plans be implemented if the raison d’ etre of the project itself — the boom in air passenger traffic — becomes doubtful.

Taking Jet Airways, which has emerged as a kind of model for growing private airlines, it has reported a loss of Rs. 221 crore for the fourth quarter of 2007-08, against a net profit of Rs. 88 crore for the same period last year. The airline shows a consolidated loss of Rs. 654 crore for the full year, including its subsidiary Jetlite - the first time that the company offers consolidated figures after acquiring Air Sahara.

The reason is not far to seek, because industry sources point to the doubling of the price of ATF in just six months. In the case of Jet Airways, though its revenue from the international operations (flights) grew by 42 per cent compared to a 23.7-per cent growth in the same period last year, the overseas load factor took a dip because of the high oil prices. Even in the third quarter the airline reported a net loss of Rs. 91 crore.

Airline sources say that the first quarter of the current year will be worse. The domestic load factor in the fourth quarter of last year was 74 per cent, and the international load factor was 69 per cent. Both of them were bound to take a hit this year. Other airlines were also facing much the same crisis. “Though the Civil Aviation Minister wants to do something positive to save the airlines and the aviation industry as a whole, he has not been able to get a short and medium term package because of the enveloping inflation and nuclear deal crisis that has gripped the government at the Centre.

The Empowered group of Finance Ministers of the States has deferred a decision on sales tax, VAT and related issues on ATF, buying time on the pretext of seeking more information from the Centre,” explains a senior financial manager of a private airline. ATF accounts for over 40 per cent of any airline’s overall operating costs.

Civil Aviation Minister Praful Patel has already suggested that the five-year norm for domestic airlines to fly on international routes must be relaxed to enable all the private domestic operators to launch services to foreign destinations and seek additional revenue from that source instead of having to depend on just the domestic traffic that is already coming down.

On top of all this, the commissioning of the new Bangalore International Airport at Devanahalli has added to the problems.

Most of the short haul flights from Kerala and Tamil Nadu have shown a drop in traffic because of distance and time taken to reach the city. Many passengers have switched over to trains instead. Though the Hyderabad airport is also some distance away, it may not be as badly affected as Bangalore.

Cost cutting

Commercial and marketing managers of the airlines say many corporates have also gone in for ‘cost cutting,’ because of the inflation and the rising cost of production. Air travel becomes the first causality in this list.

Executives of private companies are encouraged to either take trains or go in for teleconferences to cut down on travel itself. And all that is certainly not good news for the airlines. Some of the airlines are planning to review their fleet acquisition or replacement orders in view of the current slowdown in the market and the impact of oil prices. Plans to raise funds from abroad have been deferred. Over the short-term all the airlines are reviewing their schedules to cut down on the number of flights, pruning the number of services to various cities, and looking at other avenues to cut costs and save on fuel.

Industry sources and financial consultants suggest that airlines need to look at other models and avenues to raise revenue. Instead of depending on just passenger traffic, discounted tickets, and occupancy, they need to streamline operations and look at non-airfare revenue. Maintenance, repair and overhaul (MRO) units, flying and training institutions, hedging on fuel and foreign currency have been offered as some diversified projects airlines can look at. Some of them have already tied up with joint venture partners for setting up MROs.

But with the liberalisation in the FDI regime, to provide for a higher cap for foreign investors, Indian companies need to move swiftly on this front.

At least in this hour of crisis, the airlines in India will do well to act together, instead of persisting with the fare wars and trying to under-cut each other. With or without the help of the Centre and the State governments, the airlines will have to get their act together and evolve a strategy to see through this turbulence and look for a smooth and safe landing before they can take off again when the weather improves.

http://www.ongoingprofit.com/idevaffilia...

Answer 3

Airplanes with built in coffeemakers, BRILLIANT!

Answer 4

Air fare became cheaper and people who could not even dream of travel by air, travelled.In some place it was cheaper to travel by air than railway 2nd class sleeper.Indian airlines monopoly was broken and several flights to several destinations was available to the traveller.

Answer 5

they fly people to domestic locations?

Answer 6

You can go any where in the US.