February 11, 2013
NEW DELHI: If you felt the government would encourage airlines to expand their fleets after the closure of Kingfisher caused fares to spike, think again. Low-cost carrier IndiGo wanted to import 16 aircraft this year but the aviation ministry has allowed them to bring in only five.
February 11, 2013
NEW DELHI: If you felt the government would encourage airlines to expand their fleets after the closure of Kingfisher caused fares to spike, think again. Low-cost carrier IndiGo wanted to import 16 aircraft this year but the aviation ministry has allowed them to bring in only five.
For the remaining 11 aircraft, IndiGo has been asked to submit detailed plans on how it intends to use them. This process may take time as the ministry is in the process of finalizing new norms for schedule airlines to fly to tier II and III cities. And, the nod to import more planes would be linked to meeting the new norms under which it may be mandatory for all airlines to have smaller turboprops in their fleet to fly to smaller towns. IndiGo has so far placed orders for 280 Airbus A-320 aircraft and is yet to receive over 200 of them till 2025. Its currently has 63 aircraft, with three of the five cleared planes being inducted this year and two more expected this fiscal.
The aircraft acquisition committee is headed by aviation minister Ajit Singh and the Prime Minister's Office (PMO) had even objected to this hierarchy some months back due to fears that this could delay the process of importing aircraft. This panel used to be earlier headed by the ministry's additional secretary and financial advisor. But, the ministry overruled the PMO's objections and the minister remained the head of this panel by pointing out that Ajit Singh's predecessor, Congress leader Vayalar Ravi, had made this change.
When contacted, Ajit Singh said: "IndiGo wanted to import five aircraft immediately and we have allowed that. The 16 aircraft were not to be inducted in one go. Their request for getting more planes will be considered by the committee. New guidelines are being framed shortly for regional connectivity and airlines will have to meet them. For that an airline can't just have Boeing 737 or Airbus A-320 and will need to have smaller planes also to fly to smaller cities."
The minister also denied that Kingfisher's closure had led to a demand-supply mismatch and said fares have gone up for other reasons that have nothing to do with Mallya's grounded airline. "All (Indian) airlines are flying with 70% to 75% occupancy rates… where is the capacity constraint? Fares have been hiked by airlines to avoid bankruptcy. Cost of jet fuel, airport charges have all gone up. Airlines are charging fares that can recover these higher costs and the increase has nothing to do with closure of Kingfisher," he said.
Vijay Mallya's debt-ridden Kingfisher had started downsizing since last winter and then completely stopped flying from October 1, 2012. The reduced supply led to other airlines hiking fares by 20% to 35%. While allowing other airlines to bring in more planes would help increase supply – and lower fares – the government has done the opposite.
Courtesy: TOI
