Domestic airlines to lose Rs 20 cr a day as ash cloud spreads

Written by Shaheen Mansuri | Shweta Bhanot | Mumbai | Updated: Apr 20 2010, 04:47am hrs
Indian carriers flying to European destinations are likely to lose Rs 20 crore a day owing to flight cancellations due to the huge ash cloud from an Icelandic volcano that has precipitated the worst air travel chaos since the September 11 attacks. Air India, Jet Airways and Kingfisher Airlines have cancelled over 50 flights in the last four days, as airports in Europe remain shut, hitting travel to the US and Canada as well.

Meanwhile, Air India has scheduled flights on the India-US route for Monday. Jet Airways operated flights via Athens to US and Canada on Saturday.

According to the International Air Transport Association, airlines across the world are collectively losing $200 million a day due to cancelled flights.

Says Ankur Bhatia, MD, Amadeus India, Over 28,000 flights operate in European airports but the number has reduced to 11,000 due to the volcanic disruptions. Indian carriers are also impacted financially since there are no take-offs and landings on the network. The revenues of airlines will descent. He further added European authorities believe that northern and eastern European air space will remain closed for the next several days, at least.

Industry analysts say on long-haul destinations, the employee to aircraft ratio is over 200 per aircraft. In such a scenario, airlines will have to pay their employees despite no operations on the sector.

This incident comes at a time when Indian carriers were trying to cash in on the peak outbound travel season from India. Generally, carriers earn around 50% of the total annual revenues from international operations.

Jet Airways, which cancelled four flights on the India-London and London-India sector, said it is monitoring the situation and has worked closely with relevant authorities in evaluating and mounting flights to and from the US and Canada.

Jet Airways has ensured that the chosen route via Athens is one that would avoid the volcanic ash-affected air space.

The carrier, which majorly flies to most destinations in Europe, the US and Asia among others, had 27,073 departures in the December quarter of FY2010 with 75%-plus load factors.

Kingfisher too has cancelled its regular flights on the sector like Air India.

Meanwhile, International Air Transport Associations (IATA) initial estimates of the financial impact is in excess of $200 million per day for the industry, but this figure does not take into account factors like additional costs for re-routing aircraft, care for stranded passengers and stranded aircraft at various airports.

Rajji Rai, president, Travel Agents Association of India (TAAI), said, There have been cancellations and travellers are being refunded. The consulate is also co-operating with us. He added that airlines are looking for alternate routes. Jet Airways, for instance, announced flight via Athens to the US and Canada on Saturday.

The soaring mercury is not stopping the Indian travellers to travel to cooler destinations like Europe and they are just looking at re-scheduling their holiday plans for a later date. A huge departure typically happens by the end of April when the schools shut, said Rai, adding that there will be a price increase in the holiday packages upward of 5%-10%.

A Mumbai-based travel company said, There have been cancellations and re-scheduling by the travellers. This is the peak season when Indians travel to the EU and it is unfortunate that this incident has happened now. It has caused inconvenience to travellers not just going to Europe but also US, as many flights go through the EU region. The company indicated that travellers are not putting the holiday plans of shelf but looking at re-scheduling for a later date. This is an annual opportunity for them and the planning is done in three to four months in advance. They do not want to let it go just because of this incident. Talking about travellers who have already gone to the EU and now stuck, the company official said that EU offices of theirs are looking after them and the consulates are also helping in terms of visa extensions.