Mumbai terror attacks make airlines bleed on intl routes

Written by Shaheen Mansuri | Mumbai | Updated: Dec 2 2008, 06:44am hrs
High fuel costs, rigid taxation policies and now the terrorist attacks in Mumbai have hit major airlines in India hard. Carriers like the state-run Air India, Indias largest private carrier Jet Airways, and Kingfisher Airlines, which has recently launched its international operations to London, are losing nearly Rs 2 crore a day due to poor load factors on their international routes, especially, the US and UK post the November 26 attacks. These airlines have earlier told the media that they enjoy a healthy load factor of upto 75% on international routes.

A source at the Airports Authority of India (AAI) says, The load factors on international flights have dipped almost 60% on all the airlines after the terror attacks ripped Mumbai due to postponing of travel and cancellations done by the travellers. Poor load factors and high airport usage fee will burn a neat hole in the bottomline of the airlines. He further adds that most of the airlines have yet to pay their airport usage fee to the AAI, which collectively amounts to Rs 2,000 crore till date. Also, AAI charges Rs 22,770 for an aircraft (in case of international flight) weighing above 100 metric tonne.

It may be noted that according to the AAI data, nearly 40 million passengers travel to the US and 30 million to the UK annually from India. Also, in August 2008, international traffic was 2.67 million as compared to 2.44 million in the corresponding period last year. But an AAI official predicts a huge dip in international travel in the coming weeks, though considered a peak season for international travel.

However, Jitendra Bharghava, director (PR) at Air India says, Tourists from the US and UK have deferred their travel to India. Its a natural transgression after terror struck Mumbai last week. It may be noted that Air India had spent Rs 20 crore on publicising its India-US operations last year. Besides, the route contributes nearly 20% to the revenues of Air India. Air India has nearly 24 weekly flights to the US from various Indian destinations and approximately 24 on the India-London sector.

Jet, which also has nearly an equal number of frequencies like Air India to these destinations, will bleed badly in terms of revenue generation from its international network, say analysts. However, the airline in a press statement has said that its international and domestic operations remain unaffected by the grim scenario that has gripped Mumbai. An AAI official explains that during a 16-hour flight from India to the US, fuel worth Rs 10 crore is burnt on a non-stop flight. But with poor load factors and high airport usage fee, airlines have already started losing Rs 2 crore a day after the terror attacks and the trend will probably continue. It may also be noted that the Indian consulate in New York has issued more than a lakh visas this year. But the Indian consulates in New York and Chicago have started receiving requests from citizens to hold on to their visa applications, given the changed situation in India after the terrorist attacks.