Monday, January 12, 2009

Low-cost airlines may get more peak-time slots in metros

New Delhi: Low-cost carriers may soon pull a large number of corporate
customers away from the full-service carriers. The civil aviation ministry and
the Directorate General of Civil Aviation (DGCA) are planning to award the
low-cost carriers some key morning and evening peak-time slots (a fixed time for
departure or arrival of a particular flight) lying unused with the full-service
carriers at metro airports like Delhi and Mumbai.

DGCA officials and airline officials confirm that airlines like
Jet Airways and
Kingfisher are not using around
10 per cent of their slots during the peak periods.Slots are given to airlines
for all airports collectively and on a six-month basis (summer and winter
schedules). Each airline puts in its request for slots, which are then decided
by the DGCA, civil aviation ministry and the airport operator. The award of
slots usually follows a historical trend wherein an airline retains the slots it
had operated in the previous schedule.

Both Delhi and Mumbai handle 550 flight movements each daily, with around
140-160 prime-time departure slots and an equal number of arrival slots.A
low-cost airline executive also said that airport executives of both Mumbai and
Delhi airports had unofficially informed them that there were slots in both
airports that were lying unused. Ajay Singh, director in
SpiceJet, a low-cost carrier, said:
�We have decided not to downsize and are adding flights. There are unused slots
available in prime time, when corporate travellers go, which we have asked the
government to give.�

�This has become a practice of late when the airlines combine a lot of flights
during the day. If an airline has around five flights in two hours, it usually
combines the flights and cut them to three. Since this is a regular practice, we
might give some of the slots to other deserving airlines like
IndiGo and SpiceJet who have asked for
them,� said a civil aviation ministry official.

Industry experts say around 80 per cent of the domestic corporate travellers in
the country are mostly carried by full-service airlines like Jet Airways and
Kingfisher or their low-cost affiliates.For instance, in the Bangalore-Chennai
sector, the KFA-KF Red combine operates six out of the nine flights in the key
prime-time slots of 6 am-9 am and 6 pm-9 pm. Similarly, the combine operates
around 7 out of around 13 flights in the key morning and evening slots in the
Bangalore-Hyderabad sector.

Similarly, in the Mumbai-Delhi sector, which is the single largest revenue
generating sector in the country, the Jet-JetLite
combine controls almost 35-40 per cent of the prime-time slots.

�This move will add a significant amounts to the corporate traveller base of the
low-cost carriers. And this in turn will enable them to raise their ticket
prices and not pull them back for the leisure traveller,� said Keyur Joshi, COO
of travel portal Makemytrip.

While corporate travellers account for around 30 to 40 per cent of a low-cost
carrier�s total customer base, they account for around 60 per cent of the total
customer base of a full-service carrier. The revenue chunk from corporate
travellers would be more than 75 per cent for full-service carriers since that
includes business and first-class fares as well as corporate travel contracts
with companies. The award of unused or under-used slots will be a boon for the
low-cost carriers especially in an airport like Mumbai which has paucity of

�While getting additional slots is easier at the Delhi airport now with the
opening of the third runway, it is impossible at the Mumbai airport. If we get
some existing unused slots at the Mumbai airport, it would mean much higher
loads for us,� said a low-cost carrier executive.

The Mumbai airport did not allot any additional slot last year. Sources said
that with the land constraint which the airport is facing, no airline should
expect additional slots for the coming summer schedule either.
Jet Airways already has more
than 80 daily departures out of Mumbai while Kingfisher has more than 60.

Giving away unused slots to more deserving carriers would also be good news for
airport developers at a time when their passenger and airport charges have taken
a hit due to declining air passenger traffic.

�Unused flight slots lead to lower revenue for us. We would want flight slots to
be operated by an airline that can make more efficient use of them through
better capacity management. We would also prefer more slots operated by regular
narrow-bodied aircraft like the A320 rather than turboprops,� said a
spokesperson of Mumbai International Airport Ltd (MIAL), the GVK-led consortium
that currently operates the Mumbai airport.

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