Low-cost carriers to cut flights over user charges

With the Bangalore airport announcing stiff user developmental fee (UDF) on domestic passengers, low-cost carriers (LCCs) "" JetLite, SpiceJet and Simplifly Deccan (formerly Air Deccan) "" have decided to drastically cut their flight schedules to the city and other new airports like Hyderabad.

Bengaluru International Airport Ltd, which runs the new airport to be operational at the end of March, is imposing Rs 240 as UDF on domestic passengers flying from the city, which will be hiked to Rs 675 from June 1.

It has also imposed UDF of Rs 520 on international flights which will be hiked to Rs 955 again on June 1.

The new Hyderabad airport, controlled by the GMR group, is also negotiating with the government on imposing UDF of a similar nature. GMR executives say that the charges will be finalised in a few days.

Says Gary Kingshott, CEO, JetLite: "We are seriously considering rescheduling operational activities to these airports. LCCs will have to minimise the operations to these airports."

Agrees Ajay Singh, director in SpiceJet, "We will oppose any charges and fees levied by the greenfield airports. The government initially assured us that post privatisation, there will be no hike in the charges. Any deviation from this stand will call for opposition. If charges go up, there is no alternative but to minimise operations to these airports and increase capacity to other airports like Chennai. From our perspective there are a lot of sectors to build capacity still."

Air Deccan, which has its headquarters in Bangalore, says that many of its flights will become virtually unviable. Top executives in the airline say for instance its average fare on a short-haul flight from Bangalore to Hubli is only around Rs 1,600.

"The UDF will constitute half the cost of the ticket. How will the market grow at all as the only thing you can do is pass on the increase," says a senior executive of the airline.

Deccan executives also argue that even on long-haul flights the UDF would constitute of around one-third of the existing fare and will impede growth in these markets.

LCCs constitute a major percentage of the total flights which operate in the two cities. As much as half the 232 flights to and from Bangalore are LCCs, while in Hyderabad it is well above 50 per cent (around 70 flights a days).