A-I tackles loss-making routes

Cuts Alliance Air's capacity by deploying smaller planes

As a part of cost-cutting measures, national carrier Air-India has halved its domestic subsidiary Alliance Air's capacity on certain loss- making routes by deploying much smaller aircraft for the operations

Alliance Air, now known as Air-India Regional has replaced the 120-seater Boeing 737 with the 70-seater, Bombardier-manufactured Canadian Regional Jet (CRJ) for routes like Delhi-Vizag and Delhi-Ranchi.

This development, along with the decreased number of flights per week from 7 to 6, has exactly halved Alliance Air's weekly capacity deployed in these sectors. The total number of seats deployed in these routes per week has come down from 840 to 420.

According to company sources, other sectors tentatively looked at are Delhi-Ahmedabad, Delhi-Ranchi, Chennai-Vizag, Chennai-Bhubaneshwar, etc as more such jets are delivered to them.

"Going by the order, there is a clear scope to cover all regional routes, which have a duration of around two hours, while the shorter routes like the north-eastern destinations are operated by ATRs," said an aviation expert. Alliance Air has 6 ATR aircraft, which service areas like the North-East.

This is one of the starters for the slew of cost-cutting measures undertaken by the company to curtail its losses. Inclusion of Alliance Air's Rs 300 crore loss into Indian Airlines' accounts was the sole reason for its accrued losses of Rs 250 crore for 2006-07 instead of a profit of Rs 50 crore.

There are orders for four such jets, which will be used by Alliance Air for various sectors. While the first one was delivered in early December and pressed into service from the 17th of this month, the second jet will be delivered on the first fortnight of January and the remaining two are slated to join the fleet by April next year.

These jets will replace the more than 20-year-old Boeing 737s, which will be now be used for the freighter services or Air- India cargo.

"Sectors like Delhi-Ranchi and Delhi-Raipur were the ones in which we were consistently less than lower load factors, which is why we deployed the smaller aircraft," said a NACIL spokesperson. After the merger, Alliance Air was converted into Air-India Regional, although it has not yet sought for a separate regional airline licence yet.

As a part of their route rationalisation plan, Air-India Regional is supposed to cover all the regional routes, primarily the non-metro or the metro-non-metro sector.

Though the company did not give away the amount of cost-cutting that would be possible through this measure, aviation experts said that the chunk of it would come from increased fuel efficiency.

"The Boeing 737 is almost twice the size of a CRJ, which would give a fair idea of the cost-cutting in terms of fuel. Also, while the Boeing 737 flights were getting load factors of below 50 per cent, deploying the smaller aircraft will ensure that the flights have a PLF of 90 per cent with the same number of passengers, which will lead to much greater yields," said the expert.

Cutting down capacity in line with load factors has been a strategy, which is being used by other airlines as well. Kingfisher, for instance, has cut down on its business class on several key sectors like Delhi-Bangalore and Delhi-Mumbai from 32 to 20 and increased its economy class by 40 extra seats.

This change in configuration will give a 64 per cent benefit per flight for certain sectors. Jet Airways in its new "more leg room" campaign has also cut down on one row of business class seats.

...to induct 20 aircraft

Air-India will induct about 20 aircraft next year and has ambitious plans to strengthen and expand its domestic and global network even as it expects to finalise plans for placing orders for more planes in 2008.

As the government wants the newly merged carrier to compete with the best in the industry, the process of integration of the two erstwhile national carriers "� Air-India and Indian Airlines "� was progressing smoothly, A-I officials said.

The amalgamation process, which started right from the the board level, has now come down to the general manager-level employees.

"The integration of general manager-level staff (of the two former airlines) is likely to be over by this month-end," A-I Executive Director (Corporate Communication) Jitender Bhargava said.

He said the road map projects a period of 16-18 months, by which the complete integration of all staffers was expected.

Civil Aviation Minister Praful Patel had recently warned that the national carrier would have to perform and compete with the best in the industry or else it would "perish".

---

BUSINESS GAMBIT

Cutting down capacity in line with load factors is the strategy now being practiced by airlines

Inclusion of Alliance Air's Rs 300 crore loss into Indian Airlines' accounts was the reason for its accrued losses of Rs 250 crore for 2006-07