JFK slot auction may spoil US party

Kingfisher, Jet Airways will face problems as they plan operations in New York.

A move by the US administration to reduce congestion at the New York's John F Kennedy (JFK) airport "� the busiest in the world "� by auctioning parking slots, might spoil the party for the private carriers in India such as Kingfisher and Jet Airways, which are planning their operations there.

It could also mean passengers, especially a business traveller, to shell out more from March this year.

The Federal Aviation Administration (FAA) is planning to auction slots, instead of a fixed price with carriers.

According to Kapil Kaul, CEO (Indian subcontinent and West Asia), CAPA, the exact details of the base price that the FAA decides for the slots should be known to the airlines in two months.

US is an important business traveller market, around 50 per cent are in this category, and eventually if the costs of the operations goes up, then it has to be absorbed and this means paying more for a premium airport such as JFK, he added.

Of course airlines can land in Newark, 42 kms away from New York, which takes an hour and a half extra to commute. But experts say, business travellers prefer JFK because of short-distance and also better connectivity. The government is also planning to cap the number of flights in Newark.

Currently, there are no slots available at the JFK airport.

Congestion at the New York airport has been costing the airlines a lot because of the additional costs of the jet fuel burn due to holding time and also waiting at the tarmacs sometimes up to three hours.

Vijaya Mallya-promoted Kingfisher Airlines is planning its US operations in April this year will get effected by the new rules. The airline was reportedly informed on the JFK plan to auction the slots.

The airline says, if the slots auctioned at the JFK are too exorbitant, it might change its plan to fly to JFK and instead fly to Newark airport.

"We are considering both the airports for our operations and if costs are too high at the JFK, we will fly to Newark. It is well connected and also less congested," said Hitesh Patel, executive vice-president with the airline.

The next step for the US Department of Transportation is to cap the number of the flights at the Newark airport.

Patel sidestepped the question on tariff and about the additional costs incurred due to the auction will be passed off to the passengers or to be absorbed by the airline.

"We would not like to comment on it right now. If the plans to decongest the JFK airport and the cap on the number of flights a hour is able to cut down the delays and result in savings in the jet fuel burn, then we would think of buying slots as one time investment," said Patel.

But, he said, flights to JFK would priced a little more than that to Newark might be a possibility. The airlines in India are already reeling under the heavy costs that they have to shell out at Heathrow London for getting slots, now JFK would be another worry.

"Already the cost of getting slots at the Heathrow is exorbitantly high (currently 98.5 per cent slots had been sold out). An airline in India has shelled out as much as Rs 50 crore to get a slot at Heathrow, now JFK would add another millions of dollars obviously subject to availability," said an airline executive.

Jet Airways that launched the US operations in August last year and has a daily flight from Delhi to JFK airport didn't comment on the issue.

But Air-India that launched its direct flight to the US during the same month says it has its slots in place and would not be impacted.

But the airlines in India will have competition from American carriers that have slots in the JFK such as the Continental, which also operates direct flights from India, and Delta Air Line that flies into JFK airport.

Aviation experts feel that it is time for the airline operators to pay for premium slots at the busy airports and the move is essentially a market-based approach.

Recently, Alitalia (now no longer in operation) auctioned its slots at the Heathrow and reportedly made a huge amount from that auction.

This might also happen at the New york where airlines such as Continental would lease there existing slots to other airlines.