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India’s new planes mean lower costs, emissions and insurance

India’s new planes mean lower costs, emissions and insurance
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First Published: Wed, Feb 09 2011. 12 30 AM IST

Stumbling blocks: Inefficiencies in airport infrastructure are easing, although other costs such as jet fuel remain a concern. HT
Stumbling blocks: Inefficiencies in airport infrastructure are easing, although other costs such as jet fuel remain a concern. HT
Updated: Wed, Feb 09 2011. 09 49 AM IST
Mumbai: Having the youngest fleet in the world doesn’t simply mean cleaner, more efficient planes. It allows India’s airlines to pay less for insurance, cut maintenance costs, stick to schedules and have fewer cancellations. The average age of the Indian fleet is less than five years right now and this is set to drop even further to four when state-owned Air India Ltd phases out older, leased aircraft as it inducts new planes in 12 months from orders placed fours years ago.
Stumbling blocks: Inefficiencies in airport infrastructure are easing, although other costs such as jet fuel remain a concern. HT
Other carriers such as IndiGo, run by InterGlobe Aviation Pvt. Ltd, and SpiceJet Ltd are freshening their fleets through smart leasing strategies.
Inefficiencies in airport infrastructure are easing, although other costs, such as jet fuel, remain a concern. Aircraft still need to wait their turn to land at peak hours at some airports, burning fuel and causing delays, while the newer airports have put up user charges.
Operating a young fleet “results in superior operating efficiencies, greater customer acceptance, and leads to higher asset utilization and operational excellence,” said Kapil Kaul, India chief of Sydney-based aviation consultancy Centre for Asia Pacific Aviation (Capa). “It also reduces our carbon emissions. It has also been helpful in India as our fuel costs are perhaps the highest in the world and a young fleet reduces fuel consumption.”
Indian carriers are emulating Singapore Airlines Ltd and Emirates, he said. “Fuelled by growth, by and large, Asia has a younger fleet, while North America and Europe are facing the issue of ageing fleets,” Kaul said.
The average age of planes in the US is 12.1 years and 10.7 in the UK, according to consulting firm Ascend Worldwide Ltd and Capa. It’s seven years in the United Arab Emirates and 6.3 in Singapore.
According to the ministry of civil aviation, flight cancellation rates at domestic carriers have been largely flat over the past two years—2.3% in 2010 and 1.8% in 2009. Overall on-time performance in 2010 was 81.3%. The figure for 2009 was not available. Several airline executives confirmed that insurance and maintenance costs are lower because of the age of their planes.
“We have 81 brand new planes with an average age of less than three years, but the remaining 54 have an average age of nine years,” said an Air India executive, who did not want to be named. “We are in the process of phasing out old planes that will bring our average age further down. Besides, we are set to take delivery of 27 new Boeing 787s shortly.”
With Air India’s new aircraft, the average age of planes in India will drop to four, Capa’s Kaul said.
India’s largest low-fare airline IndiGo, which recently announced a record deal to buy 180 Airbus SAS planes worth a total $15.6 billion (Rs 70,824 crore today) at list prices, will use the transaction to ensure that its fleet is constantly refreshed. The deal follows its previous order for 100 planes in 2006.
This doesn’t mean that the carrier will have 280 planes in its fleet, said two airline consultants who didn’t want to be named. Instead, it won’t retain aircraft beyond six years.
“IndiGo will complete the current outstanding order of 100 planes by the financial year 2015 and it will then take deliveries in a staggered manner until the financial year 2013 (for) a total purchase of 243 planes (180 new aircraft plus 63 from the previous order),” said one of the consultants cited above. “By financial year 2023, they would have bought 243 and returned 120 aircraft to have a fleet size of 123 planes. By doing this, IndiGo will always have a young fleet.”
Currently, IndiGo has 34 planes with an average age of two years. The airline declined to comment for this story.
Rival carrier SpiceJet has 25 medium-sized planes made by Boeing Co. with an average age of 3.2 years, according to spokeswoman Priti Dey.
Another low-fare airline GoAir, run by Wadia Group-owned GoAirlines (India) Pvt. Ltd, has 10 Airbus planes with an average age of 21 months. “Brand new planes will give a fresh feel to the customers. Also, it avoids any technical snag while in operation. Apart from routine check-ups, the planes will not have any major issues,” said a GoAir executive.
A young fleet and more new planes on order, reflects growth, said John Siddharth, industry analyst (aerospace and defence for South Asia and Middle East) at consulting firm Frost and Sullivan.
“In 2010, the sector surpassed the 50 million-mark in domestic passengers and is expected to grow at 10-12% CAGR (compounded annual growth rate) for the next five years,” he said. “In this context, a younger fleet would mean better safety.”
Some airlines from South East Asian countries have been barred from flying to Europe over this issue, Siddharth said, and added, a younger fleet also means lower carbon emissions.
pr.sanjai@livemint.com
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First Published: Wed, Feb 09 2011. 12 30 AM IST