Kingfisher Airlines wants itself and Deccan to be considered one entity by the government while enforcing rules that mandate that airlines fly to certain number of remote locations.
Kingfisher Airlines Ltd, whose parent UB Group recently acquired a controlling stake in Deccan Aviation Ltd, which operates Deccan, has written to the government to this effect.
Jet Airways India Ltd, which acquired Sahara Airlines Ltd, had previously requested the government for a similar relaxation.
Government rules mandate that airlines deploy a certain proportion of their flights on these routes, referred to as CAT II, CAT IIA and CAT III routes within the industry— many of these routes are commercially unviable. The number of flights an airline has to operate on these routes is a function of the number of flights it operates in other routes such as the ones connecting the metros.
“We are operating flights to CAT II and CAT III destinations with decent passenger response. But if the government asks us to increase the frequency on the same route in proportion to our additions in other profitable routes it would certainly affect us,” said SpiceJet Ltd executive chairman Siddhantha Sharma.
Both Kingfisher and Jet say they have grounds for asking for a relaxation in the rules.
“Since Kingfisher Airlines and Deccan Aviation are now one, the government should now only ask us to fly CAT II and CAT III routes limited to one airline,” said a senior Kingfisher Airlines executive, on the condition of anonymity.
A senior Jet Airways executive, who did not want to be named, confirmed that the company has requested the government to rationalize mandatory flights to far-flung areas. The move by the two airlines comes in the backdrop of efforts by airline lobby group, Federation of Indian Airlines, or FIA, to get the government to scrap these mandatory flights.
“We are examining the possibilities of relaxing route dispersal guidelines. I cannot comment on the airlines’ request,” said a senior government official, who did not want to be named.
“Technically, Kingfisher-Deccan combine and Jet-JetLite combine are four different companies. Therefore, one will have to wait and watch what the government decides on it. If it allows this, Kingfisher and Jet Airways can pull out certain flights from unviable routes to redeploy in profitable routes,” said a Mumbai-based analyst, who did not wish to be identified because he is not authorized to speak to the media.
For instance, airlines flying such mandatory flights to cities in the north-east have a passenger occupancy of 40% in most of the cases. Flying a mid-sized jet plane with such a load factor will adversely impact the airline, the analyst added.
India’s airlines posted a combined total loss of around Rs2,000 crore in 2006-07, according to industry estimates.
Under the government’s route dispersal guidelines, or RDG, airline routes are generally divided into three categories—CAT I, CAT II and CAT III. The government introduced these guidelines in 1994 in an effort to ensure that all regions of the country were well-connected by air.
Under the government’s guidelines, an airline may provide services on CAT II and CAT III routes either using its own aircraft or through other operator’s on mutually agreed terms. Normally, airlines that fail to meet the mandatory flying requirements of the government buy available seats from other airlines that operate on such routes.
“It is time to scrap these guidelines and replace them with other alternatives as the carriers are already bleeding. Airlines are burdened with high jet fuel cost and other infrastructure costs. This mandatory requirements of flying unviable routes will add to costs,” said an airline executive, who didn’t want to be identified.
ROUTES AND REQUIREMENTS:
Delhi-Bangalore, Delhi-Chennai, Delhi-Hyderabad,
Kolkata-Chennai, Kolkata-Delhi, Kolkata-Bangalore
(Airlines are required to deploy at least 10% of their CAT I capacity on such routes)
Stations in Jammu & Kashmir, north-east region,
Andaman & Nicobar and Lakshadweep islands
connected with stations outside these regions.
(Airlines are required to deploy at least 10% of their CAT II capacity on such routes)
Routes for flying exclusively within
Jammu & Kashmir, north-east region,
Andaman & Nicobar and
(Airlines are required to deploy at least 50% of their CAT I capacity on such routes)
Routes other than those included in
CAT I and CAT II
Source: Directorate General of Civil Aviation