Lufthansa puts brakes on its India expansion plans

Lufthansa puts brakes on its India expansion plans
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First Published: Fri, Nov 21 2008. 12 13 AM IST

Changing way:?A Lufthansa aircraft taking off from Berlin. Adam Berry / Bloomberg
Changing way:?A Lufthansa aircraft taking off from Berlin. Adam Berry / Bloomberg
Updated: Fri, Nov 21 2008. 12 13 AM IST
New Delhi: Deutsche Lufthansa AG, Europe’s second biggest airline, which has a significant presence in India with 55 weekly flights, has put a brake on any major expansion in India including setting up of an aircraft maintenance centre at Hyderabad.
Changing way:?A Lufthansa aircraft taking off from Berlin. Adam Berry / Bloomberg
Lufthansa blamed falling yields from overcapacity and the economic slowdown.
“The Indian market was ready to take more capacity one year back. We still have same number of passengers. We still have same load factors which we had last winter or two winters back—around 90%. But now we (have) come to a stage where (international) airlines have pumped so much capacity into the Indian market that the (weaker) start to drop out first. That means with the same number of passengers you don’t earn the same amount of money. And this is, let’s say, the bad news where you prepare what did you do? We try to defend ourselves. We try to keep prices competitive,” Axel Hilgers, director, South Asia, Deutsche Lufthansa AG said.
The Centre For Asia Pacific Aviation, in its November report, said that while there has been a steep reduction in domestic passenger growth - 13% in October, international travel has not been hit to that extent.
“The one bright spot presently is international traffic, which has remained consistently robust at 10% year-on-year for the first half of 2008-09. Some carriers such as Singapore Airlines, Finair, Austrian have started announcing capacity cuts but others continue to grow,” the consultancy said.
“The next 12 months are about survival and not growth,” said Kapil Arora, an aviation analyst with Ernst and Young.
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First Published: Fri, Nov 21 2008. 12 13 AM IST