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Losses may force Alitalia out of India

Losses may force Alitalia out of India
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First Published: Mon, Feb 18 2008. 12 53 AM IST
Updated: Mon, Feb 18 2008. 12 53 AM IST
Mumbai: Mounting losses may force Italy’s leading airline Alitalia to pull out from India even as more global carriers begin flying to India and more domestic airlines explore international routes.
Senior executives of the airline could not be reached for comment but a representative at the airline’s reservation office said there are no scheduled Alitalia flights to and from India after March. “There is no formal circular issued by Alitalia indicating the stoppage of flights but there is no schedule updated on the system after March,” added the executive, who asked not to be identified. Alitalia currently operates daily flights to Milan from Mumbai and New Delhi.
The imminent exit of Alitalia comes just over a year after UK’s second largest full service scheduled airline, British Midland Airways or BMI, shut down its Indian operations due to poor passenger response. BMI, a member of the largest operating grouping of global carriers Star Alliance, operated flights on the busy Mumbai-Heathrow segment.
Executives at several travel agencies who did not wish to be named confirmed that Alitalia was pulling out. “Airlines pull out from the services when they make losses. Though there were serious problems in sourcing aircraft and spares, BMI was also suffering losses in its sector,” said an executive at a travel agency. who asked not to be identified.
In the 12 months to 31 March 2007, airlines operating out of India carried 22.4 million international passengers (up 15.1%). The Centre for Asia Pacific Aviation, a consulting firm, projects that international traffic to and from India will grow at that rate till 2010.
The state-owned Alitalia, run by Linee Aeree Italiane S.p.A, lost nearly $530 million (Rs2,104 crore) in 2007 and has not posted an operating profit since 1998. The carrier, which is in the process of selling assets to infuse cash into its operations, is in talks with Air France-KLM for a merger.
Alitalia’s exit comes at a time when Indian carriers operating international routes, such as Air India (state-owned and operated by National Aviation Co. of India Ltd) and Jet Airways (India) Ltd are expanding their international operations. Kingfisher Airlines Ltd also plans to fly international routes by August.
According to Aniket Mhatre, an analyst with broking firm Prabhudas Lilladher Pvt. Ltd, Alitalia’s withdrawal from India has to do with the airline’s own problems.
“As of now, there is no (profit) margin pressure on international flights. The profitability factor of an international flight is solely dependent on the business model,” Mhatre said.
Wolfgang Prock-Schauer, CEO of Jet Airways, said the exit would not significantly change market dynamics because several other European carriers continue to operate flights to and from India.
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First Published: Mon, Feb 18 2008. 12 53 AM IST