lastdon
3rd Jun 2008, 08:03
Rising oil prices is taking its toll on the aviation sector. Jet Airways, which currently has market share of 30% along with its low cost carrier JetLite will shell out USD 210 million a year. That is 30% of the additional burden on the entire industry. So, the airline has drawn up a USD 50 million cost cutting plan for this financial year.
Meanwhile, Union Civil Aviation Minister Praful Patel said the impact of high cost of ATF is a reason for worry. He added that he tried to convince state governments to rationalize sales tax on ATF. Airlines have revised fares about eight times in a short period, he stated. According to him, there has been an impact on the volume of passengers carried and the load factor had dropped for most airlines.
Top of the list is an optimized fuel efficiency policy, a sophisticated mechanism by which a flight can carry the lowest possible fuel to reduce the weight of the aircraft, a fuel tankering policy in which a computer program shows fuel costs in various locations and recommends the pilot to tank up more at a cheaper location and optimized fleet utilization. Jet wants to fly its wide-bodied planes for 14 hours from the current 10-12 hours per day to bring down cost per trip per hour.
The airline is also planning a rejig among its pilots. Currently, two captains fly a number of its flights. But Jet hopes to re-deploy them and allow first officers to be co-pilots now. But all of this doesn't seem to be enough.
“This USD 50 million will compensate for only 30% of the increased ATF costs. So, we also need to look into other means to decrease cost base i.e. sales tax and landing and airport charges,” said Wolfgang Prock-Schauer, CEO, Jet Airways.
Jet Airways is also looking to re-negotiate its contracts with maintenance providers to service their aircraft faster. Besides the USD 50 million cost cutting plan Jet Airways also hopes to bring down its distribution costs incurred by ticket sales. While it eats into 7% of their revenues on international routes, the domestic figure is at 14%. But for now all these measures seem like precious little with oil prices showing no signs of cooling down.
Meanwhile, Union Civil Aviation Minister Praful Patel said the impact of high cost of ATF is a reason for worry. He added that he tried to convince state governments to rationalize sales tax on ATF. Airlines have revised fares about eight times in a short period, he stated. According to him, there has been an impact on the volume of passengers carried and the load factor had dropped for most airlines.
Top of the list is an optimized fuel efficiency policy, a sophisticated mechanism by which a flight can carry the lowest possible fuel to reduce the weight of the aircraft, a fuel tankering policy in which a computer program shows fuel costs in various locations and recommends the pilot to tank up more at a cheaper location and optimized fleet utilization. Jet wants to fly its wide-bodied planes for 14 hours from the current 10-12 hours per day to bring down cost per trip per hour.
The airline is also planning a rejig among its pilots. Currently, two captains fly a number of its flights. But Jet hopes to re-deploy them and allow first officers to be co-pilots now. But all of this doesn't seem to be enough.
“This USD 50 million will compensate for only 30% of the increased ATF costs. So, we also need to look into other means to decrease cost base i.e. sales tax and landing and airport charges,” said Wolfgang Prock-Schauer, CEO, Jet Airways.
Jet Airways is also looking to re-negotiate its contracts with maintenance providers to service their aircraft faster. Besides the USD 50 million cost cutting plan Jet Airways also hopes to bring down its distribution costs incurred by ticket sales. While it eats into 7% of their revenues on international routes, the domestic figure is at 14%. But for now all these measures seem like precious little with oil prices showing no signs of cooling down.