The Hindu : Kerala News : AI planning non-stop flights to the U.S.

Online edition of India's National Newspaper
Monday, Nov 15, 2004

Kerala

Kerala

AI planning non-stop flights to the U.S.

By S. Anil Radhakrishnan

THIRUVANANTHAPURAM, NOV. 14. Air-India (AI), the country's international carrier, is planning non-stop flight to the United States in 2006, the Chairman and Managing Director, V. Thulasidas, has said.

"We are planning for a daily flight to the U.S. Offers have been invited for aircraft. We have received some. They have to be negotiated and finalised," he told The Hindu.

``The aircraft is due for delivery in 2006 summer. It will have 200 seats. It can accommodate more people, but because of the range and flying time, it is likely to be limited to 200," he said. There are only two types of aircraft that could be deployed for this kind of service and the airline will increase the frequency depending on passenger demand.

Fuel hedging

Air-India has the requisite clearance for fuel hedging. The lack of decisive action on fuel hedging was costing the airline dearly as it was struggling to come to terms with a fuel price regime that was threatening to blow over the top, he said.

"Fuel hedging ought to have been tried out earlier. But, we could not do it. We now have all requisite clearance for hedging. Obviously, this is not the right time to try it out. We will try to improve fuel efficiency wherever we can," Mr. Thualsidas said.

The International Air Transportation Association's (IATA) Fuel Savings Action Plan approved earlier this year had said that fuel was the greatest threat to profit. The action plan aims at achieving cost savings and more profit.

The rising fuel price was the main threat being faced by all airlines. "If prices don't come down, we're going to be in serious trouble," he said.

The price was even higher in the country. Domestic carriers would be the worst-affected. The sales tax on Aviation Turbine Fuel (ATF) for international flights had compounded matters. Foreign airlines were exempted from the levy. Kerala had withdrawn the levy on ATF for international flights from April 1 this year, he said.

Pricing strategies

Mr. Thulasidas said that pricing strategies would have to undergo change in accordance with the costing strategies. But achieving this was not easy in the international air travel industry. ``Unlike the domestic market, you cannot decide on your own. You do not have the freedom because you are in a market along with many other players. IATA is the umbrella body for deciding on all these matters,'' Mr. Thulasidas said.

"There is fierce competition. If the costs keep going up and competition leads to lowering of fares, airlines will be in serious trouble as in the case of some U.S. carriers," he said.

Cargo subsidiary

A cargo subsidiary was among the options being considered by AI in order to cope with conflicting demands from cargo movers. A group of people was working on this and to decide on the kind of cargo operation to be adopted. The airline wanted to step up its cargo operations, he added. "We have several options. We can have a cargo subsidiary. Within AI, we can buy right of aircraft or we can take aircraft on lease. We can also lease cargo space on other aircraft. All these are being explored," he said.

The Air India Express to be launched in April, 2005, will have some cargo space but not as much as the regular flights, he said.

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