India not suitable country for low-cost airline ops: report

New Delhi, Dec 28 (PTI) India is not a suitable country
for low-cost airline operations as it not only lacks
infrastructure like low-cost secondary airports but also the
cost of their staff is at par with full service carriers
(FSC), a study has claimed.

Also, the LFCs have to face tough competition from Indian
Railways and road transport for destinations of shorter
durations.

"India has very few secondary airports from which the low
fare carriers (LFCs) could operate. Of the 127 airports with
the Airports Authority of India, only 80 are operational,"
aerospace expert Harmoz P Mama claimed in a study 'Civil
Aviation in India : Challenges and Prospects'.

Highlighting the poor airline coverage of smaller
airports of the country, he said, "The top five airports in
India handle about 70 per cent of all domestic passenger
traffic in India, which indicates poor airline coverage of
most of the other airports."

Beyond these are primarily small, crumbling airstrips
with huts masquerading as terminal building which are totally
unsuitable for airline operations, he claimed.

The low fare airlines in order to save their staff --
particularly the pilots and engineers -- from being poached
have to pay salaries on a par with those of FSCs, he said.

Apart from it, low-cost airlines also have to bear the
brunt of the high price of Air Turbine Fuel (ATF), which
actually is a high percentage of their total costs.

The airlines also face a dearth of capable senior
management, which is essential as "the LFCs require higher
standard of management capabilities than the FSCs as they have
to operate on tissue-thin margins." They are compelled to
appoint expatriate top management at a very high cost, Mama
claimed.

The study found that more than 70 percent of the costs
of LFCs are about the same as those for FSCs, which include
aircraft purchase and lease rental costs, maintenance repair
and overhaul costs, fuel costs, all airport charges and also
personnel salaries.

Also there are a number of LFCs fighting for a piece of
cake by flying on the same sector. As a result, LFCs ended up
cutting each other throats thus losing the opportunities to
achieve economies of scale in a price sensitive market, he
said.

"The LFCs have to juggle with only 30 per cent of their
overall costs to gain a cost advantage over the full service
carrier -- which is difficult task at the best of times," Mama
said, adding under the existing socio-economic conditions
"there does not seem to be much future for the LFCs in India."

They have suffered an estimated loss of Rs 70 billion in
2008 alone, he claimed in the report and added that some of
the LFCs may not survive for long.

"The potential entrepreneur should stay away from this
field," he warned. PTI