Domestic airlines on Wednesday told the ministry of civil aviation that they might go for a 20 per cent reduction in the overall capacity deployed in the country.
The move follows a severe price hike in aviation turbine fuel, sparking fears of an overall loss of $2 billion for the aviation industry this year.
"This is a commercial decision, which airlines will have to take individually, but it is an accurate enough figure. The capacity deployment has increased by 17 per cent over the last one year, while the passenger growth has been much lesser.
"Going forward and with most airlines bleeding due to severe hike in fuel prices, a 20 per cent reduction in capacity is very probable," said an airline executive present in Wednesday's meeting.
The civil aviation ministry met all airline and airport executives to review issues like price hike in ATF and higher airport charges. The meeting was chaired by Civil Aviation Secretary Ashok Chawla.
Airlines like SpiceJet have already stopped operations of around 15-16 flights on short-haul sectors and will soon go for more. A Jet Airways senior executive said airlines would soon take a decision on cutting down operations in some sectors of the country.
"The ministry, in turn, said in regions like the North-East, if an airline was getting load factors less than 10-15 per cent, they were free to opt out of that route, provided the route dispersal guidelines are not hampered," said a ministry official.
According to the current guidelines, an airline has to deploy a certain percentage of its total capacity in unprofitable routes like the North-East.
Discussing the ATF menace, airlines told the ministry that any airline would need relief of at least 50 per cent in ATF rates to be able to stabilise in the industry.
"One of the options suggested was that instead of levying sales tax on the entire fuel price, which already includes customs, excise and other duties, sales tax should only be levied on the basic fuel price," said a ministry official.
Chawla asked airlines to inform the ministry as to how a relief package in fuel prices would translate to price cuts for passengers before any relief could be mulled. In spite of states like Kerala, Andhra Pradesh, Rajasthan and Maharshtra decreasing sales tax on ATF, there has been no decrease in fares in these sectors.
To ease airline woes of higher fuel burnout due to congestion in airports, the ministry announced that the much-talked Performance Based Navigation would be in place at the Delhi, Mumbai and Ahmedabad airports from August 1.
The new form of navigation in airports will enable the handling of 25-30 per cent additional aircraft movements, which will result in lesser delays. Delhi handles around 680 flights a day, while Mumbai handles 720. Air Traffic Controllers have been trained to handle this efficient form of aircraft navigation, which has been implemented with the assistance of the Federal Aviation Administration, the US aviation regulatory authority.
The airlines on Wednesday complained that every flight at the Delhi and Mumbai airports still had to face an average ATC delay of 40-50 minutes.
The directorate general of civil aviation also suggested a slew of measures for more efficient use of fuel to airlines. "The suggested measures include using only the Ground Power Unit instead of the Auxilliary Power Unit, while the flight is taxiing across the runway.
"Using only the GPU means that you are using external power rather than from your own aircraft engine and that leads to less fuel burnout," said a ministry official.
"Another measure suggested was to avoid uplifting too much fuel from places where they are cheaper since that, in turn, makes the aircraft too heavy and burns more fuel. For instance, if you uplift 5,000 kg of extra fuel and carry it in your aircraft, you end up burning 400 kg of extra fuel while flying because the aircraft becomes too heavy," he added.
Airlines like Kingfisher and SpiceJet have already implemented some of the measures that have led to a 1.5-2 per cent decrease in ATF burnout.
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