The Directorate General of Civil Aviation (DGCA) has begun farming out flight slots left unused by Jet Airways to other carriers, which will come as a boost for rivals With demand set to rise and possibly moderating fares that have surged.
The slots are being allocated for flights between April 16 and July 15, covering the peak summer travel season, when demand for leisure travel swells. That follows talks among airlines, the aviation regulator and airports in the past week, said people with knowledge of the matter. Financially battered Jet has grounded more than 75% of its planes, creating a gap of more than a million seats between January and March, which has seen ticket prices shoot up. On top of that, Boeing 737 Max planes have been grounded following crashes in Indonesia and Ethiopia.
Mumbai airport has allocated close to 40 departure slots for domestic and international flights to IndiGo (NSE -0.23 %), SpiceJet, AirAsia India and Vistara under DGCA coordination, the people cited above. Slots in Delhi are being discussed, they said. A total of 80 unused slot pairs are on offer at the two airports. In all, Jet is estimated to have close to 400 unused departure slots across the country. It has 26 planes flying, down from 124 in December, mostly because of unpaid lease rentals and the unavailability of spares in a few cases.
Slots in highly congested Mumbai, India’s second-busiest airport, are near impossible to get and therefore lucrative. Delhi, India’s busiest airport, comes closest in terms of elusive slots. The Delhi-Mumbai route is the busiest in the country.
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“This is a bonanza for airlines given Mumbai and Delhi are extremely constrained airports,” said Balu Ramachandran, head of the airline business at Cleartrip. com. “It can also be good news for passengers. Due to the capacity cuts, year-on-year fares for April-May have increased by 15% and sequentially (versus the preceding months) by 50% on average. We may see a decrease in prices after the new capacity deployment by airlines.”
Vistara announced five new flights between Mumbai and Bengaluru and one new flight each to Hyderabad and Kolkata from Mumbai on Thursday. AirAsia has got eight slots. IndiGo has received 13 slots including three for international flights. Jet has cancelled overseas flights to destinations such as Abu Dhabi, Dammam, Bahrain and Kuwait. SpiceJet has got 10 new slots, said one of the people cited above.
The allocation of slots is temporary, which means Jet should be able to get them back once its planes start flying again. The carrier has submitted a month-long schedule to the DGCA, based on a revival plan, to have 35 planes flying by the end of April. Still, losing key slots in the busy season means Jet will be denied critical cash flows that it needs to shore up finances.
The cut in capacity has led to a surge in prices. The cheapest Mumbai-Delhi flight ticket for Friday was priced at about Rs 8,500, twice the fare in peak winter. India’s metros have been the worst hit by the reduction in flights.
Two Jet planes were deregistered on Thursday after notices from Dublin-based lessor Avolon, said a person with knowledge of the matter. The two planes had, however, already been grounded and hasn’t reduced Jet’s operating fleet strength further. Jet has defaulted on local and international loans, delayed salaries, not paid lessors and vendors and laid off staff. The airline’s management has internally estimated that it will fail to operate beyond April if it doesn’t get a loan funding of Rs 1,500 cr within a week.
Civil aviation secretary Pradeep Singh Kharola on Thursday said Jet fulfils the criteria for operating on international routes as it was currently operating a fleet of 26 planes. On Wednesday, Kharola had said Jet was operating 28 planes, including 15 aircraft on domestic routes, and its eligibility to fly overseas “needs to be examined”.
The current ‘0/20’ rule says carriers need to operate 20 planes in the domestic sector in order to fly overseas.
Source: Economic Times