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Thursday , February 17 , 2011
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Budget carrier bleeds, holidaymaker hurt
- Air Asia set to withdraw thrice-a-week Kuala Lumpur flight despite demand for tickets

The days of flying to Malaysia at less than the price of a ticket to Mumbai are over.

Air Asia, the first foreign low-cost carrier to operate from the city, has decided to withdraw its thrice-a-week flight to Kuala Lumpur on March 26 despite demand being high on that sector.

The reasons cited by the airline, which also has a daily flight to Bangkok, are low earnings per seat and correspondingly high airport charges. “The airline feels it will benefit more from deploying the aircraft for domestic operations in Malaysia,” a source said.

Operational costs on the Calcutta-Kuala Lumpur route apparently broke the viability barrier after the latest hike in the price of aviation turbine fuel (ATF). “Combined with airport charges, the fuel price graph has made it impossible for a budget carrier like Air Asia to continue offering low fares,” the source said.

For the budget Calcutta traveller, Air Asia’s withdrawal from the Kuala Lumpur sector means a foreign holiday is now almost out of reach. Bangkok is the only option left, where one-way fares are in the range of Rs 3,490 to Rs 6,169 for the next couple of months.

Sources blamed the higher cost of ATF in this part of the country on the rate of sales tax imposed by the Bengal government.

The price of aviation fuel in Calcutta is around Rs 61,000 per tonne, Rs 7,000 more than in Delhi and Mumbai. In Chennai and Bangalore, fuel costs Rs 3,000-4,000 less per tonne than in Calcutta.

Air Asia also needs to pay more commission to agents in India than in other countries, which makes a dent in profits.

“Air Asia banks heavily on web-based bookings, for which they don’t have to pay any commission. But international travellers here rely mostly on agents for ticket booking, visas and hotel accommodation,” said Anil Punjabi, the chairman (east) of the Travel Agents Federation of India.

Air Asia had started its Calcutta-Kuala Lumpur flight in November 2009 with jaw-dropping promotional fares that prompted many to book tickets even before planning their holiday. Although demand remained high, the airline was forced to scale down its operations on this route from once a day to thrice a week last December.

Calcutta has now become the third Indian city after Hyderabad and Thiruvananthapuram to lose its low-cost Kuala Lumpur link.

According to a tour operator, 100-odd seats on each Kuala Lumpur flight were being sold at promotional fares in the Rs 3,000-Rs 6,000 range. “Around 60 to 70 seats are in the full-fare category, but only half of these are occupied on a given day. That is where the airline incurs a loss,” he said.

Airline officials said each flight should be at least 95 per cent full for the route to be viable. Air Asia’s A-320 to Kuala Lumpur carries 150 passengers on an average.

Aviation experts said the operational cost of flying an A-320 was approximately Rs 7 lakh per flight for a low-cost carrier like Air Asia. “The average cost of a seat should be around Rs 4,000 and all flights must be full for the venture to be viable,” said an official.

Then how do domestic low-cost airlines stay afloat?

Capt. G.R. Gopinath, whose Air Deccan was the first to put the common man on a flight, said the domestic sector was different from the international one. “In Europe, there are alternative airports for low-cost operators but not in India. So international operators like Air Asia have to shell out high airport charges,” Gopinath, the chairman and managing director of Deccan Charters, told Metro.

According to Gopinath, only 2.5 percent of Indians were flying despite airfares being one third of what they were in 2002. “More market penetration is required and, at the same time, all stake-holders, including airports, catering service providers and the government should come forward and make low-cost operations viable,” he said.

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