The Telegraph
Thursday , March 20 , 2014
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City not business class for big airlines
- Three carriers turn away, one steps back

Three international airlines have all but rejected Calcutta airport’s invitation to operate from the city and another has aborted take-off after initially showing interest.

Japan Airlines hasn’t even responded to the last email from the airport authorities while Lufthansa and Turkish Airlines seem to have excused themselves, citing the lack of business travellers to sustain full-service international carriers.

Sources in these airlines said cargo volumes were also not enough to make up for the shortage of business travellers.

The Airports Authority of India had approached the three airlines in March 2013, when the integrated terminal became operational.

“We have been talking to the Japanese, German and Turkish carriers for the past year but haven’t got a positive response from them till date,” airport director B.P. Sharma told Metro.

The new terminal is equipped to handle 20 million passengers annually and the airport authorities are keen to have more international airlines on board.

Lufthansa has verbally communicated its inability to start flights from Calcutta because of poor business prospects, sources said.

Turkish Airlines, which had said in 2013 that it did not having flying rights for new routes in India, hasn’t reviewed its status.

Japan Airlines has yet to respond to an emailed request sent around a couple of months ago.

Tiger Airways, the Singapore-based budget carrier, had shown interest in starting flights to and from Calcutta in April, but is understood to have kept the plan on hold.

Business travel is the lifeblood of aviation and Calcutta provides little of that to the industry.

“The viability of an international full-service airline on a particular route depends on the sale of business-class seats, which provide high yield,” said Kapil Kaul of the Centre for Asia Pacific Aviation.

Industry sources said only 30 per cent of the tickets sold on flights to and from Calcutta were for business travel, against 70 per cent in Mumbai and Delhi and nearly 60 per cent in Bangalore. The primary reason for the city failing to generate business travel is, of course, the lack of industry in Bengal.

“Corporate travel ensures year-long traffic volumes for an airline whereas leisure and education travel are seasonal,” said an official of a private airline.

Business travel is usually not price sensitive and accounts for the majority of high-fare seats sold, including those in business class.

Tour operators in Calcutta said the bulk of their customers were leisure travellers. In Mumbai, business travellers constitute the majority of the clientele.

“Hardly 30 per cent of our clients are business fliers who travel round the year. The rest are leisure travellers or students and the business is seasonal. Also, the maximum number of tourists are budget travellers,” said Anil Punjabi, chairman of the Travel Agents’ Federation of India.

Even cargo, which constitutes 20 to 30 per cent of a flight’s yield, isn’t adequate.

“Calcutta handles far less cargo than the other metros,” said an official at Calcutta airport.

Mumbai handles 35,000 tonnes of cargo every month while Chennai records 30,000 tonnes. Calcutta handles barely 4,000 tonnes every month.

Lufthansa, Turkish Airlines and Japan Airlines had conducted market surveys in eastern India, which revealed that it wouldn’t be viable for them to start flights from Calcutta, sources said.

An airline looks at several factors while conducting surveys, including the reason why people fly between two cities (business, tourism or religious travel), average fares and occupancy of high-yield seats.

Calcutta fared low in all categories, the sources said.

“We have no plan to start operations from Calcutta in the near future. We are looking at Chennai,” a Japan Airlines official said from Delhi.

Tamil Nadu has 15-plus automobile and two-wheeler manufacturing units. Bengal has only one in Hindustan Motors.

German airline Lufthansa used to operate from the city but pulled out in March 2012 after its Calcutta-Frankfurt service failed to generate revenue.

The airline has told airport officials that it does not intend returning to Calcutta anytime soon.

“Barely 10 per cent of the business-class seats would be sold when we were operating here. The yield was low from each flight and the situation doesn’t seem to have changed much,” a Lufthansa official said.

Since Calcutta’s integrated terminal opened in March 2013, not a single airline has been added to the roster. Air Asia withdrew its Calcutta-Bangkok flight earlier this month and Jet Airways has decided to pull out both its flights to the Thai capital by the end of March.

For the AAI, fewer flights mean lower than projected earnings.

The airport charges a user development fee of Rs 450 from every passenger booked on a domestic flight from Calcutta and Rs 1,125 for each international ticket. The fee, levied since March 15, is meant to ensure a fair return on the Rs 2700-crore investment in the terminal.