Air India flights will operate as normal from Tuesday. This follows the airline management and pilots reaching an agreement in Mumbai on Sunday.
“The agreement involves some financial payout by the airline. The pilots have withdrawn the strike call issued earlier,” a senior airline official told Business Line without divulging details of the agreement reached. Sections of the airline pilots had threatened to go on strike from midnight Monday.
The pilots and management were to meet again on Monday (November 30) at the office of Chief Labour Commissioner here to resolve their differences.
Demands
The agitating pilots were seeking wage revision and parity in wages with other pilots and an inquiry into the mismanagement of the company. A major bone of contention between the agitating pilots and the management has been the proposal to stop paying Productivity- Linked Incentives (PLI) to its employees including pilots. PLI forms a large portion of the monthly salaries of employees.
The airline's annual PLI payout is about Rs 1,500 crore, almost half of which is paid to pilots and cabin crew, while the remaining is shared by about 26,000 employees of the airline. Air India has a total staff strength of 31,500 employees.
The pilots had gone on a four-day strike in September this year. At that time about 200 pilots had reported sick protesting against the decision to cut their PLI by 50 per cent and non-payment of flying allowances for three months. The agitation disrupted the carrier's operations with 240 flights being cancelled during the impasse. The financial loss to the airline was estimated at over Rs 100 crore.
Source: The Hindu Business Line
Monday, November 30, 2009
Friday, November 27, 2009
Airfares to increase 12% on strong peak-season demand
GET ready to pay more for your air travel this holiday season. Fares are expected to go up by around 12% from the first week of December. Differing from airline to airline as well as sector to sector, the hike would be around Rs 360 per sector, highly-placed airline industry sources said on condition of anonymity.
Captains of the airline industry met in the Capital on Wednesday and have arrived at an informal understanding to avoid undercutting, the sources said. Jet Airways chairman Naresh Goyal, Kingfisher chairman Vijay Mallya, Arvind Jadhav of Air India, Rahul Bhatia of IndiGo and Sanjay Agarwal of SpiceJet were among those present at the meeting of the Federation of Indian Airlines. All the airline companies said there was no joint decision on fares, but the sources said the denial was due to the fear of cartelisation charges which would invite the wrath of the government and regulators.
Mr Goyal and Mr Mallya said the meeting discussed industry issues like the new ground handling policy. Airlines should be allowed to continue self-handling and the issue would be taken up with the concerned authorities, they added.
The proposed fare revision would be effected by tweaking the yield management system of airlines, the sources said. The number of seats sold through the lower buckets would be cut sharply and discounts would be rolled back to the minimum, they added. No announcement would be made, but simple adjustments to the revenue management system, which is run through software, would take care of the hike.
The upward revision would be highest for the last week of December and the first week of January, the sources said. Continuous reduction in capacity since the beginning of this year and better-than-expected peak season demand has enabled airlines to hike tariffs, they added. “Within days of each other, most major airlines would push up their tariffs for the peak season,” the sources added. There was a fear that some airlines, especially the no-frills players, might undercut as they had done on previous occasions and that issue has been sorted out, they explained.
The move gives all airlines an opportunity to wipe up a bit of red ink from their balance sheets. Network carries like Air India, Jet Airways and Kingfisher are expected to go in for higher upward revision as compared to budget carriers like SpiceJet and IndiGo, the sources said.
Jet Airways’ Goyal has been emphasising on the need to cut overcapacity which was knocking out yields, leading to increasing losses. However, he declined to comment on fare hike possibility after the meeting, insisting that the agenda was to sort out problems relating to the new ground handling policy which was to come into place by January 2010.
Without directly stating the need for hiking fares, Kingfisher Airlines chairman Vijay Mallya said: “Five years ago, average (air) fare was Rs 6,000. Now it is Rs 3,000. That’s the revenue side. On the cost side, crude used to cost $35 per barrel. Now it is over $80 per barrel. Over and above this, we have 26% sales tax on aviation turbine fuel. Costs are going up and fares are going down. This cannot be sustainable.” Paramount Airways managing director M Thiagarajan said there should be a balance between growth and profitability. “At the Rs 6,000 level, average fares were high, restricting demand. At the current levels of below Rs 3,000, average fares are too low. There has to be a balance which is somewhere mid-way,” he said.
While demand has been improving during the recent months, airlines are worried about increasing fuel costs. After sliding to $40 per barrel, crude has inched up to $80 per barrel and there is a feeling that prices would only increase once the recovery of the global economy takes roots. The airline industry has been pitching for a relief package from the government, but the civil aviation ministry has ruled out any such assistance, emphasising that only Air India will get support since it is a state-owned company.
PLANE TRUTH
The hike is expected to be around Rs 360 per sector Airline industry captians have arrived at an informal understanding to avoid undercutting The proposed fare revision would be effected by tweaking the yield management system of airlines The upward revision would be highest for the last week of Dec and the first week of Jan The move gives all airlines an opportunity to wipe up a bit of red ink from their balance sheets
Source: The Economic Times
Captains of the airline industry met in the Capital on Wednesday and have arrived at an informal understanding to avoid undercutting, the sources said. Jet Airways chairman Naresh Goyal, Kingfisher chairman Vijay Mallya, Arvind Jadhav of Air India, Rahul Bhatia of IndiGo and Sanjay Agarwal of SpiceJet were among those present at the meeting of the Federation of Indian Airlines. All the airline companies said there was no joint decision on fares, but the sources said the denial was due to the fear of cartelisation charges which would invite the wrath of the government and regulators.
Mr Goyal and Mr Mallya said the meeting discussed industry issues like the new ground handling policy. Airlines should be allowed to continue self-handling and the issue would be taken up with the concerned authorities, they added.
The proposed fare revision would be effected by tweaking the yield management system of airlines, the sources said. The number of seats sold through the lower buckets would be cut sharply and discounts would be rolled back to the minimum, they added. No announcement would be made, but simple adjustments to the revenue management system, which is run through software, would take care of the hike.
The upward revision would be highest for the last week of December and the first week of January, the sources said. Continuous reduction in capacity since the beginning of this year and better-than-expected peak season demand has enabled airlines to hike tariffs, they added. “Within days of each other, most major airlines would push up their tariffs for the peak season,” the sources added. There was a fear that some airlines, especially the no-frills players, might undercut as they had done on previous occasions and that issue has been sorted out, they explained.
The move gives all airlines an opportunity to wipe up a bit of red ink from their balance sheets. Network carries like Air India, Jet Airways and Kingfisher are expected to go in for higher upward revision as compared to budget carriers like SpiceJet and IndiGo, the sources said.
Jet Airways’ Goyal has been emphasising on the need to cut overcapacity which was knocking out yields, leading to increasing losses. However, he declined to comment on fare hike possibility after the meeting, insisting that the agenda was to sort out problems relating to the new ground handling policy which was to come into place by January 2010.
Without directly stating the need for hiking fares, Kingfisher Airlines chairman Vijay Mallya said: “Five years ago, average (air) fare was Rs 6,000. Now it is Rs 3,000. That’s the revenue side. On the cost side, crude used to cost $35 per barrel. Now it is over $80 per barrel. Over and above this, we have 26% sales tax on aviation turbine fuel. Costs are going up and fares are going down. This cannot be sustainable.” Paramount Airways managing director M Thiagarajan said there should be a balance between growth and profitability. “At the Rs 6,000 level, average fares were high, restricting demand. At the current levels of below Rs 3,000, average fares are too low. There has to be a balance which is somewhere mid-way,” he said.
While demand has been improving during the recent months, airlines are worried about increasing fuel costs. After sliding to $40 per barrel, crude has inched up to $80 per barrel and there is a feeling that prices would only increase once the recovery of the global economy takes roots. The airline industry has been pitching for a relief package from the government, but the civil aviation ministry has ruled out any such assistance, emphasising that only Air India will get support since it is a state-owned company.
PLANE TRUTH
Source: The Economic Times
Wednesday, November 25, 2009
Air India’s US flight may be scrapped
Air India's (AI) flights to United States could well turn out to be the next big casualty as the state-run carrier gropes for options to stay afloat in precarious financial health.
A senior Air India executive confirmed that the management was considering a drastic route rationalisation exercise. This could include removing a direct flight to New York, either from Delhi or from Mumbai.
"The idea (of reducing flight to the US) is still in formulation stage, and is unlikely to be taken up in the airline's board meeting slated for later this week," said the executive, who did not wish to be identified, as he was not authorised to speak to the media.
The airline has four daily flights to the US, two each from Mumbai and Delhi, connecting New York, Washington, Chicago and Los Angeles.
Air India chairman and managing director Arvind Jadhav was not available for comments.
"An internal assessment is being made to find out which are the most loss making routes and only then a decision would be taken," the executive said.
The airline, has incurred a loss of Rs 5,548 crore in 200809. It has taken a series of measures to cut costs including rationalisation of wage structure of its 33,000 employees.
Source: The Hindustan Times
A senior Air India executive confirmed that the management was considering a drastic route rationalisation exercise. This could include removing a direct flight to New York, either from Delhi or from Mumbai.
"The idea (of reducing flight to the US) is still in formulation stage, and is unlikely to be taken up in the airline's board meeting slated for later this week," said the executive, who did not wish to be identified, as he was not authorised to speak to the media.
The airline has four daily flights to the US, two each from Mumbai and Delhi, connecting New York, Washington, Chicago and Los Angeles.
Air India chairman and managing director Arvind Jadhav was not available for comments.
"An internal assessment is being made to find out which are the most loss making routes and only then a decision would be taken," the executive said.
The airline, has incurred a loss of Rs 5,548 crore in 200809. It has taken a series of measures to cut costs including rationalisation of wage structure of its 33,000 employees.
Source: The Hindustan Times
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