Rivals see little upside in taking IndiGo's vacated slot
Airlines are unlikely to take the government proposal to operate flights using 300 slots surrendered by IndiGo, as this offer may be only for one month, industry executives indicated.
Such a short period makes it unviable for carriers to start a new route and make it commercially viable, executives at Air India, SpiceJet and Akasa Air said.
The government is looking to redistribute the airport slots vacated by IndiGo during its pilot crisis to other airlines. But a lack of clarity on whether the offer would last beyond the ongoing winter schedule is making airlines wary.
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On Thursday, the Ministry of Civil Aviation told airlines that those capable of operating new flights with additional aircraft and crew, rather than reshuffling existing services, will be given preference to take over the slots vacated by IndiGo.
Slots are permissions given by airports to airlines to land and take off during a specific time. Due to airport infrastructure remaining constrained, slots are a prized asset.
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Last month, the Directorate General of Civil Aviation ( DGCA) ordered IndiGo to cut 10% of its domestic flights from its winter season schedule--which ends in late March—after the carrier’s poor roster planning forced it to cancel more than 5,000 flights in one week in December, disrupting travel plans.
Airline executives said the government has given no commitment that they will be allowed to continue the flight after March when the summer schedule will start.
Currently, slot allocation relies on historic rights. Airlines must use at least 80% of their approved slots to retain them for the next schedule.
"It's very difficult to plan, reposition aircraft, start a route and then open it for sale only for a period of one or two months," said an airline executive.
Airlines network planners spend months studying traffic patterns before planning a flight between two cities. Viability of a flight also depends on the timing of slots.
For instance, while a 2 AM flight may be viable between Delhi and Mumbai, it may not be the same for a flight to a smaller city like Agartala.
Industry sources suggested that the reduction in IndiGo flights would only be for a short period between January and March. This makes it difficult for rival airlines to plan a new route.
Details of airport slots surrendered by the airline show that the carrier has protected its flights on high-density metro routes like those between Delhi, Mumbai and Hyderabad and cut those on thin routes.
For instance, the highest cancellation is on Bhubaneswar to Hyderabad followed by Mangaluru to Bengaluru.
"Such routes are not similar to Delhi- Mumbai where you will start getting healthy bookings as soon as you launch it. To make these work, airlines need time," another airline executive said.
IndiGo’s rivals are also constrained by the slow supply of aircraft. While Air India will add 26 aircraft, an equivalent number will be returned keeping the overall fleet size flat. Akasa Air around three planes by April while SpiceJet’s growth remain uncertain due to weak finances.
IndiGo chief executive Pieter Elbers said the airline hasn’t still got any communication from the government on how long the curb on domestic flights would last.
“Right now, we are looking to stabilise operations and prove our ability to operate the flights. It’s then the government’s call to make,” he said during an earnings call Thursday. “We have not calculated our growth for summer. So, any forecast will be premature," he said.
Such a short period makes it unviable for carriers to start a new route and make it commercially viable, executives at Air India, SpiceJet and Akasa Air said.
The government is looking to redistribute the airport slots vacated by IndiGo during its pilot crisis to other airlines. But a lack of clarity on whether the offer would last beyond the ongoing winter schedule is making airlines wary.
ALSO READ: Adani, Embraer to announce pact next week to assemble civil aircraft in India, source says
On Thursday, the Ministry of Civil Aviation told airlines that those capable of operating new flights with additional aircraft and crew, rather than reshuffling existing services, will be given preference to take over the slots vacated by IndiGo.
Slots are permissions given by airports to airlines to land and take off during a specific time. Due to airport infrastructure remaining constrained, slots are a prized asset.
ALSO READ: IndiGo shares skid 4% after Q3 profit plummets 78% YoY. Should you buy, sell or hold?
Last month, the Directorate General of Civil Aviation ( DGCA) ordered IndiGo to cut 10% of its domestic flights from its winter season schedule--which ends in late March—after the carrier’s poor roster planning forced it to cancel more than 5,000 flights in one week in December, disrupting travel plans.
Airline executives said the government has given no commitment that they will be allowed to continue the flight after March when the summer schedule will start.
Currently, slot allocation relies on historic rights. Airlines must use at least 80% of their approved slots to retain them for the next schedule.
"It's very difficult to plan, reposition aircraft, start a route and then open it for sale only for a period of one or two months," said an airline executive.
Airlines network planners spend months studying traffic patterns before planning a flight between two cities. Viability of a flight also depends on the timing of slots.
For instance, while a 2 AM flight may be viable between Delhi and Mumbai, it may not be the same for a flight to a smaller city like Agartala.
Industry sources suggested that the reduction in IndiGo flights would only be for a short period between January and March. This makes it difficult for rival airlines to plan a new route.
Details of airport slots surrendered by the airline show that the carrier has protected its flights on high-density metro routes like those between Delhi, Mumbai and Hyderabad and cut those on thin routes.
For instance, the highest cancellation is on Bhubaneswar to Hyderabad followed by Mangaluru to Bengaluru.
"Such routes are not similar to Delhi- Mumbai where you will start getting healthy bookings as soon as you launch it. To make these work, airlines need time," another airline executive said.
IndiGo’s rivals are also constrained by the slow supply of aircraft. While Air India will add 26 aircraft, an equivalent number will be returned keeping the overall fleet size flat. Akasa Air around three planes by April while SpiceJet’s growth remain uncertain due to weak finances.
IndiGo chief executive Pieter Elbers said the airline hasn’t still got any communication from the government on how long the curb on domestic flights would last.
“Right now, we are looking to stabilise operations and prove our ability to operate the flights. It’s then the government’s call to make,” he said during an earnings call Thursday. “We have not calculated our growth for summer. So, any forecast will be premature," he said.
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