India not suitable for low-cost airline operations: Study

India is not a suitable country for low-cost airline operations as it not only lacks infrastructure like the low-cost secondary airports but also the cost of their staff is on a par with the full service carriers (FSC), a study has claimed.

Also, the low fare carriers (LFCs) have to face tough competition from Indian Railways and road transport for shorter-duration destinations.

“India has very few secondary airports from which the LFCs could operate. Of the 127 airports with the Airports Authority of India, only 80 are operational,” aerospace expert Harmoz P Mama claimed in a study ‘Civil Aviation in India : Challenges and Prospects’.

Highlighting the poor airline coverage of smaller airports in the country, he said, “The top five airports in India handle about 70 per cent of all domestic passenger traffic in India, which indicates poor airline coverage of most of the other airports.”

Beyond these are primarily small, crumbling airstrips with huts masquerading as terminal building which are totally unsuitable for airline operations, he claimed.

The low fare airlines in order to save their staff — particularly the pilots and engineers — from being poached have to pay salaries on a par with those of the FSCs, he said. Apart from that, low-cost airlines also have to bear the brunt of the high price of the Aviation Turbine Fuel (ATF), which accounts for a high percentage of their total costs.

The airlines also face a dearth of capable senior management, which is essential as “the LFCs require higher standard of management capabilities than the FSCs as they have to operate on tissue-thin margins.” They are compelled to appoint expatriate top management at a very high cost, Mama claimed.

The study found that more than 70 per cent of the costs of the LFCs are about the same as those for the FSCs, which include aircraft purchase and lease rental costs, maintenance repair and overhaul costs, fuel costs, all airport charges and also personnel salaries.

Also, there are a number of LFCs fighting for a piece of cake by flying on the same sector. As a result, LFCs end up cutting each other throats thus losing the opportunities to achieve economies of scale in a price sensitive market, he said.