Out on a wing: Airlines to meet again
Following the meeting with aviation minister in Delhi late last month, Indian carriers are making their second attempt to come together to solve their problems.
By Cuckoo Paul, TNN |
MUMBAI: Following the meeting with aviation minister in Delhi late last month, Indian carriers are making their second attempt to come together to solve their problems.
The airlines will meet on October 16 to try to form a forum or association, to ‘address a collaborative growth agenda for the airline industry in India’, according to an invitation sent out by Air-India chairman V Thulasidas to airline chiefs. The meeting, convened by Mr Thulasidas in Mumbai, is expected to be attended by most of the top brass from most carriers.
Almost all domestic airlines are losing money and overcapacity is being cited as the reason for losses. Commenting on the situation, Jeh Wadia, managing director, Go Air, said, “There is no excess capacity at the bottom half of the market.” It exists only at the higher end, he added.
Collaboration between the airlines is unlikely because competition is stiff, said industry sources. The concept of fare/tariff control being suggested by some airlines has not found acceptance among the low-cost players.
Globally, airlines are not allowed to collude on issues relating to fares. UK carrier British Airways faced a scandal last week when two senior directors had to quit, following investigations by the UK Office for Fair Trading.
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Transatlantic investigations were done with the US Department of Justice, and focused on long-haul passenger fuel surcharges. It was established that there were conversations within British Airways about fixing surcharges, which eventually led to the two directors putting in their papers. If found guilty of price-fixing, BA could be fined up to £850m — 10% of its worldwide sales. In the absence of an aviation regulator or a competition authority in India, domestic carriers are trying out several options of collaborating to ensure that fares are not cut below certain levels.
Meanwhile, an approach paper for the collaboration is currently being prepared to look at ways to streamline profitability, industry sources added.
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