NEW DELHI: The next time you board a plane, don’t expect free toffees or cookies to soothe the heartburn caused by high price of air ticket. For loss-making airlines — which find operational cost escalating and passengers dwindling — have now started looking at every possible way of saving money. On passenger front, it means putting a freeze on all freebies earlier given to them. And on employee front, most airline have put a freeze on further recruitments especially of high salaried personnel like pilots, engineers and expats. Some are even retrenching staff by up to 30%. Airlines like Go and Deccan are learnt to have sent back personnel, mostly expats. While Go refused to comment, Deccan founder Captain Gopinath said: Airlines need Rs 1,000 (LCCs) to Rs 2,000-2,500 (for full service) more per seat to break even. There are various ways of getting it and till that happens, there will be issues. The expats were hired for a limited time and some have been sent back. "This tightening of belt could only increase as oil prices show no sign of decline while domestic travel growth is down to single digit now, for the first time in three years. The industry anticipates a negative growth in July and August as school vacation will be over, slowing down leisure travel. And companies under pressure to cut costs are cutting travel by executives to a bare minimum level.Air India-domestic (Indian Airlines before merger) has stopped giving free toffees to economy and fruit baskets for executive class fliers. AI has also decided to discontinue the 5% commission ticketing agents used to get on selling their tickets to cut down distribution costs, a move that other airlines are likely to follow.SpiceJet has stopped giving free toffees, cookies and water on its flights. The big cost cutting is expected from route rationalisation but are looking at every other area also. Considering that a toffee costs Re 1 and 50 lakh people fly with us annually, the saving is Rs 50 lakh. Similarly, boarding cards’ thickness has been reduced, leading to a saving of Re 1 per card. So these small things have led to Rs 1 crore saving," SpiceJet CFO Partha Basu said. He, however, added that these freebies were stopped ever since the airline started selling eatables and soft drinks on its flights. Kingfisher has for some months stopped giving its popular pouches to passengers. Now the items in that pouch like pen and toffees are offered to passengers which they may or may not take. We have adopted more fuel efficient techniques of flying planes that has led to a saving of 1.5-2% on our fuel cost," said Kingfisher EVP Hitesh Patel. These methods include washing planes frequently to reduce drag by dust and gentler take offs and landings.The travel industry does not see an early revival of passenger growth as OPEC has announced oil prices won’t cool down in a hurry, as a result of which cost of flying can go only northward. While two main categories of fliers — visiting friends and relatives and leisure — will suffer due to the middle class reeling under sever inflationary pressure and increasing EMIs, business travel is also under pressure. Companies are under pressure and looking closely at every way of cutting costs, including travel by executives. We are witnessing a trend of essential corporate travel being downgraded. But with oil prices unlikely to cool down, companies will have to learn to live with that as telecon has never been an alternate to actual meetings," SOTC COO Sunil Gupta said.
Jun 26, 2008
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