The Hindu Business Line : Younger aircraft may be the answer

Bangalore/New Delhi, June 18 With aviation turbine fuel (ATF) prices hitting an all-time high, the domestic airlines industry is looking at various options to insulate their bottomline including leasing newer aircraft which are more fuel efficient.

The consultancy firm KPMG points out that there are several advantages of operating a young fleet. “There are several fiscal advantages of having a young fleet as the aircraft will require only minor line maintenance which is relatively cheaper than the major maintenance which has to be done after about every four years of operations,” Mr Mark Martin, Senior Advisor, Aviation, said. Besides, having a younger fleet also helps in the harsh operating conditions seen around the country, Mr Martin said.

“An aircraft flying inside the country is subjected to varying degrees of temperature and such fluctuations do take a toll on the aircraft and in turn increasing the operating cost of an older aircraft,” he said.

Industry watchers point out that currently the average age of domestic operators like IndiGo and Kingfisher Airlines is relatively young and hence their operating costs are less.

Airline officials, however, say that while a young fleet is an advantage there are also other ways of cutting down on operating costs. “Apart from operating a younger fleet, the airline also controls costs in a much tighter fashion than some of the others,” SpiceJet’s Chief Commercial Officer, Mr Samyukth Sridharan, told Business Line. He said on a block hour basis, savings are higher by 7–8 per cent. SpiceJet’s fleet consist of aircraft which are less than three-year old.

But industry analysts said from now, operators will choose to lease out newer aircraft rather than buy them outright because of higher costs or because of longer waiting period. According to a new Frost & Sullivan study, more domestic airlines are looking for newer fuel efficient aircraft because irrational aviation turbine fuel pricing in the country is leading to huge losses for the industry.