Airbus ends A340 era, selling last two aircraft, defaulted by Kingfisher Airlines

European airframer Airbus S.A.S. announced the sale of the last two A340-500 aircraft in its inventory, marking an end of the longest range model of its portfolio.

AJW Capital Partners Limited, a worldwide aviation services group based in the UK, has signed a firm contract for the purchase of two Airbus A340-500s aircraft. With this order AJW Capital becomes the newest Airbus aircraft customer. Powered by Rolls-Royce Trent 500 engines the aircraft features a comfortable two-class cabin for maximum passenger appeal. Commercial service will begin with an existing AJW Group customer early 2013.

The two aircraft MSN (Manufacturer Serial Number) 886 and MSN 894 were the last two of the five A340-500's ordered by Indian carrier Kingfisher Airlines, who defaulted on taking delivery of the entire order. The A340s with their ultra-luxurious cabin product were meant to be the flagships of the fleet with these two airframes originally allocated registration numbers VT-VJA and VT-VJB. Three aircraft from the order were sold by Airbus to Nigerian carrier Arik Air.

The four engined A340 series in general, and the A340-500 in particular was the least profitable aircraft for Airbus. With the rising costs of fuel, the ultra-long-haul (ULH) flights, the 282 seat A340-500, was designed for, no longer were viable. Airbus has been buying back A340s from airlines to help sales of the more efficient twin-engined sister, the A330, one of the most profitable aircraft for Airbus.

The two A340-500s appear to be destined to AZAL Azerbaijan Airlines with two Embraer 170s of another failed Indian airline, Paramount Airways. Swiss industry news website, ch-aviation, reports

AZAL has also acquired two ex-Paramount Airways (India) EMB-170s (c/n 17000002 and c/n 17000005) from Embraer subsidiary ECC Leasing that will already join the fleet in spring of next year. In other news, AZAL plans to add two A340-500s (c/n 886 and c/n 894) to its fleet for long-haul services that were originally ordered by Kingfisher Airlines, and then never delivered.

We opine that Azal will put these aircraft on a Baku-New York route.

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Tarun Shukla at the Mint profiles the downfall of Paramount Airways

Over the last few months, I have grown to respect Tarun Shukla. Tarun and his colleague P.R. Sanjai at the Mint newspaper (a joint venture of The Hindustan Times and The Wall Street Journal), take the time to well research and write, analytical stories on the Indian aviation industry.

This week, Tarun has detailed the rather rapid decline of Paramount Airways, one of the early success stories of Indian commercial aviation. There is an interesting collection of stories which detail the timeline of the crisis at Paramount which has left the carrier with only one aircraft in its fleet.

I recommend you take the time to read both stories.

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Paramount Airways receives favourable verdict against GECAS

The drama involving Chennai based Paramount Airways and GE Commercial Aviation Services (GECAS) over a dispute on refunds and payments, began last Friday.

Paramount officials explained that the dispute with GECAS was over maintenance reserves and deposit refund. An airline release claimed

“Paramount had made a $15 million deposit to GECAS - $5 mn as deposit and $10 mn as maintenance reserves. The dispute had arisen as Paramount asked for a reimbursement of the maintenance reserves created on various checks carried out. The lack of response from GECAS led to the dispute."

On Friday, at the request of GECAS, India’s aviation regulator, the Directorate General of Civil Aviation (DGCA), de-registered three of the five aircraft in the Paramount fleet leading to major disruptions from Saturday.

Four-year-old Paramount, is a niche airline with a market share of about 2%, largely flying within southern India. The aircraft de-registered were all Embraer ERJ-175SR (ERJ-170-200SR) VT-PAD, VT-PAE and VT-PAF and were part of a lease agreement entered in to in July 2005.


The actions were taken despite the fact that the airline had won a case over the issue at the London High Court, which has stated

“The defendant is permitted to remain in possession of the aircraft and use them for all purposes permitted under the lease agreements”

Today, Paramount Airways, got a favourable court order from the Delhi High Court which has set aside the de-registration of the Paramount aircraft by the DGCA, allowing the resumption of flights using the three de-registered aircraft.

All Paramount flights are expected to fly on schedule from tomorrow.

This is the second time since last year the DGCA has de-registered aircraft at the behest GECAS which last year, confiscated three aircraft from Kingfisher Airlines claiming payment defaults.

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Indian airlines still owe $445 million to oil companies

The Minister for Petroleum and Natural Gas, Mr Murli Deora, informed the Lok Sabha (lower house of the Indian parliament) that Indian domestic airlines Kingfisher Airlines, Jet Airways, National Aviation Company of India Ltd (Air India), Paramount and SpiceJet, still owe a whopping Rs. 2,225.52 Crore ($445 million) to the stated owned oil marketing companies Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. Rs. 5 Crore = US$ 1 million.

Bulk of the outstanding (Rs. 2,183.46 Crore) is from the three legacy airlines Air India, Jet Airways and Kingfisher. Paramount Airways had to pay Rs 25.82 crore and SpiceJet owed Rs 16.24 crore.


From the beginning of this calendar year, these three carriers have reduced their outstandings from Rs. 3,608.20 Crore to Rs. 2,183.46 Crore by the end of May. Air India has reduced it's outstanding almost 64%, Jet by 40%. Financially strapped Kingfisher Airlines which was put on a "cash and carry" basis by Indian Oil has been lagging at a measly 7.73%.

Mr. Deora also informed the house

"This issue was also taken up with the Ministry of Civil Aviation, which advised the airlines to clear their outstanding dues promptly."

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Orders for Airbus A320 and A350 dominate Paris air show; Paramount to buy 10 Airbus A321s

John Leahy is a happy man; may not be as happy as in 2007, but surely the orders received for the Airbus A320 and A350 families at this year's Paris air show, must give him a cautious sense of optimism.

Airbus SAS is expected to walk away from Le Bourget with about orders for 110 new planes or commitments worth around $6.5 billion. By comparison, Boeing logged just one order at the show, a $153 million deal with MC Aviation Partners, a leasing subsidiary of Mitsubishi, for two 737-800s which will be leased to Japanese low cost carrier Skymark Airlines Inc.

Interestingly all the orders for Airbus are from the A320 single aisle family and the upcoming A350 medium sized wide body family, also all the orders are from smaller global airlines or low cost regional airlines. Clearly, while the global economy and longer distance travel is still to recover, the absolute panic gripping the industry just six months ago has subsided. The smaller, newer, and cost competitive airlines are betting on the future and getting ahead in the order queue.

Chronologically, the orders won by Airbus are:

On June 15th, Doha based Qatar Airways ordered 24 A320 family aircraft. 20 A320s and 4 A321s.

June 16th was a lucrative one for Airbus. First, a private Asian customer ordered an Airbus A320 Prestige which is based on the A320 airliner, but meant for private/business jet use, featuring a customised cabin, extra fuel-tanks for intercontinental range, and other features preferred by this up-scale market segment.

Next, Manila, Philippines based low cost carrier, Cebu Pacific increased its existing A320 aircraft order by five aircraft taking the total order to 15. Scheduled for delivery from 2013, the new aircraft will join Cebu Pacific's existing fleet of 21 A319 and A320 aircraft. The initial batch of 10 aircraft is scheduled for delivery between 2010 and 2013. The carrier has now placed firm orders for 27 A320 Family aircraft, with 12 already delivered.

This was soon followed by an announcement that state owned Vietnam Airlines had placed a firm order with Airbus for 16 more single aisle A321s and signed a Memorandum of Understanding for two additional A350 XWBs. The A321 is the largest member of the Airbus A320 family, typically seating 185 passengers in a two-class layout. This contract increases the total number of orders placed by Vietnam Airlines for A321 to 41, of which 14 have already been delivered. The commitment for the A350-900 variant came in addition to an existing firm order for ten aircraft placed in December 2007.

Air Asia X, the long haul airline of Malaysia's wildly successful low cost carrier Air Asia, closed out the day by announcing it had placed a firm order with Airbus for 10 A350 XWB aircraft. The airline will use the aircraft on a network linking its Asian hub in Kuala Lumpur with destinations worldwide, especially in Europe and Australia. AirAsia X has selected the A350-900 variant for its fleet, which will be configured to seat more than 400 passengers in a two-class layout. Airbus has raised its tally of firm orders for the A350 XWB to 493 from 31 customers worldwide, though they still trail the A350 competitor, the Boeing 787 Dreamliner by an almost 2 to 1 margin.

After the four announcements on the preceding day, June 17th, was a relative quiet one. French private airline Aigle Azur placed an order for a solitary new A319 aircraft. The new A319 will be configured in a comfortable two-class layout and will be powered by CFM-56 engines from CFM International. Aigle Azur currently operates a fleet of ten A320 Family aircraft, comprising three A319s, three A320s and four A321s, but this is the first time the airline has purchased an aircraft directly from Airbus. Founded in 1946, Aigle Azur is the oldest private French airline. The company became an Airbus operator in 2003 and has operated an all-Airbus fleet since 2005.

On June 18th came one of the biggest announcements of the show. Hungary's Wizz Air, the largest low cost carrier in Central and Eastern European, signed a Memorandum of Understanding to buy 50 more A320s, to take their total orders up to 132 aircraft. All Wizz Air aircraft will be configured in single-class 180 passenger layout. No choice of engine has been made yet. Wizz Air supported by lead investor Indigo Partners has developed into a formidable success story, and has an extensive network established at 11 operating bases, in Poland, Hungary, Bulgaria, Romania, Ukraine and Czech Republic, with 130 routes, and a fleet of 24 A320s.

Just when I was getting ready to close this article, along came the news that Chennai, India based Paramount Airways, has signed a memorandum of understanding to buy ten A321 aircraft with an option for an additional ten. Paramount is a niche player in Indian aviation, currently has an all Embraer E170 fleet. Commencing from small beginnings, Paramount offers a business class experience at economy class prices. It has consistently logged the highest passenger load factors in India (typically 88% and above) and has steadily gained market share. From it's regional start in South India, it has now expanded services to the North and East of India. The A321s will be used to commence international services to the regional destinations of south and south east Asia, and the middle east.

As a footnote, Delhi based IndiGo airlines will receive it's next Airbus A320-232 VT-INZ, part of it's mega 100 A320 order, by June 27th.

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Domestic passenger traffic rises 20% in May

Buoyed by the summer holiday season and the continuing rise in the Indian economy, domestic passenger traffic rose by almost 20% to 3.93 million in May from 3.315 million passengers in April.

There was no significant change in the market shares of the various airlines, but the low cost carriers IndiGo, SpiceJet, Go Air and JetLite have continued increasing their share at the expense of the legacy carriers, especially Jet Airways and Kingfisher Airlines. Go Air has shown good growth with the induction of its new Airbus A320 VT-WAJ, and niche carrier Paramount Airways has expanded its flights to Kolkata.


Passenger load factors (Revenue Passenger Kilometres as a percentage of Available Seat Kilometres) are still soft on the three legacy carriers.


For the first time the Ministry of Civil Aviation has released figures for on time departure performance. A flight is considered on time if it departs within 15 minutes of its schedule.

Paramount Airways, IndiGo and Jet Airways lead the charts. Despite competitive fares the effects of Jet Airway's low cost subsidiary JetLite's low punctuality reflects in its poor load factors evidenced in the chart above.

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Indian domestic passenger traffic rises marginally in April

The month of April has been bringing signs of a slowing down in the economic slow down. Industrial production, railways freight loading (indicative of raw materials for the core sector of steel, cement, mining), employment, stock markets and even inflation rates have moved back in to positive territory.

While it a month does not make a trend, there is a sense of cautious optimism even if it is ever so slightly.

The domestic air passenger traffic also reflect a slight rise for the month of April 2009, up by 155,000 passengers to 3.315 million or 4.68%.

Kingfisher continued to be the largest carrier with a 26% market share, closely followed by Jet Airways and low cost subsidiary JetLite.


The turn-around king for the month has been Go Air. It has doubled its passengers from March and has a very respectable 72% passenger load factor (percentage of total seats filled).

With the exception of niche carrier Paramount Airways, IndiGo remains the leader with a 72.1% passenger load factor. With about 65% load factors, one must ask how do full service Kingfisher and Jet Airways plan to achieve success with their newly announced low cost plans.

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Boeing in a better position than Airbus as Indian airlines slash aircraft deliveries

2008 was the year reality struck home in the Indian airline industry. One whiff of the downturn exposed the lack of robust business planning, and abundance of financial vulnerability of Indian carriers, leaving all of them battered and bruised, some more than others.

We saw mass-scale defaulting on payments by carriers in India to everyone from airports to aircraft manufacturers.

Touted as THE growth sector of the future by both Boeing and Airbus in 2007, in the last nine months, domestic airlines have slashed capacity and with very shallow pockets, pulled back at least one-third of their aircraft orders due for delivery this year.

India’s domestic airline capacity shrank by more than 8%, compared with 3.5% in Japan and growth of 18% in China.

As late as mid 2008 Boeing, Airbus SAS and Empresa Brasileira de Aeronautica SA (Embraer) were projecting delivery of 91 aircraft during 2009. They will now thank the stars if they can deliver the reduced quantity of 57 aircraft expected this year.

Both Boeing and Airbus are claiming that no airline has "cancelled orders", but this statement does not account for the deferrals in delivery and the diversion sales of aircraft by Indian carriers to foreign airlines.

In this highly competitive market, it appears that Boeing has the upper hand. It is facing deferral of only two of its 22 expected deliveries down 10%, while Airbus is down 53% expecting to deliver only 32 out of the expected 68 aircraft in large part due to Kingfisher. Embraer increased its delivery tally to five aircraft up 500% from the projected one thanks to the phenomenal growth of Paramount Airways their main customer

Boeing Customers

Jet Airways with fleet of 111 aircraft accounts for the two deferrals of Boeing. One 777-300ER and one 737. Jet has leased out a significant portion of its wide-body fleet. A total of seven of its eleven uber-luxurious Boeing 777-300ERs to Turkish Airlines THY and Gulf Air, and two each of its Airbus A330-200s to Oman Air and Gulf Air. Jet has called for a further ten per cent cut in seat capacity and is now trying to leasing out its narrow body Boeing 737s.

Image courtesy and copyright A.J. Best. Used with his permission. Please do not re-use without permission.

SpiceJet with 12.5 per cent growth will take delivery of 12 Boeing 737-800s/900s, one each quarter for the next three years adding to its fleet of 14 Boeing 737-800s and 900s.

Air India backed by the Government of India, will take delivery of its new Boeing 737-800s, four 777-300ERs and and three 777-200LRs by September, as scheduled. Air India (domestic and international combined) has a fleet of 150 aircraft. The combined order to Boeing and Airbus was for 111 aircraft.

Airbus Customers

The largest domestic carrier and most aggressive Airbus customer Kingfisher Airlines is in terrible financial shape. It led all Asian carriers with a 17.1 per cent capacity cut and has held its expansion to its existing 76 aircraft not withstanding the fracas with GECAS on four of its aircraft. It has diverted its three of its five A340-500s to Arik Air of Nigeria, the balance two have become "white tails" at Toulouse. Of the five A330-200s delivered, two are lying idle. Kingfisher is now in talks with Arik Air in an effort to lease them. The deliveries of the A380 have been deferred yet again. Even pending deliveries of ATR42s and 72s from the Air Deccan days are languishing at Toulouse. Kingfisher has been forced to defer delivery of 32 of 48 Airbus A320 planes that were due for delivery in late 2008 and in 2009 and is also diverting its narrow body A320 family orders to foreign airlines like Turkish THY. So while Airbus may deliver planes to an Indian airline, the aircraft may never come to India.

IndiGo along with fellow value carrier SpiceJet has been registered increasing market share, and has recently taken delivery of its 19th Airbus A320. It is maintaining a more conservative but steady delivery rate.

Air India domestic (formerly Indian Airlines) will maintain its delivery with Airbus for the narrow body A320 family having recently taken delivery of three each A321-200s and A319-100s. Airbus has also commenced discussions with Air India on the A380 superjumbo and hopes to convince the airline to buy a few.

While both Boeing and Airbus do not expect any new orders from the Indian market in the near to medium term, they continue to be bullish on India and maintain their market forecasts which estimates that the country’s airlines would buy up to 1,100 planes over the next 20 years.

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Domestic passenger numbers highlight need for major cuts in air fares

2008 was a torrid year for domestic airlines in India, as recently released figures by the Ministry of Civil Aviation (MoCA) show.

Domestic passenger traffic for the year 2008 fell 5% from 42.58 million to 40.77 million (Fig. 1), driven by the increase in fuel costs, and the massive hikes in air fares, which are yet to fully retreat, and capacity reductions by the airlines.


The Low Cost Carriers (LCCs) Indigo, SpiceJet, and JetLite, improved their market shares at the expense of Full Service Carriers (FCCs) Air India, Jet Airways, and Kingfisher Airlines. IndiGo is the big winner this year with a four per cent market share gain. Air India (the former Indian Airlines), gave up a big three per cent share. (Fig. 2)

The notable exception is Go Air (now called No Go Air due to its numerous flight cancellations), and the former Air Deccan, now christened Kingfisher Red after their acquisition. Kingfisher Red lost five per cent market share, while Kingfisher Airlines gained only three per cent, resulting in an overall loss of two per cent market share to competitors. Clearly the strategy at Kingfisher is not working.


While most airlines and airline groups lost in actual passenger numbers, LCCs IndiGo, SpiceJet, JetLite (the former Air Sahara now a subsidiary of Jet Airways), and Paramount, gained passengers. (Fig. 3).

The capacity swapping at Kingfisher group is clearly visible, and when performance of both Kingfisher Airlines and Kingfisher Red is combined, actual passenger numbers went down 10.5 per cent, from 12.56 million to 11.25 million.


The first two quarters of 2008, provided no clue to the excess capacity in the Indian airline industry. The "perfect storm" of increased fuel prices and reduced economic activity started rearing its ugly head towards the end of Q2 (April, May, June), and kicked the industry in it's teeth in Q3, with a mind numbing 25 per cent drop in traffic. (Fig. 4). Q4 has provided some seasonal relief, but Q1 of 2009 will see numbers dropping back again.


With the exception of Paramount, which has a small niche regional market, all the airlines saw massive drops in passengers in Q3. (Fig. 5). Most airlines staged a recovery in Q4, but the surprise is Jet Airways. It's passenger numbers tanked almost 20 per cent in Q3 and continued the downfall by another 15 per cent in Q4.


The market share of LCCs followed the increase in air fares, as passengers shifted from the FSCs. SpiceJet share in Q3 reflected its financial problems, prior to the Ross bailout. (Fig. 6)

It is an ignominious performance that the pioneer in the air travel bubble, Air Deccan (now Kingfisher Red) has lost over six per cent market share over the year. Clearly many of the "first time flier" passengers have chosen not to repeat, either returning back to trains and buses, or moving to other carriers like IndiGo and SpiceJet.


The data highlights the price sensitive nature of the Indian traveller. IndiGo appears to have a winning formula with its low prices and efficient service. Fancy gimmicks do not work. At a time of economic slowdown, the FSCs have to get their act together quickly. By holding fuel surcharges to unjustifiably high levels, they are surrendering ground to the LCCs and surface transport.

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Travel agents to boycott Singapore Airlines

I must tip my hat to the travel agents' associations in India. Their strategy of targeting one airline at a time, has paid handsome dividends.

From a paltry five per cent commission on the basic fare, they have successfully made all the airlines pay three per cent on the gross fare, which includes the fuel surcharges, on domestic fares. Passengers will recognise that very often, fuel surcharges are anywhere from 4 to 10 times greater than the basic fare.

Travel agents represent as much as 85 per cent of the full service airlines' business. By selectively boycotting one airline at a time, the agents focussed all the hurt on one airline, while still preserving relations by continuing to provide services to their customers, using other airlines. In these days of economic crises, and rabid competition, the "non-boycotted" airlines were happy to benefit from their competitor's misery.

Like dominoes, each airline folded its negotiation hand. It started with Jet, then Kingfisher, then Paramount, and finally Air India.

In the history of air travel, prior to this action, only agents in Japan have been able to force a roll back of the zero commission regime. I wonder if it is too late for agents in other countries to learn from the Indian strategy. For all of us, regardless of business vertical, we should take lessons. Prior to negotiation, recognise the weaknesses in the opposite party/parties, if possible target one at a time i.e. divide and rule, adopt a strategy that pressures them, but never, ever, compromise your business survival, by pressuring your customers.

After obtaining concessions from the domestic airlines, the travel agents have now focussed their attention on the international carriers. starting with Singapore Airlines.

Following a failure of negotiations (read re-instatement of agency commission), six associations of travel agents today decided not to sell tickets of Singapore Airlines from Monday, December 29, 2008. Later, they have also decided to boycott, Singapore Airlines' subsidiary, SilkAir from January 1, 2009.

In the case of foreign travel, since the commission is paid only on basic fare, and fuel surcharges do not constitute as significant a component as in the case of domestic travel, the agents are demanding a five per cent commission.

Singapore Airlines, like other foreign airlines, at present, allows travel agents to charge around Rs 1,200 on sale of its tickets as a transaction fee.

A Singapore Airlines spokesperson said travel agents comprised an important element of its business and that it was very much interested in working with them. "Travel agents are getting a transaction fee, around Rs 1,200 per ticket. We think this model is good for the business. The model is working well and we would like to persist with it," the spokesperson said.

However, having tasted success with their "selective boycott" strategy, the associations are firm in their stand, that they would not settle for anything less, than a five per cent commission.

The senior management of Singapore Airlines has rushed to Singapore for "consulatations" with senior airline management. Stay tuned. I am sure, an announcement from Singapore Airlines, capitulating to the agents, will follow, very shortly. After which it will be the turn of Lufthansa, British Airways, Emirates, and other major foreign carriers.

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Air India and Paramount launch promotions

Air India launched (05-Dec-08) a promotional scheme for passengers travelling on its select domestic metro sectors. The scheme titled ‘Winter Warmth’ will be applicable for travel between the four metros - Delhi, Mumbai, Kolkata and Chennai; and also between the four metros cities and Bangalore/Hyderabad.

The scheme, aims at frequent flyers - award of one free return ticket of two coupons on the domestic network of Air India for those undertaking a minimum of eight flights on select sectors between 05-Dec-08 and 05-Feb-09.

The Free Domestic Return Award ticket will be available for all destinations on the domestic network of Air India with the exception of Delhi-Kozhikode-Delhi, Delhi-Kochi-Delhi, Delhi-Thiruvananthapuram -Delhi and Delhi-Coimbatore-Delhi.

The award ticket would be issued in Economy Class to those who have undertaken their travel in either economy class or a mix of economy and business class. However, in case of exclusive travel on Business Class the award ticket would be issued in Business Class. The Passenger Service Fee (PSF) on the award ticket would be borne by the passenger. No FFP points will accrue on the award ticket. The Award ticket authority will be valid for 30 days from the date of issue. Travel on the Award ticket must be completed within three months from the date of issue.


Paramount Airways announced (02-Dec-08) it has launched a promotion - ‘A Sepcial holiday bonanza offer’. The offer allows passengers to purchase one Elite Business class ticket and receive a complimentary ticket* for free. (*INR1500 payable for taxes and surcharge on the companion ticket).

This offer is valid for travel during the peak holiday season. With the introduction of new flights Western India, key cities like Ahmedabad, Goa and Pune are now linked to Madurai.

A new frequent flier programme, ‘Paramount Royale, has also been launched. In addition to upgradation and mileage redemption, Paramount Royale members can also avail of golf club memberships and spa services.

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Paramount adds Pune as third destination in Western India

Paramount Airways extended its services to Western India, by launching daily flights from Chennai to Pune. Paramount already serves Ahmedabad and Goa from Chennai.

Commenting on the Pune launch Mr Thiagarajan, MD, Paramount Airways said, “As part of our expansion strategy we have launched the Chennai - Pune sector today. This we believe will help our foray into the western region and we hope to replicate the success that we have acheived in the Southern market. Being a premium airline, we are certain that Paramount would receive a huge franchise from these key market. This flight would be a convenient and comfortable option for Chennai flyers to Pune.”

The airline has also launched its frequent flyer programe “Paramount Royale”.

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Paramount Airways adds new routes to its network

Paramount Airways adds new routes to its network
Will enhance operations from 62 flights to 66 flights a day in the following weeks
By TBM Staff | Chennai

Madurai based, Paramount Airways is planning to enhance its operations from 62 flights a day to 66 flights a day in the following weeks. The new routes include Bangalore-Vishakapatnam (direct), Chennai-Vishakapatnam (direct) and Chennai-Tiruchipalli (daily). Paramount Airways will also double the frequency of its flights on the Chennai-Tiruvananthapuram route. The airline also plans to launch flights on Chennai-Pune route by July end or first week of August this year. It will induct two new Embraer aircraft in its fleet by end of next month, taking its fleet size to nine. The airline is expanding its route network at a time when most carriers are cutting routes to reduce losses on account of the rising cost of Aviation Turbine Fuel (ATF).

According to M Thiagarajan, Managing Director, Paramount Airways, they have not been affected due to the rising ATF prices, since they do not cater to the train passengers like most other low cost carriers. Paramount Airways, which caters to the top end of the market feels, that the price elasticity of their customers is better and an increase of Rs 500 or Rs 1,000 in the fares does not affect its target group. As per the Ministry of Civil Aviation (MoCA) statistics, Paramount Airways recorded the highest seat factor for May, 2008. The seat factor for Paramount was 81.2 per cent, while that for Air India (domestic), Jet Airways, Deccan and Kingfisher Airlines was recorded at 61.2 per cent, 73.9 per cent, 71.5 per cent and 70.1 per cent respectively.

Source : TravelBiz Monitor

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