Kingfisher cancels orders for three A340s
16 Oct, 2008, 2058 hrs IST, IANS Print EMail Discuss Share Save Comment Text: HYDERABAD: Private domestic carrier Kingfisher Airlines has cancelled orders for three Airbus A-340 aircraft, a top Airbus official said here Thursday.
Airbus chief operating officer (customers) John Leahy told reporters his company held talks with Kingfisher on the issue. This was the only cancellation from India, he said. Asked if Kingfisher was deferring deliveries of A-320s, he said: "There is nothing new in it."
Kingfisher, which announced a cost-saving alliance with Jet Airways this week, has deferred deliveries of 32 narrow-bodied A-320 aircraft.
Leahy said India remained a key market for Airbus despite the slowdown. Airbus forecast that India would be the fastest growing country for air travel for the next decade. The growth rate is expected to be 9.7 percent against the average global growth rate of 5.4 percent.
The company has forecast that India's aircraft fleet would grow five-fold by 2026. The demand for Indian market over next two decades would be for about 1,000 aircraft worth $120 billion. The largest number 670 will be in single-aisle category.
"Few years from now these numbers might look small as we keep revising our forecast once every two years," Airbus executive vice-president (sales and marketing) Kiran Rao. Airbus has strong partnership with seven Indian carriers. Out of 508 orders from India during 2005-07, Airbus account for 68 percent. It has the biggest share (57 percent) of aircraft in India.
Kiran said the number of engineers at Airbus Engineering Centre in Bangalore would go up from 65 to 100 by the end of this year. The number is expected to go up to 400 by 2010. The CAE Airbus training centre in Bangalore will be opened in February 2009 during the Bangalore air show. To read business stories in हिंदी click here. Print EMail Discuss Share Save Comment Text:
The Indian aviation sector looks set to shrink amid financial turmoil, with the nation's air carriers in schemes to try and ride out the problems and domestic air traffic at a five year low.

Air traffic has fallen by 19% in September, the fourth month in a row of negative growth. The news comes as a joint result of the current financial crisis and high jet fuel prices, with Indian airlines in debt to the tune of Rs1,800 crore after surpassing their credit limits with oil companies, who are themselves making losses due to government controls on the price of jet fuel.

Kingfisher Red - originally known as Air Deccan, India's first budget carrier, until Kingfisher Airlines bought the company out - suffered the biggest drop in passenger numbers at 20% of their load factor. Flag carrier Air India is running at 53% of capacity after a 10% fall, and the average for airlines is now 55% as opposed to 65% this time last year.

Kingfisher Airlines has decided to enter an alliance with Jet Airlines that will see them collectively control half the Indian aviation market. Both airlines are in debt over fuel payments with Jet owing Rs850 crore while Kingfisher refused to disclose the amount they needed to pay. The money is owed mainly to the Indian Oil Corporation, with the rest owed to the Hindustan Petroleum Corporation and the Bharat Petroleum Corporation. 45% of costs for Indian carriers is fuel, which is 70% more expensive than abroad due to multiple taxes.

Air India's head Raghu Menon expressed concern about what the Kingfisher-Jet alliance meant for his own airline. "We were competing with both these airlines separately. Now we'll be competing with them perhaps as one entity. It'll be a challenge," he said.

Kingfisher have cancelled an order for three A340 aircraft from European airframer Airbus. Airbus executive John Leahy said that Airbus had discussed the issue with Kingfisher before the choice was made and that this was the only cancellation from India. He also maintains that India will be an important area for Airbus, with the firm predicting Indian aviation growth will be at 9.7% compared to a global rate of 5.4%. Airbus predict that 1,000 new aircraft will increase the Indian fleet fivefold by 2026. Airbus have also welcomed the partnership between Jet and Kingfisher, saying it will help consolidate the carriers.

Airlines are cutting capacity to reduce costs, with around 20% gone already. Average flight movements are down to 8,000 a week compared to 10,500 in the period from April to June. The aviation industry in India is expected to post a collective loss of US$2 billion.

One executive at Boeing, Dinesh Keskar , predicted the downfall to be brief. “The current downturn in the sector is temporary and may not prolong for more than 6 to 9 months,” he said. Airlines, however, feel that the risk is very much immediate; Jet and Kingfisher are requesting a government bailout package worth Rs 40.7 billion. They are currently losing a combined US$1.3 billion.