Air India slashes flights as West Asia war sees operating costs spiral, travel demand dip

NEW DELHI: Air India has cut a further about 200 weekly flights from June to August, including a number of long hauls, in a bid to stem losses amid the sharp hike in jet fuel prices and the rupee’s crash. These cuts come on top of the about 90 flights cuts in May. The airline, which used to have about 1,200 daily flights, is taking cost-cutting measures after suffering a loss of over Rs 22,000 crore last fiscal with the West Asia war showing no signs of ending.In the most recent cuts, flights including the thrice-weekly between Delhi and Chicago; four times weekly between Delhi and Newark, Delhi and Shanghai and Mumbai and New York; daily between Delhi and Male, Chennai and Singapore and Mumbai and Singapore have been terminated for now. Comments have been sought from AI on the latest flight cuts and are awaited.Amid the sharp rise in operating costs, all airlines globally including AI are looking at each of there route from the perspective of financial viability. Passing on the entire hike in operating costs means a sharp rise in airfares, which means a drop in demand as only essential travel will take place at those prices with discretionary and non-essential travel being deferred. PM Modi recently gave a call to cut down on foreign travel; work from home and virtual meetings. So overall the demand for travel is expected to get weaker going ahead. In this situation, airlines are cutting flights due to high operating costs, low demand and a weak economic sentiment where non essential travel like holidays as always become the first discretionary expense item to be cut by both individuals and corporates.Air India is looking at multiple ways to control burgeoning costs, including HR related while not looking at job losses for now. It is planning to make meals optional on its domestic and short international (under two hour) flights. Once and if this “unbundling” rolls out, passengers opting out of meals could have upwards of Rs 250 shaved off their ticket price. While not opting for meals could lead to slightly cheaper economy tickets, AI is looking at unbundling lounge access for business class passengers because those opting out of this, could get their tickets cheaper. On an average, lounge operators charge Rs 1,100-1,400 per user at metro airports and Rs 600-700 at non metros. The average spend is about Rs 1,000 per lounge. Many business class flyers are frequent travellers who just make it to airports in time for their flight and do not head to the lounge. If unbundled, this could be a saving in their ticket cost. Banks have been reducing lounge access for credit card users for the same reason to cut their costs.