Financial Daily from THE HINDU group of publications
Tuesday, Dec 28, 2004
Financial Daily from THE HINDU group of publications Tuesday, Dec 28, 2004 |
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Logistics
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Human Resources Air Deccan plans to hire 250 pilots, expand fleet K. Giriprakash
Bangalore , Dec. 27 AIR Deccan plans to hire around 250 pilots in another two years and expand the aircraft fleet to over 25 during the period. An Air Deccan official told Business Line that the airline expects to have around 400 pilots all together within two years. It expects to increase the strength of its fleet to around 30, including 19 ATRs, during the same period. Currently, the fleet strength consists of 12 ATRs and three Airbus A-320s. The airline recently signed a $1.8-billion deal to buy 30 Airbus A320s, which will be delivered over a period of five years. The official said that of the 150-odd pilots working for the airline, some are undergoing training. Typically, each aircraft requires 6-8 pilots because of the restriction on number of flying hours for each pilot. The official also said that increase in fuel costs will not affect the operations of Air Deccan because there are no quantity-related discounts offered by oil companies in India. "All airlines in India will have to bear the increase in fuel prices equally. Those with smaller operations will have the least impact because their requirements are lower than those with bigger fleet. As there are no hedging provisions either, airlines in India do not have the option to benefit from such a facility." Hedging allows an airline to buy fuel at a specific price for delivery at a later date. Analysts at Goldman Sachs said that the high price of jet fuel is the biggest challenge facing the industry today. Because of the increase in oil prices, certain budget airlines have been several affected, with some on the verge of closure. According to the International Air Transport Association, the global airline industry is forecast to have run losses of around $4.8 billion this year with the rise in oil prices leaving budget airlines no room to play around with ticket prices. But an analyst said that Air Deccan's ambitious plans will propel the airline to the big league sooner than other domestic airlines. If the airline decides to exercises its option of buying another 25 Airbus A-320s as it has indicated, it will soon be among the largest airlines in India. With several others planning to operate budget airlines, the competition will only get tougher. Hence, any further increase in fuel prices will make it that much more difficult for budget airlines to stay profitable, the analyst said. Apart from planning to buy more aircraft, Air Deccan has also announced that it has decided to offer 13 per cent stake each to ICICI VF and Capital One for a consideration of $40 million.
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