Vayudoot runs into heavy losses in its first year of operation

Vayudoot, the country's third airline does not look like becoming one of the great success stories of Indian aviation. As it flies into its first anniversary next month it will already have totted up losses of nearly Rs 60 lakh - a loss of approximately Rs 1 lakh for every week of its existence.And all this despite the limited scale of its operations - to date it has only one aeroplane. Both the plane and the pilots who fly it are on loan from Indian Airlines. The only person permanently on its payroll is General Manager D.B. Braganza who sits in a small office in a wing of the Indian Airlines' Air Hostess Training Centre at New Delhi's Safdarjang Airport.But if the Government has any apprehensions about the high cost of keeping the airline in the sky they are not showing it very much. Only last fortnight Tourism and Civil Aviation Minister Anant Prashad Sharma told Parliament that the airline, which at present operates only in the north-east, would soon be flying between 50 centres all over the country. This decision has come in spite of the aviation experts, verdict that as things stand, Vayudoot does not have a ghost of a chance of making a profit. Even Braganza, who confidently asserts that his airline will take off one day, admits that this will only happen when it gets the right aeroplane. Says Braganza: "Low fares, low seating factor and a high capacity aircraft are the primary reasons for Vayu Doot's losses."Wrong Aeroplane: Of these factors the single biggest one, that is responsible for the airline's losses, is that it does not have the right aircraft for its job. At the moment its one solitary plane is a Fokker Friendship F 27 which seats 40 people. But the Fokker is too big for the needs of the airline. So far, during the last one year's running, its average load factor has been only 42 per cent even though the plane breaks even only at over 100 per cent.Aviation experts say that Vayudoot took the F 27 on a wet lease from Indian Airlines (which means that the company hiring out the aircraft also flies it) only till a final decision is taken about which plane it should buy. There is no sign yet that the Directorate General of Civil Aviation (DGCA), which has to select the plane, is any closer to arriving at a decision. To date, four committees have debated which plane should be bought. The plane chosen should have military applications so that it could be produced in sufficient numbers in the country by Hindustan Aeronautics Limited (HAL).The choice of planes has now been narrowed down to one of three. The three still in the running are the Dornier 228-200, the Twin Otter and the Casa 212-200. The Dornier appears to be ahead of the field as a computer analysis with the DGCA, based on typical operating conditions in the northeast, shows that it lowers costs and enhances operating revenue to generate 100 per cent more surplus than the Casa 212 and 60 per cent more than the Twin Otter.Apart from the choice of aircraft, the airline also faces other difficulties. Its fares, have been pegged at an uneconomical level: so low in fact are the fares that they are 30 per cent less than what Indian Airlines charges. This is especially odd since Indian Airlines holds 50 per cent of the shares of Vayu Doot. The other sponsor of the airline is Air-India, which also has a 50 per cent interest.In the aviation industry, it is widely agreed that Vayudoot has to expand and run some lucrative routes to balance its loss-making ones if it is to ever make a profit. In this respect the Government's decision is correct but it is premature as it comes before the airline has decided which plane to fly. But even this option is not without its difficulties. Several state governments are keen on running their own feeder services between towns and they have not granted Vayudoot permission to operate. And even where the state governments are willing to permit Vayudoot to fly, there are still enormous hurdles to be overcome. For one thing, many of the towns to be connected by Vayudoot do not have airfields which can be used.'And in many places another problem is the nonavailability of staff to man the airports.Cash Shortage: All the plans for expansion depend on the airline getting the right aircraft. But at the rate the airline is losing money its problems will not end even when it buys planes. In the Sixth Plan the airline has been allocated Rs 17 crore. Sources in the aviation industry say that of this, Rs 10 crore has been earmarked for building up infrastructural facilities. The balance is very likely to fall short when the airline starts buying new planes. And the longer the DGCA postpones a decision on the planes the more likely is this to happen, as the cost of planes is constantly rising.Dornier originally offered HAL a joint venture to manufacture the Dornier 228. When it heard that it was leading the field, it tried to improve its terms by offering a smaller plane, the Dornier 128-6 twin-turboprop, an 11-seater aircraft which required the lowest investment, operating costs, breakeven seat factor and fuel consumption amongst aircraft of its size. The added incentive was an offer that if traffic increased the company would buy back the smaller plane and India would only have to pay the difference for the Dornier 228.Vayudoot's problems, however, are far from surprising. Says an official who works in the office of the chairman of Indian Airlines: "Keeping an airline on time, and profitable, takes more than good intentions. The not-so-magic ingredient is logistics." The logistics have clearly not been worked out very well,yet. Though the idea of having a third airline has been tossed around for years there was no real conception of what task it should perform. At one time the idea was to connect towns of tourist interest only. Later it was thought that the third airline would be most worthwhile in areas like the north-east, which are inaccessible by road and rail. Judging by the ambitious programme which is now on the cards, it looks as though Vayudoot, the one-man-one-aeroplane show, is trying to fulfil all these aims at the same time.Published By: AtMigration Published On: Oct 22, 2013 15:39 IST--- ENDS ---

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Vayudoot runs into heavy losses in its first year of operation

Vayudoot, the country's third airline does not look like becoming one of the great success stories of Indian aviation. As it flies into its first anniversary next month it will already have totted up losses of nearly Rs 60 lakh - a loss of approximately Rs 1 lakh for every week of its existence.

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