BIA flies into the doldrums

BIA flies into the doldrums

K.V. Subramanya

Major airlines have been witnessing decreased load factor

— Photo: G.R.N. SOMASHEKAR

Grounded: In view of the industry slowdown and financial crisis, BIAL has decided to postpone its expansion project.

BANGALORE: The economic slowdown has not only affected the load factor of airlines but has also made a dent on the revenue earnings of the Bangalore International Airport Limited (BIAL), which operates the Bengaluru International Airport (BIA).

Coupled with high airfares, passenger traffic, particularly in the domestic sector, has come down since June at the BIA. The BIA, which commenced commercial operations on May 24 this year, handled around 172 flights a day — international as well as domestic — during the initial days. However, the airport now handles only 162 flights and the domestic traffic has come down by 1.5 per cent, according to BIAL sources.

The passenger traffic did not pick up at the BIA during late August, September and October as was seen in other airports in the country. The overall annual growth of passenger volume in the country had dropped by 3 per cent, the sources said.
Lean season

However, the trend was not unusual, as according to the global trend, September was a lean season for the aviation industry. Although there had not been any flight suspensions to or from the BIA because of the fall in traffic volume, there had been some ad hoc or unscheduled cancellations of flights in the past two months due to “operational reasons,” the sources said.

Major airlines have been witnessing decreased load factor on domestic routes. While the average load factor had been around 70 per cent, on some routes it was as low as 20 per cent, said a senior official of a private airline. Although the load factor had shot up on some routes during the Deepavali, it has again plummeted.

While two private airlines used to operate two flights a day each to Mangalore, they were likely to operate one each after the flights registered just 20 per cent load factor. Similar has been the case with many private carriers operating on short-haul routes such as Hyderabad, Chennai, Coimbatore, Kochi and Thiruvananthapuram.

On the other, with the fall in passenger traffic affecting the revenues of airlines, most of the airlines have not paid the airport charges to the BIAL. In all, airlines owe Rs. 59 crore to the BIAL as airport charges dues. The dues, the overall economic slowdown and the delay in the Ministry of Civil Aviation permitting it to collect user development fees from domestic passengers have resulted in the BIAL suffering an estimated loss of Rs. 152 crore in the past six months, said Albert Brunner, Chief Executive Officer, BIAL.

While serious measures would be initiated in some cases to recover the dues, there is no plan to encash the bank guarantees of the defaulting airlines. “They too are struggling because of the industry slowdown,” Mr. Brunner said.
Expansion decision

In view of the industry slowdown and financial crisis, BIAL has decided to postpone its expansion project, which comprises construction of an express terminal and the second terminal building and runway. “The industry slowdown has given us some more time to plan and research, but an expansion is evident. We are conducting a study on the current trend and based on the results, which will be out in two or three months, we will take a decision on our next expansion,” Mr. Brunner said.

Meanwhile, the slump in the real estate market triggered by economic slowdown has made the BIAL to think twice on its proposed “airport city” project. In the long run, the BIAL had plans to enhance its revenue generation by venturing into real estate by developing airport city, utilising 200 acres of its land near the BIA. The BIAL, Mr. Brunner said, would tread cautiously in view of the falling real estate prices.