Private air carrier Jet Airways is likely to cut capacity by 8-10 per cent this year to cope with the falling passenger traffic due to recession, Saroj Datta, executive director, has said.
Speaking on the sidelines of Routes Asia 2009, a networking event for the airline industry, he said capacity reduction was a way to beat the slowdown as air fares were stagnant.
Jet would, however, take a decision on this only after studying the industry response. Last year, the airline had reduced capacity by 12 per cent.
The company would not reduce the number of aircraft as they were on lease, he said, adding that keeping them idle would add to the company's financial woes. Rationalisation of routes and frequency was a logical step to cut costs, he said.
Datta also hinted at a substantial reduction in employee costs. He did not elaborate on this.
Though there has been a marginal increase in the number of international passengers, domestic traffic has taken a hit in the range of 12-17 per cent in the past few months. Industry experts predict a reversal only around October.
Low-cost carriers have fuelled the growth in passenger traffic in recent years and travel has been the first causality of global recession. "All players should cut capacity by at least 10 per cent," he said.
The civil aviation ministry decided to hike aeronautical fees and airport charges by 10 per cent at all airports controlled by the state-owned Airports Authority of India from March. This, Datta said, would increase the losses of airline companies. The charges in the south-east Asian countries were being reduced due to the slowdown, he said.
