In India too, aviation is badly hit, caught in the triple whammy of hiked insurance surcharge—which will lead to a fresh round of fare hike—suspended services, and withdrawals by global airliners. United Airlines packed its bags after only five months of resumed operations; Northwest, which has seven flights each out of Mumbai and Delhi, has suspended its Delhi flights; and Lufthansa has modified its services for West Asia, suspending flights to Muscat and Abu Dhabi.
Air-India has suspended 13 West-bound flights, including the new London terminator, till November, and closed down offices in Frankfurt, Sydney and Zurich to "save crores". Says civil aviation minister Shahnawaz Hussain: "I don’t see any point in paying in dollars. We will recall our personnel from these stations." The other indirect offshoot of the hit: disinvestment plans have gone on the backburner amidst fare hike fears due to higher insurance premia, fear of fuel price hike, and the inevitable expenditure on beefing up airport security.
Insurance companies have levied a special surcharge of $1.25 per passenger, payable from October 1—a burden of around $10 million (Rs 48 crore) a year on Indian Airlines, which ferries eight million passengers a year and was due to renew its insurance cover by September-end. Jet Airways, which carries 5 million passengers, will have to fork out about $6 million. Failure to pay this premium means they will be stripped of war cover. "The airliners will have to pass on this huge burden to people. There is virtually no way out," says an industry insider.
And India will recede from the visitor’s radar screen. "What will happen to India if the UK, the largest recipient of annual American tourist traffic, has admitted it will be a disaster year? India will be viewed as a trouble spot because of its proximity to Pakistan and Afghanistan," says Uday Chatterjee, air travel analyst. "The ultimate losers will be the passengers, not only because of fare hikes but also because of the disappearance of the stiff undercutting that has been the norm in the western sectors," he adds. Chatterjee also says that fewer flights and higher security will wreak havoc on smaller, regional airports. "Discount carriers and shuttle operations will have a tough time," says Chatterjee.
UA’s decision to move out means curtains for India’s first proposed non-stop 15-hour flight to Chicago, planned for next month. With over 300 staffers to handle its twice-daily flights, UA had invested heavily in ground operations and planned to leverage this investment by offering it to other airlines following government clearance. A-I, which operates seven flights a week to New York and three to Chicago via London, will suspend its September 25 and September 28 flights to New York and Chicago respectively. This will be followed by the suspension of two Jumbo flights every week from India to London and Chicago from October 19 to November-end, in effect pulling out over 5,000 seats from the US and UK-bound market.
The turbulence clearly is extreme.
