European carriers are cutting capacity to India as increased competition and higher operating costs threaten profits.
Austrian Airlines (AA) is pulling out of Mumbai from March 25 and Air France is reducing its frequency to Delhi, Mumbai and Bangalore to six flights a week in its summer schedule. The airlines do not disclose financial data on a countrywide basis but global profits have come under pressure, due to increased competition and high operating costs as per a report in BS by Aneesh Phadnis.
Air France general manager Pieter de Man said frequency was being reduced to adjust with lower demand in summer. India is considered a low season at the time and there is a drop in demand from the market. These are seasonal adjustments, he said.
In a statement, AA said it was suspending its Mumbai flight, "due to the challenging economic situation.'' The airline has suffered operating losses of ¤100 million (Rs 650 crore) in the past two years and is restructuring operations. The airline said it was focusing on Eastern Europe and would ply the Boeing 767 it used on the Mumbai route for those to Tel Aviv and Teheran.
AA will continue to operate its Delhi flights. An executive from a foreign airline said, "Delhi is the gateway for leisure travellers in India, as it is closer to Jaipur, Agra or Varanasi. As a result, sales in Europe for the Delhi flights are higher than the Mumbai flights. Traffic from Delhi is growing.”
Another analyst said the Mumbai route had been a non-starter for AA, which faces competition from other European and Gulf carriers. Incidentally, AA is pulling out from Mumbai for the second time. It began flights to Mumbai in 2005 and withdrew in 2009. It returned to Mumbai a year later, after being taken over by Lufthansa. Other European airlines to stop Mumbai flights in recent years include FinnAir, Virgin Atlantic and British Midland International. A Mumbai International Airports spokesperson would not comment on the issue.
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