PROBLEMS FOR AIRLINES THIS QUARTER IN INDIA AND NORTH AMERICA

Dino D'Amore
By Dino D'Amore February 8, 2011 16:51

PROBLEMS FOR AIRLINES THIS QUARTER IN INDIA AND NORTH AMERICA

Air India yesterday delayed for the second time payment of salary to all of its 30,000 employees for the month of January. The Indian flag carrier, which had earlier said that the salaries would be disbursed on February 10, now says that they will be paid on February 14.

Airline officials confirmed to Indian national media that the delay was due to the critical financial position, following on from the January 31 notification that said due to its “critical financial position” it has been decided to delay the salary disbursement for the month of January 2011 to February 10.

This news comes after the airline posted Rs 71.14 crore worth of operating surplus in December and November combined.

Meanwhile in the USA, airlines look to be heading for more than $600 million in weather-related losses as winter storms cause flight cancellations to reach the highest levels since records began. Close to 20,000 flights were cancelled last week alone as snow moved across northern states with flight cancellations for this winter approaching a massive total of 90,000. If we take the average cost of a lost flight as that mentioned by Delta last week ($7,500) then the total loss could be approaching $675 million to date.

Now forecasters say that Atlanta, the home of Delta will be hit by snow tonight as the white stuff moves towards Dallas.

We mentioned this last week but now we might as well just come out with it – Does someone up there hate the US aviation industry? You have to admit the run of bad luck for US airlines has shown no let up for a decade now. 2010 may be remembered as the year that paid for the 2011 losses!

With fuel increasing and likely to increase with every flake of snow in the US, airlines will now have to make provisions for the possibility that the bad weather could continue for some time on and off yet. This coming as capacity has increased en masse over the past few months raises the possibility (certainty?) that this quarter will be a very poor one for many of the major US airlines.

But as we mention cancellations, we must remember that current federal regulations rule out long waits on the tarmac and allow for huge fines of $27,500 per passenger if the rules are broken. So for airlines nowadays it is far more logical to just cancel a flight rather than try everything to get an aircraft out, this alone will account for many cancellation decisions.

Dino D'Amore
By Dino D'Amore February 8, 2011 16:51
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