Cost Control Options For Airlines

Ratan Marrott - Mumbai

Airlines now intend to reduce agent commissions and in time are looking to bring it to zero worldwide especially due to the advancement of technology and mode of communication. One aspect whch is overlooked is the precious commodity of Aircraft Turbine Fuel (ATF) which is diminishing day by day and a few countries have conserved the same for their own usage. A long term solution has to be considered and adopted.

Following are some of the main suggestions that airlines can consider and seek government aid wherever possible and adopt the same globally so that it becomes a cost saver.

Crew

i. Operating Crew: They are the highest paid individuals in an airline. They recieve some the highest salaries in the aviation business for doing the minimum amount of work. The pilot, also a highly paid one, is solely judged during take off, landing and turbulent weather. Hence, the cockpit crew has been reduced by the airline from four to two or three in the cockpit. Airlines must offers shares in lieu of a 50 per cent cut in salary to the pilots so that they make the airline more productive by means of:

a) Short Routes

b) Direct Routes

c) Flying levels to conserve fuel

d) Advantage on tail winds

e) Extending flight time limitations according to acceptable norms on a human body endurance.

ii) Cabin Crew: These are dispensable jobs and they should be paid salary on a ground level with flight allowance as the only extra. Most people in the world opt for such jobs as this requires no specific qualification or experience or any other skills besides the knowledge of catering and first aid.

Catering

Airlines incur wastages herein. Nearly 30 to 40 per cent of the food is destroyed due to various types of meals and often, excessive meals being uplifted. None of the carriers have initiated the exercise of trying to save on meals but because of competition, various categories of meals are uplifted. Airlines must generalise and reduce categories drastically in order to economise and save cost which are exorbitant.

Handling

Always look to the national carrier or the country’s handling agency to provide you services on a reciprocal basis. Here, you effect marginal savings in proportion to the number of operations you have. Equipment should be pooled together with the local carrier instead of importing and using your own which adds to the cost and maintenance.

Hotel Accommodation

It is not imperative put the cabin crew up in five star hotels which add up to a major cost component. The crew should instead be provided with reasonably decent three or four star accomodation which they should appreciate given the aviation industry’s current predicament in the face of inflating oil prices.

Pooling of resources and flights during lean period are advisable where national carriers reduce their frequencies on par and pool resources to opeate their flights easily accessible to one and another’s passenger. This is a long term thought but will have to be resorted to on a reciprocal basis if fuel becomes a rare commodity. Similarly, spares should be pooled for aircraft that share a commonality of fleet type as well as as originating, transiting and terminating destinations.

Overseas

An airline needs to have only a local country head to look after the management of the airline. Other heads should be local in places where the talent it available. A quarterly check can be carried out by the head offices personnel in a year to ensure the proper functioning of the airline and its offices.

If the above steps are taken by the airlines jointly, then the cost could be reduced by as much as 30 per cent of the present cost and there would be no need to penalise the agents by reducing their commission. It is therefore, necessary for each airline to do their homework thoroughly. When OPEC was established in 1972, many airlines had to shut down, especially the BOAC and a few American carriers who could not survive the situation due to prohibitive and avoidable operative expenses which translated into massive losses. TAAI is planning to send this paper to the airlines for the purpose of serious consideration to cut down on avoidable losses and to ensure savings for the airlines by reducing costs which could be substantial.

(The author is CMD of Marrott’s Travel Express P Ltd)