Sir Richard Branson’s Virgin Atlantic Airways has been forced to slam the brakes on its Mumbai-London operations from May thanks to a double whammy of the economic slowdown and excess capacity. This is the fourth international airline in the last year alone to cease operations from the city.
“We have decided to temporarily suspend operations to Mumbai with effect from May 4. We are suspending this service until rational conditions re-emerge and it can resume service on this important route,” confirmed Ms Neha Lidder Ganju, Senior Marketing Manager- India, Virgin Atlantic Airways.
The exact number of job cuts could not be ascertained but the company has said that its cabin crew, airport staff and cargo staff would be affected as a result.
Virgin Atlantic has stated that while it performed satisfactorily in its first three years, the overall traffic between Heathrow and Mumbai fell 18 per cent last year. In addition, there was an “irrational level” of capacity on the route. “As a result, Virgin Atlantic and presumably other carriers have been losing money. This would be unsustainable at the best of times, but is ruinous in current conditions,” the carrier said in an email response.
The airline operates daily direct flights from both Mumbai and Delhi to Heathrow. The Delhi link will remain intact as it has not been hit by idle capacity and still remains sustainable.
Indian players in fray
Virgin’s exit comes at a time when Indian carriers such as the state-owned Air India as well as private airlines such as Jet Airways and Kingfisher Airlines are aggressively pursuing their international operations, especially to European and South Asian destinations.
The Centre for Asia Pacific Aviation, an aviation consultancy, has predicted that international traffic to and from India would grow at 15 per cent till 2010.
In the last two years, the UK-based full service scheduled airline, British Midland Airways or BMI, shut down its Indian operations due to a dip in load factor. A member of the largest operating grouping of global carriers Star Alliance, BMI operated flights on the busy Mumbai-Heathrow route.
Even Italian carrier Alitalia, run by Linee Aeree Italiane S.p.A, Austrian Airlines and the Taipei-based Eva Air suspended operations in India due to poor passenger response.
An airport official familiar with the development said, “It is only obvious that airlines pull out from services when they start making losses. One way out is to deploy the aircraft to more profitable routes or just reduce routes to get over the downturn.”
An analyst with a brokerage firm said Virgin Atlantic’s withdrawal from Mumbai has to do with the problems faced by the airline itself.
“The profitability of an international carrier is solely dependent on routes it undertakes. With a dip in load factor, the only alternative for any airline now is to restructure its business model and fly on routes full to capacity,” he said.