Fuel impact: Deccan may rationalise routes, defer fresh deliveries

Mumbai: Acquired low-cost carrier, Simplifly Deccan, is set to rationalise its route network as a cost-cutting measure with fuel costs showing no signs of abating, according to a top company official.

"We are looking at different cost-cutting measures. We are considering rationalisation of routes since many of them are on a gross negative margin," Deccan Aviation's officiating CEO and CFO, Ramki Sundaram, told reporters here on the sidelines of India Aviation Outlook Summit 2008.

Cost-cutting measures would also be implemented on IT solutions, distribution costs and others as well, he said.

Sundaram also said if oil prices continued to rise then the company may defer taking possession of   new aircraft. ''We might defer taking aircraft deliveries if the situation continues," he said. "By the end of this calendar year, we were supposed to get 6 ATRs and 6 Airbuses," he said.

Deccan currently operates a  fleet of 83 aircraft.

Another cost-cutting measure would also include the lease back arrangement for its fresh aircraft orders, he said. In such an arrangement the company first buys the aircraft and then sells it to lend-lease operators at a higher price before leasing it back.

Sundaram also said that the airline industry had shown a growth rate of 8.7 per cent in April this year, as against 30 odd per cent for the same period last year.