British Air to beat fuel costs with bigger aircraft

British Airways, which has had a profitable run in India so far, is still wary of the cost factor. Fuel costs and airport fees are among the things that make airline operation expensive in India, though British Airways is less impacted, Christopher Fordyce, regional commercial manager – South Asia, British Airways, told K V Ramana in an interaction in Hyderabad. Excerpts:

How is the airline sector in India right now?
The cost element is very significant. India is a significantly costly place to run an airline. We have seen significant costs in fuel cost, airport fees and some other costs that are included in aviation sector. This has made it difficult, particularly for some carriers. The difficulty is more for them, particularly if they have a significant amount of debt. High costs will make it less attractive to expand. But we are still growing in India.

Are you also affected by this?
We are impacted, but we are less impacted since we have a certain premium built into the structure.

How do you plan to cut costs?
It will be done by bringing in more efficient aircraft, like 777-300s. A380s can’t come to India as yet. Fuel is one of the biggest costs for any airline. The fuel uplift here is expensive. So, the less fuel you need, the cheaper will be your operation. Also, if we can have larger aircraft, we can take more people on board.

Are you looking at any investment in Indian carriers, now that the rules have been relaxed?
We don’t have any plan right now and we have not made any announcement saying we have any interest in any Indian carrier.

How has the activity been in India?
India is one of the fast-growing markets for us. In fact, this is the second-largest market for British Airways outside the UK, after the US. Considering the importance, we are now increasing our flights from Hyderabad and Chennai by about 20% from March next year. This would bring in an additional 10,000 seats every year. We are now flying 47 flights from India per week.

Are you expanding your fleet?
2012, in particular, has been a significant year for British Airways. Apart from various events in London in which British Airways was associated, we have also announced an investment plan of about £5 billion, including in new and upgraded aircraft. We have already taken delivery of six of our new 777-300s and by the next year, you will see some of the biggest developments in our fleet. The first of our 787-800 Dreamliners is expected to arrive in May and another three would arrive by the end of next year. We are also taking the delivery of our first A380 in July and two more are coming in September and November next year. We expect both these aircraft to be fully operational by winter 2013. However, we expect to add 24 787s and 12 A 380s in the next five years. These deliveries would help us in network expansion and certain developments that were never seen in British Airways. This would also allow us to fly to some new destinations in Asia.

How about technology deployment?
We are deploying technology to make travel less stressful. We are introducing automatic check-in and this would change the way check-ins are made in future. In this system, the customers can automatically check in and we send them the boarding pass. If they have no baggage, they can walk straight to the aircraft and if there is some luggage, they can drop it at one of the counters. We are currently testing it and by end of next year, it would be available to all our customers.

But, the London route has seen intense competition. How are you handling the pricing issue?
It is a fact that the market is very competitive and we believe that it is a value conscious market and we also believe that the customer focused service will make us win.

But don’t you think Emirates is tapping more into the US-bound passengers market from India?
One of the strategies we have is with the largest network we have to the US from London. We are able to connect passengers to more destinations than anyone else. We have a lot of loyal customers who chose us since we deliver what they like.

Do you plan to reduce the tariff to face competition?
The fact that we are expanding shows that we have a place in this market. We have multiple prices in the route and there is no fixed price. It’s a very vibrant market and also competitive market due to the presence of a number of airlines in this route including several European airlines. We think this market is value sensitive than price sensitive and we are investing significantly on our services on board. But for those who are price sensitive, we come out with tactful offers.