At the outset, I must point out that I am not an expert on the subject of Airline Efficiency. In my defence, I don’t think such experts exist.
Our favourite airline, Air Mauritius, has announced dramatic changes to its scheduling as well as its equipment. All for the worst, in my opinion.
For the US readers who don’t know where we are, Mauritius is an island surrounded by a lot of sea. Getting here by plane is not the preferred option, it is the only option.
One of the most important industries in Mauritius is Tourism. Our economy, especially the banks, have invested in fancy hotels, resorts, golf courses and shopping centers. There are thousands of trained employees and a support infrastructure that touches every Mauritian in some way. Don’t forget the effects on restaurants, taxis, water sports, market vendors, and secondary effects on banking, the offshore sector, IRS and RES. Most foreigners who do business in Mauritius, first came here as a tourist or combine their visit with some liesure. In the good days when oil was low and bank balances were high, tourism grew the fastest of all industry sectors, with annual percentage increases in the 20’s.
But oil prices have pumped up the costs of flying. Inefficient airlines around the globe are coming unstuck. Newly impoverished tourists are taking cheaper holidays. Tickets are usually one of the biggest expenses on a holiday. Another is your bar-bill if you are not in an all inclusive hotel, but that is covered in an earlier post.
Here is the transcript from an imaginary Air Mauritius Management Meeting:
Boss of Finance: Our income is up this year, but our costs are upper, resulting in our profits being lower.
Boss of Almost Everything: How low…and is there such a word as upper?
Deputy Boss: Yes, how lower and what is upper?
Boss of Finance: The profits are missing.
Boss of Almost Everything: Please explain.
Deputy Boss: Please pass the biscuits.
Boss of Finance: The profits have been replaced by €30 million net income in brackets.
Senior Pilot: Brackets are bad.
Boss of Almost Everything: Oh dear. What should we do to fix this?
Deputy Boss (chewing): The more we fly the more we lose. Therefore, we should fly less.
Senior Pilot: But, but but…
Boss of Everything: OK, let’s do that.
Moving on to cash-flow:
Boss of Finance: We have no money to pay our debts.
Boss of Almost Everything: Well sell some stuff and get the money.
Deputy Boss: Exactly. Sell the aircrafts. That way we will fly less and have money to pay the extra staffs we need to manage this transition.
Senior Pilot (weeping): But what about the Tourism Sector? Less flights means less wallets arriving in our country.
Boss of Almost Everything: That’s not our problem, let’s go to lunch.
As a result, Air Mauritius is closing down its routes to Milan, Frankfurt, Geneva and Munich leaving just London and Paris for Europe. So goodbye to our Italian, German and Swiss tourists. Air Mauritius is also stopping its flights to Sydney, Melbourne and Durban.
They have decided to sell their old Airbus 340’s, intent on squashing us into the nasty A319’s.
All airlines must be incredibly difficult businesses to run in any environment, not just with high fuel costs. But don’t lower interest rates and more efficient equipment help to counteract this problem?
Open skies, the end to duopolies, cheaper facilities, more runways. These are the way of the future if we want to survive.
While Air Mauritius has a responsibility to its shareholders, it also has a responsibility to the Tourism Industry. In fact, no foreigner can do anything in Mauritius without first flying here. Let’s not burn our only bridge.
Is Air Mauritius Expensive?
While working on this post, I researched the costs of Air Mauritius flights and discovered that while it has both cheap and expensive routes, its prices are not out of line with the market. My method was to pick return economy flights all leaving on 12 Sept and returning on 17 Oct 2012. I then calculated the rupee to kilometer cost using today’s internet rates. Here are the results:
- Air Mauritius – Paris Rs2.12 per km
- Air Mauritius – Mumbai Rs2.57 per km
- Air Mauritius – Perth Rs3.13 per km
- Air Mauritius – Johannesburg Rs4.38 per km (more than double the Paris cost)
- Easy Jet: Gatwick – Gran Canaria Rs7.67 per km (so much for cheap airlines)
- BA: Heathrow – Grand Cayman Rs7.01
- AF: New York to Paris Rs2.65 (in this case I used Expedia to find the cheapest flight for my dates)
The discrepancy between the Air Mauritius Paris and Johannesburg flight costs needs some explaining although it has been pointed out to me that the longer the flight the cheaper the per kilometer rate.