Airlines set to fly out of the red

New Delhi: After reeling under heavy losses for two years, the aviation industry is finally headed towards better days. With capacity expansion slowing substantially in FY 08, and effects of consolidation beginning to show up, industry players expect profits by the second or, at most, third quarter of the next fiscal.
In addition to the more rational approach to capacity addition by the players, more restrictive policies on handing out licences by the government have helped ameliorate the situation.
There has also been a visible economy in terms of doling out infrastructure at Delhi and Mumbai (till the modernisation is through), ensuring that the existing players look at other routes than just metros to compete with each other.
A study of low-cost carrier fares across routes on their websites reveals that there is a difference of just Rs 100-150 among airlines on the same routes, with the same fares quoted quite often.
Industry players say that the market’s appetite to absorb slightly higher fares has improved and around Diwali and between December 15 and January 15 (traditionally peak periods), the fares will be above costs. They opined that the fare war was over and the extent of bleeding of individual players had come down. Many players now say there is no fare war – quite different from their refrain at the beginning of this year.
21/09/07 Anjuli Bhargava/Business Standard

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Categories: General Aviation Sep 2007