Double whammy lands for airlines

Bangalore: Even as soaring aviation turbine fuel (ATF) prices keep airlines grounded, the weakening rupee has added another layer of loss to their bottomlines.
As much as 70% of an airline?s operational cost is dollar denominated. The 3.11% depreciation in the local currency?s value this week (up to Friday) will drastically increase operating costs.
According to SpiceJet chief financial officer Parthasarthy Basu, the recent devaluation of the rupee ? by 9% in the past six months ? would increase the airline?s dollar expense, excluding fuel, by 5 paise per available seat km (ASKM).
Lease rentals of planes, aircraft maintenance, pilot training, spare parts, and interest on loans, among others, are also affected by the dollar.
Basu said of SpiceJet's total cost per ASKM (about Rs 2), the airline was spending Rs 1.30 per ASKM in dollars (including fuel).
17/05/08 Praveena Sharma/DNA MONEY

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Categories: Indian Aviation- In General May 2008