Mounting losses fuel airline burnout fears

New Delhi /Mumbai: Runaway airfares because of record aviation fuel prices that have more than tripled in three years are turning away passengers and threatens to tip airlines into steep losses that may lead to shuttered operations and distress sales in as little as a year, say industry insiders and analysts, unless there is a correction in oil prices and taxes levied on fuel.
Airlines in India, most of them offering budget travel and less than four years old, are already making losses after they started off by competing for market share by offering airfares as low as Re1, excluding taxes. They had hoped their operations would turn profitable once the passenger market expanded but rising aviation fuel prices, which now constitute 60% of the operating cost of an airline up from 40% in early 2007, have eroded those ambitions.
When India’s largest airline group by passengers carried, Jet Airways (India) Ltd, announces its fiscal 2008 results later this week, some of those concerns may be reinforced.
22/05/08 Tarun Shukla and P.R. Sanjai/Livemint

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Categories: Indian Aviation- In General May 2008