US wind blow for Indian air travel

New Delhi: The US financial market crisis has come as big blow to Indian airlines that were hoping for a reversal of fortunes with increased footfalls in coming peak travel season. Carriers now fear an erosion of traffic to and from the west as troubled investment bankers have traditionally been big ticket spenders on travel front. And since all Indian carriers are grossly undercapitalised, raising funds has become tougher as cost of capital is very high while capacity for taking risks is low.
The troubled US giant, AIG, has a 10% stake in the consortia that has insured Air India. "Our Indian insurance company, New India, has assured there's no problem and we have still an A rating," said an AI official. Clearly, the biggest worry is on travel and funding front. Apart from business travel, NRIs who used to get fat pay cheques from the troubled US giants are also feared to cut down on personal travel in the coming wedding season.
"This crisis will have consequences on all areas of economy, including aviation. While I will not dramatise the impact, there will be some reduced travel. Investment bankers travel a lot. However, Indian economy is going strong and the impact will be not as badly felt as globally," Jet Airways CEO Wolfgang Prock-Schaeur said. He added banks will become very cautious in lending to the capital-intensive aviation sector.
20/09/08 Saurabh Sinha/Times of India

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Categories: Foreign Sep 2008, Indian Aviation- In General Sep 2008