Rupee fall ups airlines' expenses by 5%

New Delhi: A weakening rupee has taken its toll on the domestic aviation industry as it has increased airlines’ monthly expenses by around 5 per cent.
The rupee touched a five-year high today crossing the Rs 47-mark. The average value of the currency against the dollar during September was almost 14 per cent lower than in April. More than a third of an airline's costs are dollar denominated.
Major heads of expenditure include aircraft ownership costs (including rentals for leased aircraft and interests payment on acquired aircraft) accounting for around 15 per cent of the total cost and maintenance and spare costs accounting for another 10 per cent. Other important components include international training costs, and a certain chunk of sales and distribution cost accounting for another 10 per cent of the total cost.
The numbers would be even higher for full service carriers who have placed orders for new-generation Boeing 737s, 777s and Airbus A330s. Their lease rentals have gone up considerably in recent times.
An indirect impact of the falling rupee was felt on the prices of aviation turbine fuel (ATF). The decline in crude oil prices during September would have resulted in a near double-digit decline in the Indian ATF prices as well, but the weakening of the rupee eroded the positive impact leading to a decrease of slightly more than 5 per cent in ATF prices. While crude oil prices declined by 14 per cent during September compared with August, the rupee weakened by around 6.5 per cent during the same period.
02/10/08 Anirban Chowdhury/Business Standard

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Categories: Indian Aviation- In General Oct 2008