Aviation industry: Turbulent times

The Indian aviation industry faced turbulent times this year, but in the last few months, things have certainly looked up. The year saw a mega alliance between Kingfisher Airlines and Jet Airways, while nearly all domestic airlines reduced their fares.
Kingfisher Airlines and Jet Airways are contemplating another round of fare cuts. After reducing fuel surcharge by Rs 550 per ticket last month, both the airlines are now likely to reduce basic fares by Rs 600 per ticket next month.
The International Air Transport Association (IATA) has projected a cumulative loss of $1.5 billion for Indian carriers this year, saying they would post the largest losses outside the US. It asked the government to take speedy steps to ensure that “the dream of liberalisation does not turn into a nightmare.”
The Indian carriers, according to IATA, are likely to account for $1 in every $3 of losses in the global airline industry this year. It is a staggering amount for a country that accounts for only 2% of the world air traffic. All airlines — full-frill and low-cost — suffered major losses in revenue but somehow managed to survive by sticking together and joining hands to curtail flights and other costs, as the government also moved in to help them.
The aviation turbine fuel price fell around 55% from this year’s August high of $147 a barrel. ATF accounts for nearly 45% of an airline’s operating costs. Analysts believe that the fare cuts will bring back travellers. The plunging domestic air traffic hit a record low in November this year to 30 lakh as compared to 38 lakh in November last year — seeing a drop of 21.3%.
Jet reported its worst quarterly performance in more than three years, suffering a net loss of Rs 384 crore in this year’s September quarter against a net profit of Rs 28 crore in the year-ago period.
28/12/08 Raja Awasthi/Economic Times

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Categories: Indian Aviation- In General Dec 2008, The Year That Was: 2008