Flying on clipped wings

It has been quite a while since the aviation sector has been struggling hard to fly out of rough weather. Be it low demand, lower margins or higher jet fuel prices, industry players have been knocking at the civil aviation ministry’s doors to seek some relief. Though the ministry has assured them that it would take every step to help the industry, it may take a while before things start looking up.
Interestingly, despite the present gloom, industry experts see a better scenario in the near future. “The outlook depends on economic growth. It is estimated that the sector will grow at about 12-15 per cent. With global economies picking up, this growth will be evident,” executive director of KPMG Rajeev B Batra said.
Batra’s estimates are little more optimistic than that of the civil aviation ministry. Civil aviation minister Praful Patel recently said that the industry was expected to grow by 8.5 per cent per annum till 2015. “In our most conservative estimates, we expect demand in the sector to grow at 8.5 per cent,” he said.
The industry is also pinning hopes on the new infrastructure plan and the setting up of Airports Economic Regulatory Authority to decide on airport charges.
The sector saw a loss of about Rs 2,000 crore in 2006-07, which in 2007-08 was pegged at Rs 4,000 crore. In 2008-09, the losses are estimated to be over Rs 8,000 crore. National carrier, Air India, alone is estimated to have accumulated losses of Rs 7,200 crore loss. Private carriers, including Jet Airways and Kingfisher, have also been complaining about huge losses mainly due to aviation turbine fuel (ATF) prices. While Jet posted a loss of Rs 225 crore in the first quarter of 2009-10, compared with a net profit of Rs 143 crore in the same period last year, Kingfisher reported a net loss of Rs 243 crore for the quarter ended June 30 from a net loss of Rs 158 crore in the same quarter last year.
The airlines’ frustration has reached such a level that a few weeks ago some of them even decided to go on strike in case the government did not extend a helping hand.
23/08/09 Parul Chhaparia & Amit Mudgill/mydigitalfc.com

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Categories: Indian Aviation- In General Aug 2009