Low-cost airlines make profit while full-service counterparts are in red

Mumbai: India’s aviation industry is in the grips of a peculiar trend, which, if it gains traction, portends a complete makeover for the sector while attracting thousands more to take flight.
Low-cost airlines such as IndiGo and SpiceJet are making profits while traditional full-service airlines Air India, Jet Airways and Kingfisher Airlines are deep in the red, a trend experts believe marks the beginning of budget airlines’ domination of Indian skies.
In the June quarter, Jet lost Rs 225 crore and Kingfisher lost Rs 243 crore. The national carrier that ran up losses of Rs 7,200 crore last year is yet to report the first quarter numbers. However, SpiceJet and IndiGo have reported profits for the quarter.
Sure enough, the full carriers are now betting on nofrills . Jet will transfer two-thirds of its domestic operations into Jet Konnect, the low-cost service it launched in May; Kingfisher has trimmed its fleet from 89 to 69 and plans to expand the operations of Kingfisher Red; and Air India says it will become a no-frills airline.
Analysts say the market opportunity is huge, particularly because just 3% of India’s population fly now and low fares are the only way to attract more passengers.
India accounts for 2% of the global air traffic and 17% of the global aviation industry’s losses, almost all of it attributed to full service carriers, according to Centre for Asia Pacific Aviation (Capa), a Sydney-based aviation research firm.
20/08/09 Mithun Roy/Economic Times

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Categories: Indian Aviation- In General Aug 2009, Low Cost General Aug 2009