Airlines may have had best quarter in a while

Bangalore: Are airlines flying to better times? If you go by their performance in the September quarter, it looks like the countdown to better times has already begun.
The current quarter, which ends on September 30, has seen not only a surge in passenger traffic surge, but, according to industry experts,also improved financials at carriers, as aviation turbine fuel (ATF) prices have dropped to half of what they were during the same time last year.
So, even though yields (net revenue per seat) during the last three months were lower than last year, airlines are optimistic about improving their financial performance this quarter compared with the same quarter last year.
Today's crude prices at around $75 per barrel are much lower than last year, when they had peaked at $147 per barrel in August.
M Thiagarajan, managing director of Paramount Airways, expects his airline's margins to go up marginally due to a 20-25% savings in cost on account of lower fuel costs.
ATF constitutes 40-45% of an airline's operational cost. An industry official revealed that seat factor of airlines averaged around 70% in the September quarter compared to around 55% last year, even as yields slipped by 30-40% during the same period.
Analysts Mahantesh Sabarad and Vijay Nara of Centrum, in their report on Jet Airways brought out on September 24, view the improving fundamentals in the aviation industry as the much needed tailwind "after a turbulent phase."
Going by the emerging trend in the air traffic, Sabarad and Nara have raised their domestic passenger traffic growth estimate to 10% for FY10 and 13.5% for FY11 from their earlier 8% and 11% respectively. In FY09, passenger numbers fell 10.5% year-on-year (YoY) to 39.4 millon, mainly on account of higher air fares due to rising crude prices.
29/09/09 Praveena Sharma/Daliy News & Analysis

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Categories: Indian Aviation- In General Sep 2009