Aviation hits air pockets on fuel cost

The global economic meltdown has dealt a body blow to the ailing Indian aviation industry, especially airport developers and full service carriers.
Domestic air traffic had been growing at an amazing 30-40% since the advent of low cost carriers (LCCs) in 2004. But the slowdown here, caused by recession in the West, meant fewer individuals and corporate taking to air and domestic traffic showing negative growth in 2009.
Fewer passengers flying led to airlines cutting fleets by almost 30%. Lower revenue from both these counts led to ambitious upgrade plans of private and state-run airport developers going awry. What made matters worse that declining revenue was accompanied by quantum increase in operating cost due to rising prices of crude late last year. This was the first time in global history a weakening economy was witnessing hike in energy price.
As a result, passengers were asked to pay a steep user fee to complete modernisation of Delhi and Mumbai airports, something that was envisaged only for new airports like Hyderabad and Bangalore. AAI is going to levy user fee soon at many airports.
With airlines expecting losses of close to Rs 10,000 crore last fiscal and the situation not very different this year, they have run up arrears in hundreds of crores to oilcos and airports.
14/09/09 Saurabh Sinha/Economic Times

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Categories: Indian Aviation- In General Sep 2009