Airlines see blue skies in FY11 on cost cuts, improved traffic

Mumbai: India’s airlines are expected to post aggregate losses of around $2 billion (Rs9,260 crore) in 2009-10, largely on account of excess capacity and high fuel prices, but most of them are looking forward to a better, even profitable, 2010-11 on the back of their own cost-cutting measures and an increase in passenger traffic.
“The growth has already started coming in. If the current situation prevails, the next financial year will be good for airlines. Most importantly, the gap between demand and supply will disappear in the year,” Delhi-based low-fare carrier SpiceJet Ltd’s chief executive officer Sanjay Agarwal said in an interview. Demand could outstrip supply by 2014, he added.
That marks a significant turnaround for a sector plagued by overcapacity in 2008-09 and part of 2009-10. The aggregate loss of India’s airlines rose 44% to Rs8,557.37 crore in 2008-09 and the airlines expect to post a loss of a similar magnitude this year. Meanwhile, passenger traffic in the country, the fourth highest in the world after that in the US, China, and Japan, fell in 2008-09 on the back of high tariffs; it also fell in the first part of 2009-10.
However, most airlines have started posting better results in recent months.
An industry analyst, who did not want to be identified, pointed out a potential problem arising from Indian carriers cancelling or deferring orders for aircraft. “Most of the carriers have deferred their aircraft acquisition plans. If the revival is true and if they fly back to black, they will miss the wave of next boom.”
KPMG’s Batra, however, said airlines could always lease all the aircraft they need.
09/12/09 P.R. Sanjai/Live Mint

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Dec 2009