Goyal: Indian consolidation needed to overcome 'fundamental problems'

Jet Airways Chairman Naresh Goyal said yesterday at the US-India Aviation Partnership Summit in Washington that consolidation among Indian airlines is inevitable and will be necessary to restore financial sanity to the market.
During his keynote address, he noted that Indian carriers are expected to account for around 19% of global airline industry losses this year even though the Indian market only accounts for about 3% of worldwide capacity. He said the Indian civil aviation market suffers from three "fundamental problems": High costs, a "substantial volume of overcapacity" and a "lack of adequate infrastructure at Indian airports."
He said the third problem is on the way to being solved though privatization of major Indian airports and government investment in aviation infrastructure. But the first two issues likely will take longer, he explained.
He complained that Indian airlines contending with rising fuel costs are "heavily taxed" by local governments, charged excessive airport fees and must pay a limited pool of qualified workers "high salaries."
The cost problem is exacerbated by too much capacity "flooding the Indian market," he said. "We have 25%-30% excess capacity, which leads to unhealthy market practices" such as carriers charging "cutthroat" fares that don't come close to covering the cost of operations. "India has become an almost totally price-driven market," he said.
He added that Indian airlines are flying with load factors in the "mid-60s" when "the high 80s are required to break even." He said, "It's just a matter of time before [Indian airlines] start looking for partners or they'll end up just folding their tents when they run out of gas.
09/12/09 ATW Online

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

Categories: Foreign Dec 2009, Indian Aviation- In General Dec 2009, Jet Airways Dec 2009