Airline losses to shrink this year

New Delhi: Indian airlines will reduce their losses significantly this calendar year, the International Air Transport Association, or Iata, said in its forecast for the industry on Thursday.
An increase in taxes, however, may hurt the industry, which incurred combined losses of more than $1.5 billion (Rs7,000 crore) in 2009, Iata said.
“We are projecting a growth of 5.1% (in international traffic) for India for this year,” Giovanni Bisignani, director general and chief executive of Iata, said in a conference call from Geneva.
While Iata did not give a projection on actual losses for Indian carriers in 2010, its chief economist, Brian Pearce, said the association expects “significantly reduced losses... Asia-Pacific on the whole will have a net profit of $900 million. You can see the trend.”
The Asia-Pacific region, which includes India, lost $2.7 billion in 2009, according to Iata.
Indian airlines, which make up 2% of global airline traffic, are expected to lose at least $1.5 billion in fiscal 2010, with national carrier Air India’s losses alone projected at Rs5,400 crore.
Globally, Iata expects airlines to lose $2.8 billion in 2010, half the $5.6 billion in losses it had predicted in December for the year. “It’s halfway to full recovery. It’s great news but not yet time to party,” Bisignani said.
For Indian airlines, however, the main concerns would be the new service tax being introduced on air travel as also “pre-financing of airport” infrastructure through development fee such as those levied at the Delhi and Mumbai airports, he added.
“The service tax on international economy (airfares) is a violation of India’s commitment under the Chicago Convention. We are strongly against it,” Bisignani said, adding he would be writing to finance minister Pranab Mukherjee on the matter.
11/03/10 Tarun Shukla/Live Mint

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Categories: Indian Aviation- In General Mar 2010