Flying high over turbulence

Mumbai: Despite rising aviation turbine fuel prices and cancellations following the volcanic eruption in Iceland, domestic airline companies are likely to witness sustained passenger volumes.
While losses from the six-day closure of European airspace are estimated at $1.5-2 billion for the global aviation sector, the impact is likely to minimal for the two listed entities, Jet Airways and Kingfisher Airlines, which diverted part of their traffic through other airports. Analysts say Jet, which operates 12 flights daily to the US and Europe, could take a hit to the tune of Rs 4 crore per day on its top line. However, as some of its flights were routed through other centres (Athens) and it charged higher fares on resumed flights, the losses might be contained.
Jet gets 56 per cent of its revenues from international operations. While these air pockets will cause a revenue loss in the short term, analysts say the year ahead could see the same robust traffic that was witnessed in FY10.
Aviation companies have been reporting consistent passenger load factors since the December quarter, considered a peak season for the sector. Passenger traffic for March, the latest month for which the numbers are available, shows a 23 per cent year-on-year jump, with volumes pegged at four million. For the March quarter, the sector saw passenger traffic at 12 million, up 20 per cent over the March quarter in FY09. While FY09 was a forgettable year for the sector, which recorded deceleration in growth for the first time since 2002 due to the economic slowdown, FY10, according to Crisil Research, should see a 16 per cent y-o-y jump in passenger traffic to 45.8 million.
The reasons are strong demand from leisure travellers and benign ticket prices. For the current financial year, the research firm believes growth will be in the region of 15 per cent due to strong economic growth, rising incomes, and affordability, and will take total passenger traffic to 52.7 million. However, what could derail the growth story for the companies are rising crude oil and aviation turbine fuel (ATF) prices.
23/04/10 Ram Prasad Sahu/Business Standard

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Categories: Indian Aviation- In General Apr 2010