Recovery Is In The Air

Finally, after at least three years of bad news and consistent losses, things are looking up for the Indian airlines. Everywhere one looks, recovery seems to be in the air. After months of falling, traffic figures are now showing an upsurge. More people are flying and business travel is back. Load factors have increased across airlines — both for full service and no-frills carriers. At times, flights are uncomfortably full (speaking from a passenger’s point of view!). What is even better news for the airlines is that flights are not full because tickets are being given away at throwaway prices. There is genuine demand and the lowered capacity levels in the market have ensured better yields for most carriers.
Till December, the recovery was more in the air than ground reality. But as more numbers are coming in, it is evident that things are actually looking up. Center for Asia Pacific Aviation (CAPA) had forecast that private Indian airlines would report profits of $250-300 million in financial year 2010-11. According to their latest mid-year assessment, they are expecting profits to be even higher, although no specific numbers have been forecast. This is despite the fact that they expect Air India to post a loss of $650-700 million in the year.
While I am a bit sceptical of whether this will happen, CAPA has even predicted that Kingfisher Airlines (which has been reeling under severe losses almost since inception) will show a small profit in domestic operations in FY11. The airline’s international operations, in their view, could break even in FY12. A 20 per cent reduction in capacity, no new deliveries till 2012 and an increased focus on aircraft utilisation and cutting costs is expected to help the airline achieve this. A senior airline executive said he was finally seeing some positive signs in what has otherwise been a battle for survival for over two years now.
17/07/10 Anjuli Bhargava/Business World

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Categories: Indian Aviation- In General Jul 2010