As economy expands, airlines hope for another year of growth

India’s airlines enter 2011 comforted by double-digit growth in passenger traffic that promises to stretch into a second year as the economy grows at a faster pace, helping support their ambitious expansion plans.
Jet Airways (India) Ltd, Kingfisher Airlines Ltd, IndiGo run by InterGlobe Aviation Ltd, Air India Ltd and smaller airlines have carried a record 50 million passengers in 2010, an increase of 18% over the year-ago period.
And, after posting a combined loss of $2 billion (Rs.9,020 crore today) in each of the previous two years, airlines are set for a profit of $300 million in the fiscal year to March 2011, estimates the consultancy Centre for Asia Pacific Aviation (Capa).
“It’s certainly a year of recovery. Everyone is now at a break-even or profitable,” says Aditya Ghosh, president of budget carrier IndiGo.
India’s airlines have emerged from two years of turbulence during which they were beset by surging costs, excess capacity and intense competition as well as fallout from the global financial crisis that caused passenger traffic to slump.
“Almost all factors that drive airline profitability—passenger demand, load factors, yields and oil prices—have largely been favourable in 2010,” says JPMorgan’s Mumbai-based analyst Princy Singh.
JPMorgan India has started tracking airline stocks that are back in favour with investors who shunned them in the past three years.
Jet Airways shares have risen 29% since the start of 2010 to Rs.715 at the close of trading on Wednesday and SpiceJet Ltd rose 35% to Rs.76.90. But Kingfisher Airlines declined marginally by 1.58% to Rs.62.05. The Bombay Stock Exchange benchmark Sensex rose 16.67% in the same period.
30/12/10 Tarun Shukla/Live Mint

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Categories: Indian Aviation- In General Dec 2010