Fare cut or not, airline profits will fly this quarter

Mumbai: Any action by the civil aviation ministry to bring down air fares will hurt full-service carriers such as Kingfisher and Air India more than their low-cost peers, though overall, this would be the best quarter for airlines in the country, even if price cuts are effected, goes the view on the Street.
“The high fares being talked about are those applicable on bookings that happen in the last ten days or the last three days. Full-cost carriers like Kingfisher Airlines and Air India are the ones that see a sizeable number of seats booked during this period due to their corporate and premium clientele. Thus, a comparatively greater effect would be noticed on their toplines,” said an analyst at a domestic brokerage firm, requesting anonymity.
According to him, the proportion of bookings within 10 days of the date of travel is around 30% for the full-service carriers compared with 10-15% for low-cost carriers such as Spicejet and JetLite.
Jet Airways, another full-service operator, also sees around 30% of bookings in the last ten days, but not much in the last three days, the analyst said. Besides, its low-cost brand, JetLite, helps reduce the overall effect on the topline.
Anoop Kanuga, managing director, Bhatija Travels, however said Jet Airways too sees major bookings in the last three days.
A spokesperson for Air India said bookings in the last 10 days or so are mainly for sectors like Mumbai-Delhi, while those for tourism-oriented sectors vary.
08/12/10 Amritha Pillay/Daily News & Analysis

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Categories: Indian Aviation- In General Dec 2010