Analysts bullish on airline flightpath as demand soars

Mumbai: With the increase in aviation turbine fuel (ATF) prices, full-cost airlines such as Kingfisher, Jet and Air India have already hiked ticket prices to pass on the hike. The hike is reportedly in the range of Rs100 - 200 per ticket, depending on the distance.
On the other hand, low-cost carriers such as Spicejet have not hiked ticket prices, thus absorbing the hike in fuel prices at the moment. Analysts point out that in both situations airlines are likely to perform well in the fourth quarter.
Indian Oil Corporation has increased its domestic ATF prices (Delhi) from Rs46,880.3 per kilolitre (kl) in December 2010 to Rs47,815.5 per kl on January 1, 2011.
Similarly, HPCL increased domestic ATF prices (Delhi-Palam) from Rs38,596.22 per kl in December 2010 to Rs39,378.65 per kl in January 2010. Overall, the hike in ATF prices has been in the range of 2%.
Most analysts are confident airlines, both full-cost and low-cost, would put up good numbers for the fourth quarter, inspite of an increase in fuel prices.
Around two years ago, when crude oil prices were on an upward trend and ATF prices moved in tandem, airlines had to take a massive hit. So, what’s changed this time?
Analysts point out this time airlines are enjoying a significant increase in demand, making it easy to pass on the hike to passengers.
12/01/11 Amritha Pillay/Daily News & Analysis

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Categories: Indian Aviation- In General Jan 2011