High ATF likely to dent airlines profitability

The year has not begun on a strong note for the aviation sector. With multiple hikes in aviation turbine fuel (ATF) in a lean season, India’s airlines could well be looking at a major dent in profitability, reports CNBC-TV18’s Mehak Kasbekar.
It hasn't been a smooth take off for airlines this year. After state-owned oil firms hiked jet fuel prices by a whopping 4.5%- the biggest hike in a year, airline stocks declined by up to 5% on fears bottom lines being hit. ATF rates in Delhi have been hiked by Rs 2,195 per kilolitre to Rs 50,959 per kilolitre. This is the eighth straight increase in jet fuel prices since October 2010, when international crude oil prices started climbing.
Kapil Arora, Partner - Infrastructure Practice, Ernst & Young said, “Oil prices crossing USD100 barrel is a cause of worry for aviation sector.”
What makes it worse for the airlines is that the last two hikes in ATF came bang on top of the lean season.
03/02/11 CNBC-TV18/Moneycontrol.com

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Categories: Indian Aviation- In General Feb 2011