Domestic carriers stare at losses in fourth quarter

New Delhi: The party for domestic airlines may not last long and some of the carriers like Kingfisher Airlines and SpiceJet may be staring at losses in the quarter ending March this year. As per a senior executive of a private low-cost carrier, the average passenger revenue is expected to come down to Rs 2,750 in this quarter compared to Rs 3,400 in the October-December period. While the two listed airline companies, Jet Airways and SpiceJet, have been posting profits for the last few quarters, Kingfisher Airlines has narrowed its losses.
SpiceJet CEO Neil Raymond Mills told FE that passenger revenue had come down significantly while operating cost moved up on rising fuel price. “What can one expect when operating cost goes up and passenger revenue comes down?” Mills asked.
Aviation turbine fuel (ATF) price has been increasing on rising global crude price squeezing airlines’ margin. Jet fuel contributes 35-40% to the total operating cost of an airline. The global crude price has crossed $100 a barrel-mark, forcing oil marketing companies to raise ATF price in the domestic market.
The oilcos led by public sector IOC effected 6% increase in ATF price on March 15, the 11th straight hike since October 2010. Jet fuel presently costs Rs 58,310 per kilolitre in Delhi. Domestic airlines have partly passed on the cost burden on passengers by increasing fuel surcharge in the last months.
23/03/11 Nirbhay Kumar/Financial Express

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Mar 2011