New Delhi: Rising aviation turbine fuel (ATF) prices are set to impact the operating margins of airlines in the fourth quarter of this financial year. But they expect to make it up with increased revenues from higher demand, which remains unabated.
Current jet fuel prices, which attract a sales tax of up to 30 per cent across the country, are 15 per cent higher than last October.
“With rising fuel prices, the operating margins in the current quarter will come to 17 per cent, which was in the range of 20 per cent in earlier quarters,” said Mahantesh Sabarad, senior vice president of equity research at Fortune Equity Brokers.
The impact of a rise in fuel prices hits Indian carriers more, as expenditure on this constitutes 30 per cent of their operations’ cost. In contrast, expenses on jet fuel constitute only 20 per cent of cost for international carriers.
Domestic airlines have been increasing the fuel surcharge for travellers but there is a limit to increasing the fares. “The aviation market is such that the airlines cannot keep increasing the fares. The problem is that no one knows about the limit to which prices can go and in how much time. Nothing can be worked out till it stabilises to one point,” said Ankur Bhatia, executive director of Bird Group, a travel and aviation chain.
Due to unrest in West Asian countries, the price of the Indian basket of crude oil reached $112 a barrel from $94 a barrel during the fourth week of January.
12/03/11 Mihir Mishra/Business Standard
To Read the News in full at Source, Click the Headline
0 comments:
Post a Comment