New Delhi: A fare war in the air is threatening to thwart domestic airlines’ return to profitability this fiscal. Analysts who expected the industry to turn profitable by the fiscal end are now revising their projections. Some of them even warn the scenario could turn as worse as before the 2008 downturn.
Since July 2010, average airfare on full-service carriers has dropped from R4,400 to R3,600, a fall of nearly 18%. For low-cost airlines, it fell from R3,900 to R3,500, down 11%. This, ironically, in a year when the price of aviation turbine fuel (ATF) — airlines’ biggest expense — rose 40%. ATF accounts for one-third of the operating cost of an airline.
In this backdrop, aviation consultancy Centre for Asia Pacific Aviation (CAPA) India is all set to review its outlook for 2011-12. Earlier, it had projected that all carriers would collectively post a profit of about $300 million.
03/08/11 Nirbhay Kumar/Financial Express
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