Airlines: Ailing private carriers get that sinking feeling

India's airline industry is on the verge of crisis. After a decade that saw all leading carriers expand their operations, most industry analysts predict that 2012 will be the year when an Indian airline will go bankrupt.
Extortionate taxes, high fuel prices and a bruising price war set in motion by state-run Air India are the main challenges India's private airlines face.
Jet Airways, SpiceJet and Kingfisher, India's three listed airlines, all lost more than 60% of their market value in 2011.
Meanwhile, Air India is still flying thanks to a series of government bail-outs that have kept the national carrier airborne. However, analysts say state aid has seriously distorted the market and contributed to the sector's financial troubles.
Indigo, a private sector carrier that is not listed on the stock exchange, is the only profitable airline in the country. But nobody really knows its secret.
The sector's ailing conditions seem inexplicable given that India's passenger numbers soared nearly 20% in 2011 to nearly 60m fliers compared with the previous year, and capacity is expected to be outstripped by a surge in demand.
Yet the airlines are still bleeding red ink and are heavily dependent on bank loans to stay in business.
The carrier in by far the most critical condition is Kingfisher, controlled by Vijay Mallya, the flamboyant billionaire and liquor tycoon.
29/01/12 it.com/moneycontrol.com

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Categories: Indian Aviation- In General Jan 2012