Airlines rocking on pot-holed runway

Mumbai: Last week, Air India executives told lender-banks it would not be able to pay interest from February. Working capital interest is about Rs 200 crore and each month the airline has a cash deficit of Rs 500-700 crore. The management has decided to pay salaries only after the government decides to release Rs 150 crore.
While the financial condition of other airlines may not be as grim, there isn't much to cheer. None except IndiGo have recorded profit. While operating costs have increased, airlines were unable to recover costs. Revenues grew due to a rise in passengers, but average fares have fallen or, at best, remained constant.
Jet Airways, which posted a Rs 101 crore third-quarter loss on Friday (its third successive quartely loss), said its fuel expense increased 60 per cent in the quarter. Fuel is nearly 40 per cent of airlines' operating costs. For Jet, average gross revenue per passenger fell 1.3 per cent to Rs 7,387 in the third quarter (Q3) of 2011-12 over the same period last year. In the earlier quarter, too, revenue per passenger dipped marginally for Jet and 15.5 per cent for JetLite. However, the cost per available seat-km, which measures unit cost, rose 25 per cent in Q3. The break-even seat factor was 89.3 per cent this year, compared to 74 per cent last year. This meant the airline needed to fill 89 per cent of seats to recover costs.
23/01/12 Aneesh Phadnis/Business Standard

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Categories: Indian Aviation- In General Jan 2012