Hyderabad: Despite the domestic airline sector growing despite slowdown globally, the airlines per se are not making any profit due to factors such as heavy operational costs, says aircraft maker Boeing.
“There is no doubt in saying that the Indian aviation sector is offering significant opportunities and only the surface has been scratched so far. The sector is definitely growing in India. But the growth is not profitable,” Dinesh Keskar, president of Boeing India and chairman, Ficci civil aviation committee, said.
Rising fuel costs are hitting the profits of the companies with the situation seeming closer to the one in 2008, he said. “In August 2008, fuel was costing about $6.5 a gallon and in March 2012 it is at $5.04. The situation was different in 2009 and 2010. We are inching dangerously closer to the level in 2008, when things turned bad for the sector. Indian domestic fuel prices are 50% higher than the world average and the exchange-rate fluctuation is also adding to the problem,” Keskar said.
A 15% hike in airfares is an immediate step that would help handle the crisis, he said. However, according to him, the hike in fares would also have its own implications, including a direct impact on the load factors. Airlines are already witnessing an increase in the gap between the market fares and the break-even fares. This too is being seen as a repetition of what happened in 2008.
15/03/12 KV Ramana/Daily News & Analysis
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