Airlines regain pricing power on supply squeeze

Mumbai: After five quarters of losses, low-cost carrier SpiceJet and full-service carrier Jet Airways veered back into profits in June.
This, say analysts, signals the worst may be over for airlines in the country and that pricing power will not desert them for at least a few quarters to come.
Anand Kumar, analyst with BofA Merrill Lynch Global Research, on Monday upgraded both SpiceJet and Jet Airways to ‘buy’, mainly on expectation of better pricing power, higher yields and route rationalisation.
Pricing power has improved, led by slower-than-anticipated increase in supply, Kumar noted.
In the past few months, overall supply growth in aviation has been restrained as Kingfisher Airlines significantly cut down capacity. According to analysts, the airline is currently flying only 10 aircraft — down from 64 in early 2011 — and even these are not fully utilised.
07/08/12 Amritha Pillay & Yuga Chaudhari/Daily News & Analysis

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Categories: Indian Aviation- In General Aug 2012