The rupee’s slide against the dollar is hurting domestic airlines, as 30-40 per cent of their expenses are estimated to be in dollars. Today, the rupee fell to a year’s low of 57/dollar in intra-day trade.
For sales in foreign markets, airlines earn in dollars. They also earn cash credits in dollars from aircraft and engine manufacturers on delivery but these earnings are non-recurring. Airlines with substantial international operations such as Air India and Jet Airways have a natural hedge against the rising dollar, because these companies also earn substantial foreign currency.
However, for low-cost airlines such as IndiGo, SpiceJet and GoAir, the scope of foreign earnings is limited. Lease and maintenance rentals of aircraft, salaries to expatriate pilots, parking and landing costs at international airports and jet fuel costs are dollar-denominated.
07/06/13 Aneesh Phadnis/Business Standard
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For sales in foreign markets, airlines earn in dollars. They also earn cash credits in dollars from aircraft and engine manufacturers on delivery but these earnings are non-recurring. Airlines with substantial international operations such as Air India and Jet Airways have a natural hedge against the rising dollar, because these companies also earn substantial foreign currency.
However, for low-cost airlines such as IndiGo, SpiceJet and GoAir, the scope of foreign earnings is limited. Lease and maintenance rentals of aircraft, salaries to expatriate pilots, parking and landing costs at international airports and jet fuel costs are dollar-denominated.
07/06/13 Aneesh Phadnis/Business Standard
