The airlines industry is expected to post losses in the March 2014 quarter as high aviation turbine fuel (ATF) prices and flat growth in passenger traffic are likely to erode a large portion of their revenues. Also, a weak rupee didn't help the cause of airline companies either: in the year-on-year period, the Indian currency depreciated 14 per cent against the dollar, increasing the operational cost of these companies as most of them pay lease rentals, maintenance cost and pilot salaries in dollars.
It is estimated that the combined losses of Jet Airways and SpiceJet are expected to be in the range of Rs 750-800 crore, against Rs 930 crore in the same quarter last year.
According to the Directorate General of Civil Aviation's (DGCA) website, in the first two months of the March quarter, demand and capacity of the airlines industry had been on the decline on a YoY basis. Demand fell by 5.8 per cent in the January-February period, according to the DGCA, prompting carriers to reduce their capacity by 6.4 per cent.
Typically, the March quarter isn't as profitable as the December one, which forces airlines to resort to price wars to attract travellers. At the end of February itself, low-cost carriers announced discounts of up to 75 per cent on travel between April and June this year.
Jet Airways followed with 70-75 per cent discount on tickets booked till February 27, for travel between March 27 and September this year. As a result of these discounts, demand in March shot up 8.8 per cent with a calculated increase of 5.1 per cent in the capacity of the airlines industry.
17/04/14 Rajesh Naidu/Economic Times
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It is estimated that the combined losses of Jet Airways and SpiceJet are expected to be in the range of Rs 750-800 crore, against Rs 930 crore in the same quarter last year.
According to the Directorate General of Civil Aviation's (DGCA) website, in the first two months of the March quarter, demand and capacity of the airlines industry had been on the decline on a YoY basis. Demand fell by 5.8 per cent in the January-February period, according to the DGCA, prompting carriers to reduce their capacity by 6.4 per cent.
Typically, the March quarter isn't as profitable as the December one, which forces airlines to resort to price wars to attract travellers. At the end of February itself, low-cost carriers announced discounts of up to 75 per cent on travel between April and June this year.
Jet Airways followed with 70-75 per cent discount on tickets booked till February 27, for travel between March 27 and September this year. As a result of these discounts, demand in March shot up 8.8 per cent with a calculated increase of 5.1 per cent in the capacity of the airlines industry.
17/04/14 Rajesh Naidu/Economic Times
