Mumbai: The profitability honeymoon for Indian airlines might have only a few quarters to go and they will have only themselves, and not high input costs, to blame. Cut-throat airfare wars and heavy discounts throughout the year may be good news for customers, but it is hitting bottom lines and all but negating the positive impact of lower fuel prices.
India's top two carriers — Indi-Go and Jet Airways — saw a decline in revenue per average seat kilometre or RASK in the April-June quarter. For IndiGo, it declined 13% over the corresponding quarter last year while slipping 5% for Jet. Cost per ASK or CASK for both airlines slid about 6%, but CASK, excluding fuel, for Indi-Go rose by 2.4% while for Jet it was down only by 1%.
RASK and CASK, the best known measures of an airline's operational efficiency, are calculated by dividing total operating income or cost by number of available seat kilometres or ASKs. ASKs are calculated by multiplying the available seats for a given plane by the number of miles that plane will be flying for a given flight.
IndiGo's quarterly net profit slipped 7% to Rs 591.78 crore but operating profit fell by 21%. Jet's consolidated net profit was down 44% to `126.3 crore. They are two of the three listed airlines in India.
The third one, SpiceJet, is yet to announce its numbers. In a post earnings conference call, IndiGo president Aditya Ghosh said, "almost everyone is throwing extremely low and competitive fares in the marketplace. In the past, we have not matched some of these fares and because of which we took a hit on our load factors-...but..we might be rethinking that strategy now."
Jet Airways chairman Naresh Goyal said the pressure on yields will continue in the ongoing July-September quarter.
18/08/16 Anirban Chowdhury/Economic Times
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India's top two carriers — Indi-Go and Jet Airways — saw a decline in revenue per average seat kilometre or RASK in the April-June quarter. For IndiGo, it declined 13% over the corresponding quarter last year while slipping 5% for Jet. Cost per ASK or CASK for both airlines slid about 6%, but CASK, excluding fuel, for Indi-Go rose by 2.4% while for Jet it was down only by 1%.
RASK and CASK, the best known measures of an airline's operational efficiency, are calculated by dividing total operating income or cost by number of available seat kilometres or ASKs. ASKs are calculated by multiplying the available seats for a given plane by the number of miles that plane will be flying for a given flight.
IndiGo's quarterly net profit slipped 7% to Rs 591.78 crore but operating profit fell by 21%. Jet's consolidated net profit was down 44% to `126.3 crore. They are two of the three listed airlines in India.
The third one, SpiceJet, is yet to announce its numbers. In a post earnings conference call, IndiGo president Aditya Ghosh said, "almost everyone is throwing extremely low and competitive fares in the marketplace. In the past, we have not matched some of these fares and because of which we took a hit on our load factors-...but..we might be rethinking that strategy now."
Jet Airways chairman Naresh Goyal said the pressure on yields will continue in the ongoing July-September quarter.
18/08/16 Anirban Chowdhury/Economic Times
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