Tuesday, August 15, 2017

Still Seeking Freedom From High Operational Cost

It’s ‘freedom to fly’ sale time for all airlines in India now. Although this freedom to passengers is a sign of a typical competitive market, the fact remains that the industry is still struggling for freedom from the country’s highest operational cost structure.

A recent quote of Singapore Airline’s India head David Lim explains it all. “With fares falling rapidly, yields are falling for airlines and all airlines are suffering,” he said in a recent media interview adding that the industry is prepared for competition and for yields to continue to be under pressure.

Even as India emerging as one of the largest and fastest growing aviation markets in the world, the industry is still concerned about the heavy operational cost as taxes on fuel, taxes and other charges still the highest in India.

But the market competition forces the players in the crowding Indian skies to keep the fares low for survival. Singapore Airlines’ India joint venture Vistara too has announced the ‘freedom to fly’ low fare offer in August along with its rivals.

But, that doesn’t stop the industry expressing their deep concerns about the cost structure in the market and its key demand at the seventieth year of India’s freedom remained a relief from the high-cost structure.

“While Government concessions in the form of reduced taxes on fuel and other services can provide the sector with a much-needed relief in order to ensure and sustain profitability, lots still needs to be done,” said Amit Agarwal, chief financial officer and acting CEO, Jet Airways, the country’s largest full service airline, responding to a BW Businessworld query.
15/08/17 CH Unnikrishnan/Business World