Bengaluru: Airline analysts and the founder of the country’s first low-cost airline have said that the full-service carrier Jet Airways should consider going the low-cost way to sustain itself.
Jet Airways is witnessing one of its most turbulent times since its launch in 1995. The airline posted losses of ?636 crore during FY18 on revenues of ?24,510 cr. During the fourth quarter of that fiscal, it posted losses of ?1,040 cr on revenues of ?6,326 cr. For the first quarter of the current fiscal, losses widened to ?1,326 cr on revenues of ?6,257 cr. The airline also has the unenviable record of posting losses for five out of the last eight years. Its total debt is ?8,150 crore as of March 2018.
“Jet should completely overhaul and merge all operations into one LCC (low-cost carrier) if it wants to survive,” G R Gopinath, founder of the country’s first low-cost airline Air Deccan, told BusinessLine. His argument in favour of an LCC model is simple: The full-service business model in the domestic sector, where flights are typically between one and three hours, the CASK (cost per seat km) is higher than the RASK (revenue per seat km). In Jet’s case, it earns ?4.21 per km from every passenger but spends ?4.49 per km to earn it, resulting in a loss.
30/08/18 K Giriprakash/Business Line
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Jet Airways is witnessing one of its most turbulent times since its launch in 1995. The airline posted losses of ?636 crore during FY18 on revenues of ?24,510 cr. During the fourth quarter of that fiscal, it posted losses of ?1,040 cr on revenues of ?6,326 cr. For the first quarter of the current fiscal, losses widened to ?1,326 cr on revenues of ?6,257 cr. The airline also has the unenviable record of posting losses for five out of the last eight years. Its total debt is ?8,150 crore as of March 2018.
“Jet should completely overhaul and merge all operations into one LCC (low-cost carrier) if it wants to survive,” G R Gopinath, founder of the country’s first low-cost airline Air Deccan, told BusinessLine. His argument in favour of an LCC model is simple: The full-service business model in the domestic sector, where flights are typically between one and three hours, the CASK (cost per seat km) is higher than the RASK (revenue per seat km). In Jet’s case, it earns ?4.21 per km from every passenger but spends ?4.49 per km to earn it, resulting in a loss.
30/08/18 K Giriprakash/Business Line
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