Sunday, August 26, 2018

High fuel cost, weak rupee hurting aviation sector’s profitability

New Delhi: The rapid growth in India’s aviation market, which was clocked at 18-20 per cent over the last two years, has also seen the profitability of the country’s airlines being hit due to rising oil prices and a weakening rupee combined with the airlines’ inability to raise air fares in line with rising costs. In the past year, the price of brent crude has risen around 40 per cent over the last one year while the rupee has depreciated nearly 8 per cent. Consequently jet fuel prices have also risen.
As per data provided by International Air Transport Association (IATA), India was among the countries that saw the most increase in jet fuel prices. Here, it grew by 12 per cent during the last eight months. Notably, fuel accounts for nearly half of an airline’s total costs.

India’s largest airline InterGlobe Aviation Ltd (IndiGo) reported a 42 per cent decline in earnings before interest, taxes, depreciation, amortisation and aircraft and engine rentals (EBITDAR) during April-June. Jet Airways, which commands the second-largest domestic market share, postponed the announcement of its results for first quarter of 2018-19 after reporting an EBITDA loss in last quarter of the previous financial year. SpiceJet reported its earnings for the June-quarter recording a net loss of Rs 38 crore, after 13 consecutive quarters of profitability. For the same period last year, SpiceJet recorded a net profit of Rs 175.2 crore.
26/08/18 Indian Express