Friday, September 14, 2018

Rising crude and falling rupee is acting as a double whammy for airline stocks

For many industries, demand outlook defines and dictates profitability. A brighter outlook on demand invariably means buoyant profits. But that equation hardly holds for the airline industry.
With buzzing airports and jammed taxiways, demand is the last thing the airlines are anxious about. While there is no dearth of demand for air travel, profit has been patchy and is hard to come by. Where is a disconnect?
First some numbers. Analyzing the airline’s annual report is not easy. One can easily get lost in the innumerous metrics that gets thrown around. The jargons are not few.
Starting from RPK, it goes on to ASK, RASK, CASK and so on. Looks like they are designed to deceive rather than to help to dissect.
Still, no harm in understanding what are they. RPK refers to revenue per passenger-kilometer while ASK refers to available seat-kilometer.
13/09/18 ArunaGiri N/
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