Saturday, October 27, 2018

With a favourable market, Jet Airways can fly easy but resource crunch will be a concern

Bengaluru: The beginning of the winter schedule from the last week of October should see down-in-the-dumps Jet Airways start performing better even though a shortage of resources will continue to hurt the airline for the next two quarters.

Sources in the airline told BusinessLine that while the situation in the airline is quite grim, the market environment is already getting better from a pricing perspective. One of the reasons for the optimistic scenario is because of the demand-supply balance kicking-in terms of routes.
The full-service carrier’s money-spinning routes are the Mumbai and Delhi metros where as per the winter schedule, the capacity addition is not more than 2-3 per cent. “The capacity on these two routes are not growing much compared with the rest. The ability to manage better yields are more and it will extract better premiums,” sources said.

This will lead to an improvement in RASK (revenue available seat km) for the airline. RASK is obtained by dividing operating income by available seat kms. Higher the RASK, better is the profitability without a corresponding increase in the number of aircraft. As per the latest winter schedule submitted by various airlines, the capacity additions out of Delhi is at about 5-6 per cent and from Mumbai, it is around 2-3 per cent. In certain routes, especially from certain cities from South India, the additions are as high as 40 per cent.
26/10/18 K Giriprakash/Business Line

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