India’s top three airlines reported their worst quarterly performance in the last three years due to the triple trouble of higher fuel prices, weaker rupee, and competitive fares.
InterGlobe Aviation, Jet Airways, and SpiceJet accounted for 70% of the air traffic in the country. The combined net losses before tax reported by these three companies was more than Rs2,500cr—the maximum in the past three years.
The fuel cost per available seat kilometer rose due to an increase in jet fuel prices. The rising global crude prices made the aviation turbine fuel costlier in India, which is already the most expensive in Asia due to higher taxes.
A weakening rupee and the airlines’ inability to raise ticket prices in a highly competitive industry led to losses for the carriers. Increasing fuel costs negated the gains from a surge in demand for air travel.
For an airline, most of its expenses are in dollar terms, which means that with the depreciating Indian rupee, airliners need to pay more. In the September 2018 quarter, the rupee weakend by 9% over the last year, which led to around five times more foreign exchange losses for these companies.
22/11/18 IndiaInfoline
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InterGlobe Aviation, Jet Airways, and SpiceJet accounted for 70% of the air traffic in the country. The combined net losses before tax reported by these three companies was more than Rs2,500cr—the maximum in the past three years.
The fuel cost per available seat kilometer rose due to an increase in jet fuel prices. The rising global crude prices made the aviation turbine fuel costlier in India, which is already the most expensive in Asia due to higher taxes.
A weakening rupee and the airlines’ inability to raise ticket prices in a highly competitive industry led to losses for the carriers. Increasing fuel costs negated the gains from a surge in demand for air travel.
For an airline, most of its expenses are in dollar terms, which means that with the depreciating Indian rupee, airliners need to pay more. In the September 2018 quarter, the rupee weakend by 9% over the last year, which led to around five times more foreign exchange losses for these companies.
22/11/18 IndiaInfoline
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