Sunday, June 16, 2019

Jet Airways' demise has a silver lining

Airlines in India are capitalising on the opportunity to add more flights and increase fares as debt-laden Jet Airways remains grounded, which could help the aviation industry turn profitable this year, analysts say.

“Indian airlines are ramping up capacities fast to make up for the supply deficit in the wake of the cessation of operations by Jet Airways,” says Garima Mishra, an analyst at Kotak Institutional Equities, based in Mumbai.

The airline was India's second largest, covering more than 60 destinations across the country and abroad, including London and Dubai, with its fleet of 119 planes. However, burdened with about $1.2 billion (Dh4.4bn) in debt, it was forced to suspend all flights in April as lenders refused to provide additional funding.

Jet’s crisis emerged as it fell into arrears in the wake of fierce competition in India's aviation sector, which forced Jet to slash fares to compete with budget carriers such as IndiGo and SpiceJet. The lower fares made it difficult for the company to cover its high operating costs, including fuel and taxes, in what has been a challenging environment for all of India's airlines. One less player to compete with on the board is a boon to other carriers, analysts say.
16/06/19 Rebecca Bundhun/National
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