Friday, June 07, 2019

‘Jet’s grounding to have positive impact on rivals in FY20’

New Delhi: The temporary grounding of Jet Airways has positively transformed market dynamics for the other Indian carriers, which could report a combined net profit of $250-700 million in FY20, the Centre for Asia Pacific Aviation (CAPA) said in a report titled ‘India Insight Q1 FY 20’, on Thursday. The best case scenario would be a profit of $500-700 million and the worst case would be $250-400 million, it added.
The exit of Jet has eased slot constraints at various airports, particularly during peak hours, and this is another positive transformation in the market, said the report. “Jet’s exit has released plentiful slots, particularly at India’s most congested airport, Mumbai, which was its base. Airport operators will need to adjust to the new growth and market realities,” the report added.
Another positive outcome of Jet’s exit is that the pilot shortage in the market has eased, with 2,100 employees of the airline now available for jobs elsewhere. Further, the issue of over-capacity has also been addressed, as more than 35 million seats were taken out of the system, resulting in a more balanced demand-supply dynamics, which should improve yields significantly, the report pointed out.
Speaking to BusinessLine, Kapil Kaul, CEO and Director, CAPA South Asia, said that in both the best and worst case scenarios, the industry will report a profit at a consolidated level. The best case scenario involves oil prices remaining stable, the rupee trading at 70-72 to the dollar and airlines maintaining pricing discipline. The worst case scenario involves airlines breaking the current pricing discipline.
07/06/19 Business Line

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