Indian airlines are headed for another large loss in 2014-2015 with risks peaking for some carriers, a report by aviation consultancy firm Centre for Asia Pacific Aviation (Capa) has said.
“Indian carriers expected to post losses of $1.3-1.4 billion (Rs7,807-8,408 crore) in 2014-2015, following on from a $1.7 billion loss last year,” Capa said. Over the last seven years Indian airlines have lost approximately $10.6 billion (Rs 63,663 crore) and the red ink is expected to continue, the report said.
Capa estimated that Indian carriers other than IndiGo, will require $1.6 billion (Rs 9,610 crore) of funding this year to stabilise their operations, let alone for investment in aircraft. Given the current environment this is likely to be a challenging exercise.
“Inability to access sufficient funds when required may impact the operational integrity and customer proposition of some carriers. Further foreign airline investment transactions involving existing Indian carriers consequently appear unlikely in the short term given recent losses and in light of the increasing intensity of competition in the market,” the report said.
Notifying aviation turbine fuel as a declared good, thereby reducing sales taxation on fuel to 4% from an average of 24%, would be the single greatest confidence boost to the industry, it said.
“Such a move would deliver an immediate reduction of 10-12% in airline operating costs, a significant benefit in such a low margin industry,” the report said.