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As Jet posts losses, industry outlook turbulent

india Updated: Jun 24, 2008 20:36 IST

Indian carriers are feeling the effect of soaring oil prices. Hit by rising jet fuel costs, India’s largest private carrier Jet Airways and its low-cost subsidiary JetLite have reported a combined loss of Rs 654 crore for the year ended March 31, 2008. The figures are not comparable with those of the previous year as JetLite (formerly Sahara Airlines) was acquired in April 2007.

Jet Airways alone has reported a net loss of Rs 253 crore for the financial year ended March 31, 2008, compared with a net profit of Rs 28 crore during the previous year. The company took a major beating in the last quarter with a net loss of Rs 221 crore against a net profit of Rs 88 crore in the same period of 2006-07.

Jet Airways said in a release that losses were mainly due to rising jet fuel prices, lower passenger traffic and massive expansion of its international routes.

Other airlines are also expected to post losses, bringing more gloom to the aviation industry that was hoping to expand furiously on the back of an economic boom that put millions of first-time fliers in planes. According to aviation industry experts, airlines will report a cumulative net loss of Rs 4,000 crore in 2007-08 and Rs 9,000 crore in 2008-09. “Rising oil prices are a major concern for the industry. The losses will continue in the next two years as well,” said Kapil Kaul, CEO-India, Centre for Asia Pacific Aviation (CAPA).

Jet Airways had to spend Rs 128 crore more on its fuel bill in 2007-08, when the average fuel cost was Rs 47.44 a litre against Rs 36.51 the previous year. Now the price of jet fuel is around Rs 70 a litre.

“The next few quarters will be impacted by very high fuel prices,” said KG Vishwanath, Senior General Manager, MIS & Investor Relations, Jet Airways. This means that consumers will have to pay higher fares. Jet Airways has increased the minimum base fare on long-haul routes to Rs 3,000 from Rs 5,00 onwards.

The airline is taking several measures to combat the impact of fuel prices. These include cutting down unviable flights, optimising sales and improving efficiency. Other airlines are also implementing similar measures.