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Domestic airlines land profits

A major increase in the number of air travellers, a fall in fuel costs, the air-congestion surcharge imposed, and economies of scale as the volume of passenger traffic increases have all ensured that most domestic airlines land profits, reports Gaurav Choudhury.

india Updated: Feb 05, 2007 00:05 IST

It is a dramatic improvement. A major increase in the number of air travellers, a fall in fuel costs, the air-congestion surcharge imposed, and economies of scale as the volume of passenger traffic increases have all ensured that most domestic airlines land profits for the third quarter which ended  on December 31, 2006. In the second quarter they had all recorded losses.

December 2006 has been particularly good for the airline industry. Most airlines have been flying with a load factor of over 90 per cent. Effectively, this means that close to 1 lakh people travelled by air every day.

This is in stark contrast to the 65 per cent load factor during August-October quarter.

Indian Airlines (Indian) has clocked profits of Rs 37 crore in December alone. “If all goes, all we will end this financial year  on a positive note with profits similar to last year”, Indian chairman and managing director V.Trivedi told the Hindustan Times. The airline had a modest profit of Rs 49 crore in 2005-06.

Jet Airways reported a net profit of Rs 40 crore in the third quarter.This was the airline’s first quarterly net profit this financial year after net losses of Rs 45 crore and Rs 55 crore in the preceding two quarters.

Air Deccan has reported a net profit of Rs 9.64 crore as compared to a loss of Rs 42.94 crore in the previous quarter.

"The gains in the last two quarters should make up for the losses in first two quarters. We expect our revenues to go up significantly in the next quarter too”, said Trivedi.

Decline in fuel costs, which account for 35 per cent of operating costs, also had a major role to play. During the last four months, aviation turbine fuel (ATF) prices have come down by 11 per cent.

Many airlines have also imposed a Rs 150 air-congestion surcharge per ticket to make up for the losses incurred by them for take off and landing delays forced inadequate airport infrastructure in the country.

The average yield per passenger has also increased from about Rs 2500 last year to about Rs 2800 presently.

Email Gaurav Choudhury: gaurav.choudhury@hindustantimes.com