E-Paper
Air fares could see a hike
Airlines in India would want to forget 2009 in a hurry. Possibly the worst times the sector saw after September 11 2001 attacks on the World Trade Centre in United States of America.
Airlines in India would want to forget 2009 in a hurry.
Possibly the worst times the sector saw after September 11 2001 attacks on the World Trade Centre in United States of America.
Besieged by very low passenger loads (an average of 66 per cent) high oil prices, the global economic slow down and strikes by pilots of two of the country’s important carriers marred the year for the airlines.
The worst is over and hope is round the corner. As the economy is showing visible signs of recovery and India Inc settling in with the necessary flab management the airline industry would sure be a beneficiary in 2010.
Analysts that Hindustan Times spoke to feel 2010 would truly play Santa Claus for the sector.
Aviation consultancy firm, Centre For Asia Pacific Aviation (CAPA), said the aviation sector except Air India would return
with a cumulative profit ranging between Rs 1,170 crore and 1,404 crore.
“The year 2010 should be a more positive one for Indian aviation, provided that airlines can remain disciplined on costs, capacity and pricing,” Kapil Kaul, CEO of CAPA said. “Domestic traffic is expected to grow 15 per cent or more in 2010/11 as the industry returns to its long-term growth trajectory. This is higher than the expected increase in capacity of just under 10 per cent that should assist carriers in achieving higher load factors and improved yields.”
Kaul cautioned that airlines should not allow growth to distract them from focusing on restructuring their operations and profitability.
He predicts that the entire domestic sector could turn low cost as airlines may chose to convert into the all economy class for better loads.
Experts feel that the economic slow down has allowed the sector to correct the demand and supply mismatch, as it was one of the significant factors that led to the losses for the Indian carriers.
“Capacity is coming in line with travel demand,” Dinesh Keskar, president Boeing India said. “The balance in capacity versus demand will help the industry break even faster and losses will come down significantly presuming that all the economic factors including oil prices remain range bound in the vicinity of $ 70-80.”
For Air India, which will receive its first installment of Rs 400 crore as equity infusion from the government, is already showing signs of recovery.
“Improvement in on time performance coupled with induction of more aircraft as replacement has enabled Air India to record a significant increase in seat factors and in market share,” its chairman and managing director Arvind Jadhav said.
As the airlines usher in the New Year, two forthcoming events the Kumbh Mela in Haridwar in January and Commonwealth Games augur well for the industry.
“As the winter schedule has set in, the loads are looking significantly better for all the airlines. Airlines flying in any direction are reporting near full house, this is truly a recovery of sorts. Coupled with the two important events next
year, airlines will have a good reason to consolidate,” said Ritika Modi, regional president of Uniglobe Travels.
Experts feel the key to stay healthy for the airlines would be to continue with the existing inventories.
“Airlines have shed over capacity and no one is in a hurry to add fresh capacity. There is a demand push that will lead to recovery for most airlines that did not se too many happy days in 2009,” said Siddhanth Sharma, president of Interglobe Air transport, a travel industry logistic firm.
