'Merger pushed AI, Kingfisher Airlines deeper into red'
The merger of Air India with Indian Airlines and that of Kingfisher Airlines with Air Deccan have resulted in a massive increase in their losses, according to official figures.Updated: Mar 07, 2010, 13:10 IST
The merger of Air India with Indian Airlines and that of Kingfisher Airlines with Air Deccan have resulted in a massive increase in their losses, according to official figures.
The losses for the National Aviation Company of India Ltd (NACIL), which runs Air India, more than doubled from Rs 2,226.16 crore in 2007-08 to Rs 5,548 crore in 2008-09.
Similarly, Kingfisher's losses rose almost four times from Rs 408.91 crore to Rs 1,602 crore during the same period, the figures have shown. The 2008-09 losses for liquor baron Vijay Mallya's airline were recorded after its merger with low-cost carrier Air Deccan.
Likewise, the combined losses of Jet Airways and its fully owned subsidiary JetLite or erstwhile Air Sahara rose from Rs 695.10 crore to Rs 1,032.7 crore.
Besides merger, very high fuel costs, the global economic downturn and comparatively low yields due to heightened competition also contributed to the rise in their losses, which have been estimated by the International Air Transport Association (IATA) to account for one-third of the losses of the global aviation industry.
But the government has defended its decision for merging the two state-owned carriers saying that the combining their critical mass or size would be a key factor in helping them survive and prosper amid a fierce global and domestic competition.