The losses on flight cancellations can touch Rs 15-25 crore by November 30. The company has announced it will cancel 50 flights everyday till that date.
This revenue loss is computed on the basis of an average fare of Rs 3,000- 4,000 per passenger.
Considering that the airline is already grappling with a working capital problem, this depletion in revenue could hit its operations further and force it to cancel more flights, unless it is able to raise capital quickly.
However, its cost will not go down much since its fixed costs – staff, airport charges equipment, etc – remain the same. It will save fuel cost, which constitutes over 40% of an airline's operating cost.
25/11/14 Praveena Sharma/Daily News & Analysis