Domestic airlines slip on red ink

New Delhi: Despite the ongoing boom in passenger as well as cargo traffic, India’s airline companies are facing a tough time in containing the red ink spreading far and wide on their balance sheets.
Conservative estimates indicate that Indian airlines lost over Rs 1,000 crore during ‘05-06 and the trend is unlikely to be reversed in ‘06-07.
The situation is expected to worsen for smaller players once the government merges Air-India and Indian and Jet Airways and Air Sahara pool together their resources. The industry lost nearly Rs 1,125 crore ($250m) in ‘05-06, said an industry analyst tracking Indian aviation.
Due to rising input costs (high aviation turbine fuel prices and increasing salaries) and low yield, the industry’s losses will be around Rs 1,350 crore ($300m) during ‘06-07, it is estimated. That the new airlines are having a tough time does not mean that established players are on a roll.
Jet, Indian and Air Sahara are losing marketshare to new players like Air Deccan, Kingfisher, SpiceJet and GoAir. The entire industry is basking in the glory of the booming market, but talk about bottomlines and everyone goes into a whisper.
26/04/06 G Ganapathy Subramaniam/Economic Times

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