Saturday, August 17, 2013

Airlines may face Rs 2,700 cr in Q2 losses on slashed fares

New Delhi: The spate of discounts being offered by domestic airlines over the last two weeks in the lead-up to Independence Day, is expected to result in a combined loss of R2,400 crore to R2,700 crore for the airline industry during the second quarter of fiscal 2013-14, according to aviation consultancy firm Centre for Asia Pacific Aviation (Capa). The estimates do not take in to account Kingfisher Airlines as it is not operating.
“The current yield environment is particularly poor, with July yields down approximately 18-20% relative to the Q1 average, and in August a further 5-8% decline is expected,” Capa said in a report. “The discounting appears to have been in vain as it has failed to stimulate the market and Q2 is likely to see only marginal year-on-year traffic growth. Load factors are primarily expected to see limited improvements.”
At the beginning of August, Jet Airways offered 7 lakh tickets with base fares as low as R1,777 as part of a promotional offer. Rivals like Air India also offered tickets at discounted rates of around R2,000.
17/08/13 Financial Express