Business Today - - THE BUZZ - Manu Kaushik

THE AVI­A­TION sec­tor is fac­ing fresh head­winds. Ris­ing crude oil prices and in­ten­si­fied com­pe­ti­tion are hurt­ing air­lines. Jet Air­ways seems to have been worst hit. In the fourth quar­ter of FY2017/18, the air­line posted stand­alone net losses of ` 1,036 crore, its first loss in 11 quar­ters. Its peers – IndiGo and SpiceJet – are still prof­itable but their March quar­ter re­sults do not paint a rosy pic­ture. Mar­ket leader IndiGo re­ported a sharp 73.3 per cent drop in net prof­its while SpiceJet’s se­quen­tial net prof­its tanked 83 per cent. Air­lines are now keenly mon­i­tor­ing crude prices as avi­a­tion tur­bine fuel (ATF) ac­counts for 3540 per cent of the over­all costs. ATF prices are be­yond the con­trol of air­lines. Other ar­eas of concern are drop­ping of yields (av­er­age fare that a pas­sen­ger pays per kilo­me­tre) due to com­pe­ti­tion and ru­pee de­pre­ci­a­tion that led to for­eign ex­change losses, es­pe­cially for IndiGo and Jet Air­ways. In­dian air­lines are de­pen­dent on the dollar for leas­ing air­craft and pay­ing for MRO ser­vices.


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