India airlines’ annual losses to soar
NEW DELHI: Indian airlines are expected to post combined losses of up to US$1.9 billion (RM7.87 billion) this financial year led by fullservice carriers like Air India and Jet Airways, driven by rising costs and low air fares, said aviation consulting firm CAPA India.
The loss forecast for the 12 months ending March 31 was up from an estimated US$430 million to US$460 million sectorwide loss in January, largely due to the depreciation of the rupee and a rise in oil prices, said CAPA in a report released on Monday evening.
Ticket prices had not risen to compensate for higher costs, and CAPA said with the exception of Interglobe Aviation Ltd’s IndiGo, none of the airlines had strong enough balance sheets to comfortably withstand higher costs and lower yields.
“Most carriers are ill-equipped to withstand cyclical downturns,” said CAPA in the report. “Airlines have completely lost pricing power as a result of the rapid influx of capacity.”
India is the fastest-growing domestic aviation market in the world and carriers have placed orders for hundreds of new Airbus SE and Boeing Co jets.
But airlines have struggled to stay profitable despite filling nearly 90 per cent of seats and seeing a more than doubling of domestic passenger numbers over the last four years.
India is one of the cheapest domestic airline markets in the world and promotions such as US$50 one-way tickets on the two-hour flight from Mumbai to Delhi are easy to find.
CAPA estimated Indian airlines, including money-losing state-owned Air India Ltd, needed an additional US$3 billion of capital in the near term to shore up their balance sheets.