Another challenge for Jet Airways

new delhi/hong kong — Jet Airways India was once at the forefront of India’s rapidly-growing market for air travel, but a challenge from budget carriers and surging fuel prices are backing the airline into a corner.

Shares of the carrier plunged 8.5 per cent on Friday in Mumbai after the company postponed announcing its first-quarter earnings. That’s less than a week after denying a report it needs drastic measures to cut costs and bolster its finances. The stock ended at its lowest level since June 2015.

Budget airlines such as IndiGo, GoAir and SpiceJet expanded exponentially in the past decade, giving first-time flyers a new opportunity and middleclass families an alternative to full-service carriers that offered lounges and free meals on board. India, the world’s fastest-growing major aviation market, is also one of the toughest in which to survive, with premium carrier Kingfisher Airlines collapsing and legacy Air India needing repeated state bailouts as ultra-low fares fail to cover their costs.

“Jet Airways is facing challenges on all fronts,” Bloomberg Intelligence’s Singapore-based analyst Rahul Kapoor said. “The rise in oil prices is having a double-whammy on their earnings. They already have a sparse balance sheet compared with other Indian carriers.”

India is one of the toughest markets, where airlines are forced to sell tickets at base prices of as low as ₹1 (2¢) to attract the fastest-growing middle class in the world. —