The Hindu Business Line : Airlines post Rs 3,195-cr loss in 2007-08

New Delhi, Feb. 17 The five major domestic airlines have reported a combined loss of Rs 3,195.27 crore during 2007-08. The airlines which reported losses during the year are Air India, Kingfisher, Jet Airways, Go Air and low cost airline, SpiceJet.

Replying to a question raised in the Rajya Sabha on Tuesday, the Minister for Civil Aviation, Mr Praful Patel, said that Air India posted a loss of Rs 2,226.16 crore. The loss relates to the operations of Air India and Indian Airlines after their merger into National Aviation Company of India Ltd (NACIL) in 2007. The merged entity operates flights under the brand name, Air India.

Kingfisher Airlines posted losses of Rs 408.91 crore, Jet Airways’ loss was at Rs 253.06 crore, Go Air’s at Rs 174.76 crore while the Delhi-based low cost airline’s was at Rs 132.38 crore.

The spiralling cost of Aviation Turbine Fuel (ATF), coupled with the economic slowdown, contributed greatly to the losses of the airlines, the Minister explained to Parliament.

During 2007-08, ATF prices in Delhi rose from Rs 36.14 a litre in April 2007 to Rs 47.04 a litre in March 2008. In Mumbai, airlines paid Rs 48.65 a litre of ATF in March 2008, up from Rs 37.36 a litre in April 2007. The two airports are the busiest in the country and account for almost 60 per cent of all airlines’ operations.

The rising fuel prices resulted in ATF constituting almost 45-50 per cent of the operating cost of most airlines.

To offset the impact on their bottom line, airlines started levying a fuel surcharge which was changed at least thrice during the year. The move only partially helped bring down the increase in their operating costs, airline officials said as passing on the entire increase in ATF prices to the passengers would see them opting for other modes of transport.

Worried at the growing losses of domestic airlines, which were estimated to touch Rs 4,000 crore in 2007-08, Mr Patel met the Prime Minister, Dr Manmohan Singh, along with a delegation of airlines’ Chief Executive Officers in June last year.

An inter-ministerial group headed by the Union Cabinet Secretary was formed after the meeting to find solutions to combat rising ATF prices.

The Government also initiated a number of steps to help the airline industry.

These included abolishing customs duty on ATF import and persuading States to reduce the sales tax on ATF.