The Hindu Business Line : Airlines losing Rs 800 on every passenger

New Delhi, March 13 The domestic aviation industry is likely to report a loss in excess of $700 million (Rs 2,800 crore) during the fiscal year 2007-08, up from around $500 million (Rs 2,000 crore at current exchange rate) recorded during the previous year, the Centre for Asia Pacific Aviation has estimated.

Addressing the third annual India Air Finance conference, CAPA Chief Executive Officer (India), Mr M. Kapil Kaul, said that the increase in losses was on account of a number of issues including the benefits of consolidation not becoming fully visible, fuel prices firming up and the surcharges being imposed that do not fully compensate the input cost of the airlines.

“While the yields of the airlines may have firmed up, they do not appear to be above the costs being incurred. Besides, the expected loss in Air India of around Rs 25-30 crore on a conservative basis will also put pressure on the industry,” Mr Kaul said.

The Executive Director, Jet Airways, Mr Saroj Dutta, said the airline had recently done an internal survey which showed that the industry was losing around Rs 800 on every passenger being flown.

“The industry will have to take steps to arrest the situation. The Government or any outside agency cannot do this,” Mr Datta said.

He was of the opinion that the various acquisitions and mergers that had taken place in the domestic aviation sector had not yet had the desired impact of leading to reduction in capacity and rationalisation of fares.

In the past year while Air India and Indian have merged into Air India, Jet Airways completed the acquisition of Air Sahara while Kingfisher purchased Air Deccan.

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