Although it stomached a loss of Rs 4,000 crore in the last fiscal, the industry's health does not permit it to lose more, increasing the fear that bankruptcies among airlines abroad may soon spread to the Indian skies.
"We have seen an increasing number of bankruptcies of airlines the world over and this can happen in India also," said Jet Airways CEO Wolfgang Prock-Schauer.
Quoting IATA figures, he said in the last couple of months 24 global carriers have gone bankrupt unable to bear rising ATF prices. ATF costs in India account for an average 40 per cent of the total operating costs annually.
Maintaining that ൺ per cent of the running cost is fuel and its rising price has become a big problem", he pointed out that ATF prices in India was much higher than most of the other countries, primarily due to high taxes.
However, Indian carriers are expected to benefit from a decision of state-run oil firms to cut aviation turbine fuel (ATF) prices by 4.3 per cent, after the government halved customs duty on the fuel from 10 to 5 per cent.
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"We must get substantial relief from the fuel burden in order to close the gap partially and come back to viability," he said, adding that since March this year "we have had four increases and this fuel increase amounts to additional 100 million dollars monthly for the industry here".
But the 4.3 per cent cut is hardly any relief when compared to the 100 per cent increase in jet fuel rates in the past year, says an official of another carrier.
SpiceJet Director Ajay Singh said the past year "has seen 100 per cent increase in fuel prices. With taxes levied by various states, the actual ATF prices tend to be much higher higher than international rates". Describing the situation in the aviation industry as "bad", he said all efforts were being made to make the industry viable.
Indigo Airlines President and CEO Bruce Ashby was, however, optimistic about the Indian aviation industry though he did say that "challenging times lie ahead of us".
"The airlines that have so far failed worldwide were almost shut down and were out of money. They were trying to get loans, but because the price of fuel was going up so fast that the bankers could not have loaned the money," Ashby said giving a global perspective.
"The fact that a low-cost airline in Hong Kong shut down does not mean that the same thing will happen in India," he said.
In the coming days, airlines will try to cut down on operating costs arising out of flying in non-profitable sectors, balance fares to cover costs and cut down on marketing and advertisement, among other measures.
Though airliners have been making losses, they are worried about passing on some of the burden to the passengers fearing a "negative growth," the Jet CEO said.
"We have tried to increase our fares through fuel surcharges but certain passengers don't fly anymore. We fear negative growth now," Prock-Schauer said.