Business Standard

StatsGuru-14-May-12

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Business Standard New Delhi

India’s airlines are, unquestionably, in trouble. This is in spite of the fact that the number of passengers in Indian skies has grown steadily, as compared with passenger growth in the rest of the world; Table 1 shows the enviable passenger growth Indian airlines have racked up in comparison with their global competitors. Yet, Table 2 outlines the central problem they’re facing: Even as growth in gross sales has increased steadily, profit after tax has stayed low — on the average, in the red. Part of the problem, also visible in Table 2, is that fuel costs have been an increasing and uncontrollable proportion of costs. Indian airlines’ profits are, in fact, lower than the world averages that Table 3 provides.

 

Table 4 compares some indicators across major airline markets. Surprisingly, India’s plane-load factor is not too far from the global average, suggesting domestic airlines’ expansion is not as unfettered as some have argued. However, its growth in revenue-passenger-kilometres — the number of paying passengers multiplied by the distance they flew — is well below that of other emerging markets, and closer to the figure for saturated markets like Japan or the US. Capacity, measured in available-seat-kilometres, however, showed healthy growth.(Click here for table & charts)

So, what trends can be picked up from the data? Table 5 shows low-cost carriers have come to dominate Indian skies. Indeed,

Table 6 — the distribution of passengers among domestic airlines — should see Air India and Kingfisher further shrink, if trends continue, and JetLite be an increasing fraction of Jet’s passengers.

Table 7 shows IATA’s data on past profits by region, and projections for the future. Even if oil prices do not spike, airlines’ profits will drop even further. But if fuel prices do go up sharply, there might be a wave of bankruptcies.

Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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First Published: May 14 2012 | 12:25 AM IST

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