Airlines fly high on low fuel prices, travel growth
Saurabh Sinha
New Delhi
There is some oxygen for the choking Indian airline industry . Two positive factors -domestic air travel growing at almost 30% and sharp fall in jet fuel prices -are bringing the industry back from the brink, at a time when some players were staring at emergency exits.
India's only profitable airline IndiGo reported on Thursday its highest ever net profit of Rs 1,304 crore for FY15 on an enhanced top line of Rs 14,320 crore. Reason: IndiGo did not resort to indiscriminate discounts and maintained a pricing discipline by consistently offering low -but not suicidally low -fares.
Another profitable Indian airline, Wadia Group's GoAir, is also expected to post its highest ever profit in the last fiscal.
Jet Airways and SpiceJet saw their losses coming down. SpiceJet has reported profits in the last two quarters with its founder Ajay Singh returning to the lowcost carrier earlier this year.
“Low oil prices have helped but the cost of doing business in India for an airline is among the highest in the world. Structural cost reduction is required, without banking on fickle oil prices.Unfortunately , the NDA's aviation ministry has not been able to offer any relief.The two ministers (senior A G Raju and his deputy Mahesh Sharma) should stop disagreeing on everything and work together to make Indian aviation sustainable,“ said an airline insider.
Officials across airlines agreed that the change in fortune has happened only due to people flocking to the skies again and oil prices falling, while pointing to the ministry's inefficiency . They hope that Prime Minister Narendra Modi will make some systemic changes in the aviation ministry -which is described as NDA's NPA (non-performing asset) by industry watchers and stakeholders -as just changing secretaries time and again won't help.
