Thursday, 3 May 2012

Airlines losses pegged at Rs 10k crore


DELHI: It is now official and for everyone to see. The Directorate General of Civil Aviation has pegged the losses of airlines in the year 2011-12 at Rs 10,000 crore, hinting at a disturbing trend of how India is losing its pitch for a potential aviation market, both domestic and internationally.
While industry sources have pegged the operational losses at Rs 26,000 crore for the period 2007-2010 for all airlines, DGCA figures based on returns filed by the airlines show that Air India alone incurred over Rs 17,000 crore of loss from 2008-2011.
The passenger movement has decreased from 16.6% to 9.3% in the months of January-February 2012 as compared to last year, the aircraft movement reduced from 19.7% to 11.2%.
The setback, ministry says, is largely attributable to high fuel costs. The airlines have also suffered from inadequate fares recovery due to intense competition. Almost all airlines were operating below the cost meeting margins, bringing the sector down as a whole.
Alarmed by the sudden losses declared by all airlines, except IndiGo, the Aviation Ministry woke up to gathering key details. Apart from understanding whether these losses was making airlines cut corners and not operate mandatory routes as per the Route Dispersal Guidelines, the ministry has also set up an inter-ministerial group to analyse factors causing this stress.
Airlines were asked to submit a recovery plan in order to avail further relaxations from banks. Recently, the ministry also gathered data from airlines on the extent of external commercial borrowings (ECBs) that they would want when the sector is opened up. An effort to ease this financial burden through the ECB route is very active. The ministry has already asked state governments to rationalise VAT on fuel.
However, the situation is not set to turnaround. With increase in airport charges at key metro airports of Mumbai and Delhi by over 300%, the airlines are only likely to suffer.
The upcoming new terminal in Chennai has also proposed terminal charges that are higher than those being charged by the New Delhi’s T3 terminal. Many international airlines have withdrawn from the Indian market on account of high airport charges.
“One airline, Air Asia had informed about suspension of its services from Mumbai and Delhi citing structural issues in the Indian aviation market, which included airport and handling costs at above airports. Restriction on VISA was cited as another reason for suspension of flights,” said Minister of Civil Aviation Ajit Singh in a written reply to a question in the Rajya Sabha.
The fleet size in India is going to touch the 1000 mark in 2020, according to the fleet plans revealed by various carriers.
“The actual number of new aircraft in the next 10 years will depend on growth factors and some of these expansion plans may get shelved,” a ministry official said.
Looking at other avenues of revenue and cost-saving, the ministry has proposed the setting up of MRO facilities within India. “We have set up a Civil Aviation Promotion Advisory Council which will focus on aeronautics policy,” the Minister said.

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