High fares decline flights by Indian carriers

High fares decline flights by Indian carriers
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First Published: Sun, Nov 23 2008. 01 49 PM IST
Updated: Sun, Nov 23 2008. 01 49 PM IST
New Delhi: With passenger traffic falling sharply in the past few months owing to high airfares, the number of flights operated by Indian carriers also registered a substantial decline between March and November.
The number of flights each week fell from 10,922 in March to 9,635 this month, according to latest official figures, with both corporate and leisure travel on the decline.
The slowdown in the Indian aviation sector, which registered an estimated combined loss of Rs4,000 crore in 2007-08, led to a 30% shortfall in passenger traffic at Delhi’s IGI Airport and 32% in CST Airport in Mumbai.
According to the official data, the industry losses are estimated to more than double this financial year to Rs10,000 crore.
Besides the high fuel costs, caused primarily by high taxation, the airline industry was also suffering from the weakening rupee against the US dollar as the airlines make large payments in dollars for several goods and services as also to the foreign crew they hire.
State-owned National Aviation Company of India Ltd (NACIL), which runs Air India, posted a loss of Rs2,144 crore in 2007-08 and is estimated to lose over Rs2,180 crore in 2008-09. Its working capital borrowings, which include aircraft acquisition, were Rs11,500 crore at 15% interest in 2007-08.
On top of this, all airlines put together owe the oil companies Rs3,000 crore and the Airports Authority of India (AAI) Rs 1,100 crore. However, the carriers are currently in the process of paying back the oil companies and the AAI.
Several airlines that have placed big aircraft orders were also on the verge of defaulting on mortgage payments for their aircraft, it has been officially stated.
The major cost-cutting exercise and reduction in flight operations undertaken by the airline industry is threatening employment opportunities in the sector and allied areas like ticketing, transport, catering and ground handling.
According to latest data, the percentage year-on-year domestic traffic growth rate in India continued to fall since November last year and declined by 15% this July compared with 10% growth in the same month last year.
The international traffic growth rate in the country, however, remained on the positive side, hovering between 20 and 10%, the figures showed.
Price-sensitive travellers, who had just started embracing air travel as a viable alternative to ground travel, were effectively priced out as the Indian aviation sector witnessed a deep downturn this year.
While asking the airlines to reduce fares, a government panel has also urged the Finance Ministry to rationalise taxes by including jet fuel in the list of ‘Declared Goods´ to help the beleaguered airline industry.
The designation of jet fuel as Declared Good would allow the imposition of a flat 4% tax on it across the country.
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First Published: Sun, Nov 23 2008. 01 49 PM IST