New Delhi: Jet Airways (India) Ltd Tuesday recorded a 91% decline in March quarter net profit as higher income was more than offset by costlier fuel, lower airfares, higher capacity and weak demand from the key Gulf region.

India’s second-largest airline by passengers carried said net profit during the quarter fell to Rs36.80 crore from Rs397.16 crore a year ago. Total income during the quarter was Rs5,759.58 crore, against Rs5451.28 crore a year ago.

Net profit during the fiscal year fell as well, down 64% to Rs438.45 crore from Rs1,211.65 crore a year ago. Total income during the year rose to Rs23,669.91 crore from Rs22,906.06 crore the year before, but expenses also rose to Rs23,279.71 crore from Rs21,852.13 crore during the period.

“The past year has been extremely challenging for both domestic and international markets," the airline’s chairman Naresh Goyal said in a statement. “Notwithstanding the growth in traffic in the domestic market, downward pressure on yields continued despite rise in oil prices. We achieved positive results through our relentless effort to streamline operations, improve productivity and business performance, enabling us to reduce our debt by Rs1,902 crore during this year, despite weakening demand in certain international markets, especially Gulf."

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There have been reports of mass layoffs in the Gulf region amid sluggish oil prices.

India gets large amounts of remittances from the Gulf region where many expatriate Indian live. Air traffic between the Gulf and India— especially South India which has had historic ties with the region -- has been among the strongest.

Jet Airways investor Etihad said the collaboration between the two carriers was on.

“As its strategic partner, Etihad Airways is committed to leverage our synergies and extend our cooperation to grow the combined value of our partnership in the form of definitive advantages for guests. Between us, the two partners carry the largest share of traffic between India and the Gulf vide our strong and compelling option of a larger comprehensive reach"

Codeshare traffic with Etihad Airways over its Abu Dhabi hub and with its partner airlines now generates over 1,800 guests daily, Jet said.

The airline has also introduced its wide-body aircraft in the domestic network, boosting connectivity between key metros.

Jet Airways flies to 65 destinations on a fleet of 113 aircraft. A major chunk of its revenue comes from its international operations.

An analyst said the dip in profits was alarming.

“The significant drop in profits highlights profitability challenges and higher near-term risks for Jet Airways," said South Asia CEO of consulting form CAPA Kapil Kaul. “Inspite of productivity improvements, Jet has structural constraints that will continue," he said.

CAPA estimates the airline will need to raise about $400 million.

On Monday, Jet Airways had disclosed making investments in three-wholly owned subsidiaries. These include Airjet Training Services (ATSL), Airjet Engineering Services (AESL) and Airjet Security and Allied Services (ASASL).

Another domestic airline too has showed a drop in annual profit.

The largest Indian carrier IndiGo’s annual profit fell 16.5% to Rs1,659 crore in 2016-17 from Rs1,986 crore the previous year. Its revenue rose to Rs19,369.57 crore for the year ended 31 March from Rs16,655.03 crore the year before.

Jet Airways shares closed 3.12% lower on the BSE at Rs459.55 on Tuesday even as the benchmark Sensex rose 0.16% to end at 31,159.40 points. The earnings were declared after the close of the day’s trading.

SpiceJet is expected to announce its results on 3 June.

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