Economic Survey says Indian carriers operate in an exceptionally high-cost environment.
The civil aviation industry, which was hit hard by the global financial meltdown and high fuel cost, saw a strong recovery in 2010 with the domestic passenger traffic rising 19 per cent to 51.53 million, the Economic Survey said on Friday.
Civil Aviation Minister Jyotiraditya Scindia on Tuesday flew on SpiceJet's special flight between Delhi and Gwalior using Boeing's 737 Max plane that has been allowed to return to service after two and half years. All Max planes were grounded in India by the Directorate General of Civil Aviation (DGCA) on March 13, 2019, three days after the crash of an Ethiopian Airlines 737 Max plane near Addis Ababa, which had left 157 people, including four Indians, dead. Along with Scindia, SpiceJet CMD Ajay Singh and Boeing India president Salil Gupte were also present on the special flight on Tuesday.
Jet Airways and Kingfisher Airlines may move towards a second round of mergers and acquisitions as smaller low-cost airlines and other rivals, hurt by rising fuel prices, seek an exit from the business to cut losses, an industry expert said. State-run oil firms have hiked jet fuel (aviation turbine fuel) prices by 18.5 per cent in line with rising international crude oil prices.
With crude oil price crossing $100 per barrel mark, the airlines have begun to pass some of the cost on to the consumer to meet the increased air turbine fuel expenses, and asked the government to take steps to reduce the cost of aviation fuel.
While there are some new faces in the cabinet, leaders such as BJP president JP Nadda and Jual Oram have returned as ministers.
Observing that the Indian aviation industry was passing through a 'fragile and delicate moment', he said some airlines could go bust in the coming few months if 'structural changes are not carried out expeditiously'. As many as 25 carriers worldwide have folded up operations in the past several months due to huge losses, the latest being Italian national carrier Alitalia, leading to over 100,000 jobs in the aviation sector being lost.
Indian Oil, Bharat Petroleum and Hindustan Petroleum raised the aviation turbine fuel price by Rs 585 per kilolitre in Delhi to Rs 32,199 with effect from midnight tonight, an IOC official said. The increase comes on the back of a marginally one per cent reduction effected on May 1, which had brought the rates in Delhi down to Rs 31,614.51 per kl.
InterGlobe Aviation, the operator of India's leading airline IndiGo, delivered a better than expected performance across most parameters in Q2FY24. The company posted its fourth consecutive quarter of net profit of Rs 188 crore. It had reported a loss of Rs 1,583 crore in the same quarter a year ago.
ATF in Delhi will cost Rs 56,324.79 per kilolitre, an increase of Rs 77.93 per litre or 0.13 per cent, from Rs 56,246.86 per kl, an official of the Indian Oil Corporation, the nation's largest fuel retailer said.
Airlines like IndiGo and Jet Airways have been quick to take the cue to keep their fuel costs under check.
In the first reduction in rate in two months, jet fuel or ATF price on Thursday was cut by 3 per cent in line with softening international crude oil prices. Aviation turbine fuel (ATF) price was reduced by Rs 1,887 per kilolitre, or 3 per cent, to Rs 58,374.16 per kl in the national capital, according to a price notification of state-owned fuel retailers. This is the first reduction in rates after four rounds of increase since February. Rates were increased by Rs 3,246.75 per kl on February 1, followed by a 3.6 per cent hike on February 16, and a steep 6.5 per cent raise on March 1. On March 16, prices were again raised by Rs 860.25 per kl. On Thursday, a Rs 10 per cylinder reduction in price of domestic cooking gas LPG also came into effect.
The jet fuel rate will go up by Rs 104 per kilolitre in Delhi to Rs 32,303, an IOC official said. The increase comes on the back of a 1.8 per cent hike in rates on May 16. On May 1, state-run oil firms marginally reduced the price by one per cent, which had brought the rates in Delhi down to Rs 31,614.51 per kl. In Mumbai, home to the nation's busiest airport, the rate will go up from Rs 33,138 per kl to Rs 33,261 per kl.
Aviation turbine fuel prices increased by 34 per cent whereas fares - on an average across the country - shot up by more than 65 per cent. Since fuel accounts for about 45 per cent of the total costs, the actual impact on airlines, in terms of increase in the cost of operation, would have been around 15 per cent. Airlines also cut capacity by 20 per cent during the period.
Indian airline industry is expecting to prune its net losses to Rs 3,000-5,000 crore in this fiscal from an estimated Rs 17,000-17,500 crore in FY2023 on the back of improved yields and stable cost environment, credit ratings agency ICRA said on Tuesday. At the same time, ICRA also estimated that domestic air passenger traffic will expand by 8-13 per cent each in FY2024 and FY2025. The rating agency has also maintained its stable outlook on the industry in view of healthy passenger traffic growth, improved yields and a stable cost environment.
The Centre asked state governments on Friday to review and rationalise their taxation policy on jet fuel and land acquisition practices to encourage the expansion of civil aviation sector so that they could themselves reap the benefits of its unprecedented growth.
Jet fuel prices were on Thursday hiked by 3.8 per cent, the second increase in rates in as many months.
Indian airlines on Wednesday filled aviation turbine fuel (ATF) into the tanks of their aircraft at Rs 68,000 a kilolitre. Around the same time, ATF sold at $1,037.8 (Rs 41,500) a kilolitre at the Singapore airport -- full 39 per cent below Indian prices.
"The 'red bag' belonged to one of the hijackers, it contained explosives, and possibly, real passports, too.
Hike comes on back of a massive 6.14 per cent increase in rates effective from March 16 in line with rising crude oil prices.
IOC and other state retailers had on September 16 raised jet fuel price by 2.5 per cent.
The airline industry was impacted last year by the global economic slowdown but the growing Indian and Chinese markets are expected to help boost the sector, Civil Aviation Minister Ajit Singh said.
Notwithstanding the sweltering heat engulfing major cities, travellers can find solace in the steady airfares to popular summer destinations like Srinagar, Bagdogra, and Kochi. According to airline executives, capacity increases and moderate demand have kept spot airfares from scorching cities like Delhi on a par with the same period last year.
'The prime minister took a meeting recently and he asked for suggestions and ideas for a plan till 2047.'
Jet fuel or ATF price on Wednesday was cut by almost 6 per cent after four rounds of monthly increases since July, while commercial cooking gas (LPG) rates were raised by a steep Rs 101.5 per 19-kg cylinder in line with international benchmarks. However, the price of domestic LPG - used in household kitchens for cooking purposes - remained unchanged at Rs 903 per 14.2-kg cylinder. Aviation turbine fuel (ATF) price was cut by Rs 6,854.25, or 5.79 per cent, in the national capital to Rs 111,344.92 per kl from Rs 118,199.17, according to a price notification of state-owned fuel retailers.
Honda Motorcycle & Scooter India (HMSI), the wholly-owned two-wheeler subsidiary of Japan's Honda Motor Company, on Wednesday launched its new 'Aviator' model scooter with 15 per cent increased fuel efficiency, in Mumbai.The ex-showroom price is Rs 50,410 for its deluxe model and Rs 45,180 for its standard model.
The government on Tuesday increased the windfall profit tax on crude oil produced in the country and reduced the levy on exports of diesel. The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil was increased to Rs 9,800 per tonne from Rs 9,050 a tonne, according to an official notification. SAED on the export of diesel was reduced to Rs 2 per litre from Rs 4 a litre and on jet fuel or ATF to nil from Rs 1, the notification said.
An Airbus A320, owned by China Eastern Airlines, landed at Shanghai's Hongqiao International Airport this morning after completing an 85-minute journey using Sinopec's new aviation fuel, the company said in a statement.
On the Rs 20,000-crore (Rs 200-billion) modernisation of Delhi and Mumbai airports, the survey said work is in progress, adding that while the Delhi Airport project is likely to be completed by 2010, work at Mumbai airport will be over by 2012.
In India, domestic airlines have not secured any relief from the government and are reporting 50-55 per cent loads as domestic air travel resumed on May 25 after two-month suspension.
The country's largest airline IndiGo on Thursday reported more than doubling of its net profit to Rs 1,894.8 crore in the three months ended March 2024 and announced the introduction of business class in select routes this year. The strong performance in the latest March quarter, which also marks six consecutive quarters of profitability, was fuelled by higher traffic, increased capacity and a favourable external environment.
Given all the risks in the world today, including the political instability, economic uncertainty, public health emergence and terrorism, there is not much buffer to absorb a significant change for the worse in the operating environment
Travelling to foreign countries might become costlier with India's international carrier Air India and 40 other foreign airlines planning to levy a surcharge to offset increase in international prices of aviation fuel.
Issues raised by the industry, like rationalisation of the eight per cent central excise on jet fuel, still remain to be addressed. As a result of the government abolishing five per cent customs duty on aviation turbine fuel from Tuesday, state-run oil firms have cut jet fuel prices by Rs 2,100 per kilo litre, on top of the 17 per cent price reduction announced late last week.
Indian is planning to start hedging its international fuel purchase in the wake of spiralling aviation turbine fuel cost that is eating into its profits
Adding petrol and diesel to GST was a challenging task due to their significant role as revenue generators for both the central and state governments.
After the two hikes, the ATF prices had risen to above September levels, the official said. The three oil firms revise jet fuel prices on the first and the 16th day of every month based on the average global oil price in the previous fortnight.
Reduction in fuel price was supposed to bring back good luck for Indian airlines. But with the global spread of coronavirus, airlines are being forced to rejig their network, cut flights, and delay launches.
