After rationalising flights and routes, major domestic airlines like Kingfisher, Jet Airways and SpiceJet are introducing sharp cutbacks in staff and salaries to cope with slower passenger growth and rising aviation turbine fuel costs. Manpower typically accounts for 10-15 per cent of an airline's total costs.
The aviation turbine fuel (ATF) prices have been raised by Rs 2,750 per kilolitre effective midnight tonight, Indian Oil Corporation (IOC).
Petrol and diesel price on Sunday was hiked again by 35 paise a litre and the auto fuels now cost a third more than the rate at which ATF is sold to airlines. The fourth straight day of 35 paise per litre hike sent petrol and diesel rates to record highs across the country. The price of petrol in Delhi rose to its highest-ever level of Rs 105.84 a litre and Rs 111.77 per litre in Mumbai, according to a price notification of state-owned fuel retailers.
Private carrier Jet Airways is expected to further consolidate its international operations into a major revenue grosser in FY09, to overcome the growing turbulence in the domestic sector. The general economic scenario does not bode well for capacity expansion on domestic routes, with some of these struggling on account of overcapacity, and only yesterday some airlines were pushed to hike fares to make up for higher aviation turbine fuel prices.
Inflation rose to 3.79 per cent for the first week of the New Year from 3.50 per cent during the previous week even as prices of some essential food items like vegetables and fruits fell.
While higher fuel costs and irrational pricing are key concerns, infusion of funds to retire debt is crucial if Kingfisher Airlines has to improve its financials.
While higher fuel costs and irrational pricing are key concerns, infusion of funds to retire debt is crucial if Kingfisher Airlines has to improve its financials.
Inflation further eased to 4.80 per cent for the week ended June 2 as compared to 4.85 per cent in the previous week, mainly due to decline in food prices and some fuel and manufactured items.
State-run oil firms on Saturday hiked jet fuel (aviation turbine fuel) prices by 18.5 per cent in step with rising international oil prices.The ATF price charged from airplanes has been raised to Rs 69,227.08 per kilolitre (kl) in Delhi from midnight on Saturday, an Indian Oil Corp, the nation's largest retailer, said.
Airline losses have more to do with their business models than the price of aviation fuel.
Air Sahara on Tuesday announced a 10 per cent fare hike with effect from June 21 following an increase in the aviation turbine fuel price.
Air France on Thursday became the first international carrier to hike its fares from India by three euros, citing steep rise in aviation turbine fuel prices as the reason, which may also force Indian carriers to follow suit.
'This is a huge step in promoting the 'Make in India' mission as this bio-fuel would be produced from Tree Borne Oils sourced from tribal areas and farmers.'
Civil avation minister Praful Patel said on Tuesday he would once again take up with the finance minister P Chidambaram the issue of rationalisation of taxes on Aviation Turbine Fuel.
The US-led war against Iraq and the Severe Acute Respiratory Syndrome have led to sharp decline in demand for air travel and raised costs on account of aviation turbine fuel, the Lok Sabha was informed on Monday.
Full-service carrier Kingfisher Airlines has sought permission from the petroleum ministry to extend the date for paying dues to public sector oil companies for aviation turbine fuel.
Succumbing to government pressure, Vijay Mallya-promoted Kingfisher Airlines on Monday decided to cut fares, but with the condition that the government put aviation turbine fuel in the declared goods category. Kingfisher has also assured that it would not resort to retrenchments to deal with the downturn.
State-owned Indian (formerly Indian Airlines) on Wednesday said it has introduced a fuel surcharge of Rs 300 for travel on domestic sectors due to steep hike in aviation turbine fuel prices.
The Indian aviation sector is on the cusp of a change as airlines look to induct a record number of aircraft. This, analysts said, will put the sector on a growth runway, though keeping it viable for only long-term investors. According to Vinit Bolinjkar, head of research at Ventura Securities, expectations of strong air traffic, coupled with low penetration, is the prime reason for a solid long-term outlook.
The country's largest private air carrier Jet Airways today posted a net loss of Rs 101.22 crore (Rs 1.01 billion) for the third quarter of 2011-12 on account of rising prices of aviation turbine fuel and rupee depreciation.
With indications that government is keen to allow foreign airlines buy stakes in Indian carriers, a Group of Ministers (GoM) is likely to meet next week to decide on the investment cap by them, official sources said on Friday.
Faced with the prospect of $1.5 billion losses owing to a slowdown in passenger traffic and high aviation turbine fuel (ATF) costs, airline companies are cancelling or cutting deliveries of new aircraft due this year or sub-leasing them to other carriers globally.
After failing to convince states to keep petroleum products within the ambit of the proposed goods and services tax (GST), the Centre has finally relented. It has agreed to the proposal of the empowered committee of state finance ministers to keep petroleum products like crude, motor spirit, aviation turbine fuel (ATF) and high-speed diesel out of GST.
The government is considering a ban on export of kerosene oil (jet kero) and aviation turbine fuel (ATF), which are similar to kerosene, to boost supplies of kerosene for public distribution system.
Indian Airlines and Air-India are expected to hike airfares by ten per cent following a green signal from Civil Aviation Minister Praful Patel.
Oil marketing companies to lose 10 paise on petrol and Rs 6 per litre on diesel from next month.
The increase in prices of jet fuel by about nine per cent would put an additional burden of Rs 550 crore (Rs 5.5 billion) on national carrier Indian and the airline has asked the government to consider levying a fuel surcharge on air travel or hiking
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Observing that the prime reason for these losses was high fuel cost which constituted almost 40-50 per cent of an airline's total costs, Civil Aviation Minister Ajit Singh said the aviation turbine fuel (ATF) prices were high due to rising base price and "very high VAT imposed by state governments."
Households continued to bear the brunt of increased cost of living with inflation rising by 0.35 per cent to 7.96 per cent for week ended August 7, mainly due to costlier vegetables, petrol, diesel and aviation turbine fuel.
Currently, OMCs provide A-I a two-month credit. "There was a request from the committee of secretaries to extend the credit on ATF to three months from the existing two months to help Air India.
After eight successive price cuts, state-run oil firms on Thursday raised jet fuel prices by 3.4 per cent reflecting increase in international oil prices.In Mumbai, the home for nation's busiest airport, ATF price will rise by Rs 1,068.87 to Rs 32,447.65 per kl.
There is no proposal from Indian Airlines to sell its assets for meeting daily expenses and neither has it sold any for the purpose, Civil Aviation Minister Shahnawaz Hussain said on Monday.
State-owned oil marketing companies have cut the prices of aviation turbine fuel, or jet fuel, by 12 per cent from midnight tonight - the first fortnightly price revision.
The airline has an annual wage bill of Rs 3,100 crore (Rs 31 billion) and the report has said as many as 2,600 employees will retire during the period of freeze.
Indian Airlines fares have been raised by 15 per cent across the board with immediate effect due to a massive increase in the prices of aviation turbine fuel, Civil Aviation Minister Shahnawaz Hussain
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