Wednesday, February 3, 2010

India’s Traffic Bounces Back, But Profits Still Lag


Aviation Daily Feb 03 , 2010 , p. 10
Neelam Mathews

India may well be proving soothsayers wrong as domestic traffic is bouncing back to previous levels after rising 7.5% last year from 2007.

Yields, however, continue to take a beating.

The country’s major airlines released their quarterly earnings for three months ending December 2009. Jet Airways led in market share at 26.9% for the main line carrier and JetLite combined. It posted a profit of $23 million, up 149% from the same period last year. Kingfisher Airlines captured a market share of 20.8% and recorded a loss of $91 million widened by a marginal loss of 2%, compared with the third quarter of fiscal 2008. SpiceJet garnered a market share of 12.9% and registered a net profit of $24 million, up from a net loss of $3.8 million in the same quarter year-ago period.

All three listed airlines reported operating profits, whereas Jet and SpiceJet in the same quarter in fiscal 2008 had operating losses. The decrease in fuel prices aided in the operating profits. For the three months ending in December, they spent nearly 32%-33% of operating revenues on fuel. Last year, the companies spent about 38%-48% of operating revenues on fuel.

The usually profitable and privately owned airline, budget carrier Indigo, is expected to have a higher profit (around $17.6 million in 2009) than in previous years. The carrier is said to have the best on-time performance record — 82% for the year.

National carrier Air India, which releases limited financials and operating metrics, posted a net loss of $318 million, a 9.7% improvement from the October-December quarter in 2008.

The rise in traffic to 43.8 million passengers carried last year on Indian carriers, up from 42.8 million in 2007, contributed to the improving financial state of the three listed Indian airlines. They benefited from an uptick in passenger traffic in the December quarter as well.

Year-on-year, Kingfisher flew 2.74 million passengers, an increase of 4%, while Jet Airways carried 3.41 million passengers, a growth of 33%. SpiceJet’s passenger traffic alos reached 1.5 million during this year’s fiscal third quarter from nearly 1 million in the year-ago period. Air India posted a 24.8% year-over-year increase in passenger numbers to 3.17 million and a 14.4-point surge in load factor to 69.7%.

Pricing discipline by the carriers helped improve the yields in the quarter. Kingfisher’s yield per RPKs improved from $0.10 to $0.11, while Jet Airways’ yield rose from $0.07 to $0.08. SpiceJet’s yield per RPKs climbed from $0.06 to $0.08.

Aircraft lease rentals for the quarter declined by 27% for Kingfisher because it operated fewer aircraft, while it increased 6% for Jet Airways and 3% for SpiceJet, compared with the same period last year.

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