MUMBAI, Feb 5: India’s airlines lost $400 million in the nine months ended December 2006 as high fuel and aircraft purchase costs hit carriers, and more trouble is ahead, aviation executives said on Monday.
At least half a dozen carriers, including budget airlines, have taken flight in the past three years in India’s skies, dominated by two state-run companies less than a decade earlier.
But profits have been hard to come by for most, and many could fold, leading private airline Jet Airways told a two-day South Asia aviation finance conference in Mumbai.
“The industry is seeing temporary over capacity but will have to charge more to cover costs,” said Wolfgang Prock-Shauer, chief executive officer with Jet Airways.
“The weaker airlines will exit the industry,” he said.
Executives and analysts at the conference forecast sharp growth for India’s aviation sector but stressed that financial and infrastructure problems would hamper growth.
Indian air passenger traffic is tipped to grow to 50 or 60 million by 2010, from around 25 million now, as a booming economy boosts wages in the country of more than one billion people.
With the industry set to grow further, most private airlines have committed millions of dollars to buy aircraft from US-based Boeing and European-based Airbus Industrie, a trend which is expected to continue.
Boeing expects India’s requirements over the next two decades at 856 planes to be worth $72 billion, according to an executive with the company in India.
Airbus has forecast India will order 1,100 planes over the next two decades.
Analysts said demand for seats in the new planes would keep pace.
“Looking at current GDP growth forecasts, air traffic growth is likely to be well above 20 per cent each year,” said Praveen Vetrivel, analyst with research firm International Bureau of Aviation.
Among the carriers, Jet Airways has a 30 per cent market share, followed by state-owned Indian with 21 per cent, 19 per cent for budget carrier Air Deccan and nine per cent each for Kingfisher and Air Sahara.
Low-cost carriers like SpiceJet, GoAir, IndiGo, Jagson and Paramount fight for the remaining 14 per cent share.But the airports and services for passengers have lagged behind this growth, forcing airlines to fly an additional 10 minutes due to air traffic congestion at Mumbai, Delhi and Bangalore, resulting in higher fuel consumption.
“This factor alone accounts for a loss of $80 million annually,” Prock-Shauer said.
Still, leading aviation companies are flocking to India, with more than 500 expected to hold displays at a five-day Aero India show starting on Wednesday in the southern hi-tech hub of Bangalore.—AFP
