cyrilroy21
28th May 2013, 18:11
IndiGo again surged ahead of its peers and not only remained the only airline in India to declare a positive net income but increased it four fold in 2012-13 over the previous fiscal. According to a report by the Centre for Asia Pacific Aviation (CAPA), IndiGo closed the last fiscal with net income of $100-110 million against $23 million in FY12.
Every other listed and unlisted airline in India posted losses, though those losses were smaller for each airline compared to FY12. The least loss-making airline was the smallest, GoAir at $14-16 million, followed by SpiecJet at $34 million and Jet Konnect at $53 million. Air India’s negative net income was the largest at $950 million while Jet Airways was at $87 million in FY13. Kingfisher was at $500-520 million.
So why did airlines continue to remain the red, except IndiGo? CAPA says things were fine for the first nine months of FY13 but the January-March quarter spoiled the party. Airlines together generated losses of approximately $700 million in the last quarter alone. Jet Airways, which had reported a marginal profit of $2 million over the first nine months, ended the year with a $87 million loss due to one‐off costs and increased maintenance expenses.
While SpiceJet’s loss of under $1 million for the first three quarters finished up as a $34 million full‐year loss due to maintenance costs being more than $30 million higher than last year, coupled with a significant increase in interest expenses. IndiGo was earlier on‐track to achieve a higher full‐year profit but it too was impacted by lower than expected yields in Q4.
Air India’s losses were intensified as a result of the weak fares environment and the grounding of its 787 fleet during a crucial period.
All in all, India’s airlines lost $1.65 billion on total revenues of approximately $9.5 billion, though the combined losses last fiscal were down compared to approximately $2.28 billion from the previous year, the industry.
But all is not lost. CAPA estimates FY 14 could be profitable for the four private airlines — Jet Airways, IndiGo, SpiceJet and GoAir — which could post combined profits of USD 250‐300 million or more. Going forward, CAPA expects demand for international travel to be a saving grace for the troubled airline sector with growth not only in double digits but also twice of domestic air traffic.
“International traffic growth is expected to be more buoyant than domestic and could grow by 10‐12% as Indian carriers expand and as more bilateral entitlements are expected to be granted to foreign carriers,” the report said.
But here’s the catch: For the first time a foreign carrier, Emirates, claimed the highest market share (over 12%) for traffic to/from India last fiscal, pipping Air India from its historical leadership position. This means even on international traffic, Indian carriers are losing the plot.
“While India’s second largest international carrier, Jet Airways, saw only a marginal increase in traffic as it consolidated its network and dropped services to points such as New York JFK, Milan,Johannesburg and Kuala Lumpur,” the report said.
In contrast, domestic traffic is expected to expand by only 4‐6% in FY14, with most of the growth to occur in the second half of the year, the report said adding that Malaysian budget carrier AirAsia’s possible entry in the second half of this year could spur local demand to some extent.
So national carrier Air India may be left behind in seizing the international opportunity as international operations account for 80% of its losses due to key structural viability issues on its overseas routes due to poor alignment between its fleet structure and route network, and weak commercial capability, particularly in offshore markets.
“The resumption of 787 services will help to improve the situation but huge losses are expected to continue,” says the report.
Meanwhile, Jet is already profitable on international operations and is expected to further strengthen its performance in the coming year as a result of its increasing cooperation with Etihad. IndiGo and SpiceJet are both nearing break‐even on overseas routes, the report observed.
Finally, CAPA thinks direct import of aviation turbine fuel and opportunities to earn revenues from non-ticket or ancillary streams could present a few positives for the troubled airline sector in FY 14.
“CAPA estimates that there is the potential for carriers to generate an additional $500 million per annum through this channel to be developed over the next two years… Low hanging fruit such as charging for premium seats and priority check‐in could generate an additional $10-12 million.”
In contrast to growth in international traffic this fiscal, domestic traffic is expected to expand by only 4‐6% in FY14, with most of the growth to occur in the second half of the year, the report said adding that Malaysian budget carrier AirAsia’s possible entry in the second half of this year could spur local demand to some extent. ends
All Indian airlines except IndiGo flew into red in FY13 - Firstpost (http://www.firstpost.com/business/all-indian-airlines-except-indigo-flew-into-red-in-fy13-823195.html)
Every other listed and unlisted airline in India posted losses, though those losses were smaller for each airline compared to FY12. The least loss-making airline was the smallest, GoAir at $14-16 million, followed by SpiecJet at $34 million and Jet Konnect at $53 million. Air India’s negative net income was the largest at $950 million while Jet Airways was at $87 million in FY13. Kingfisher was at $500-520 million.
So why did airlines continue to remain the red, except IndiGo? CAPA says things were fine for the first nine months of FY13 but the January-March quarter spoiled the party. Airlines together generated losses of approximately $700 million in the last quarter alone. Jet Airways, which had reported a marginal profit of $2 million over the first nine months, ended the year with a $87 million loss due to one‐off costs and increased maintenance expenses.
While SpiceJet’s loss of under $1 million for the first three quarters finished up as a $34 million full‐year loss due to maintenance costs being more than $30 million higher than last year, coupled with a significant increase in interest expenses. IndiGo was earlier on‐track to achieve a higher full‐year profit but it too was impacted by lower than expected yields in Q4.
Air India’s losses were intensified as a result of the weak fares environment and the grounding of its 787 fleet during a crucial period.
All in all, India’s airlines lost $1.65 billion on total revenues of approximately $9.5 billion, though the combined losses last fiscal were down compared to approximately $2.28 billion from the previous year, the industry.
But all is not lost. CAPA estimates FY 14 could be profitable for the four private airlines — Jet Airways, IndiGo, SpiceJet and GoAir — which could post combined profits of USD 250‐300 million or more. Going forward, CAPA expects demand for international travel to be a saving grace for the troubled airline sector with growth not only in double digits but also twice of domestic air traffic.
“International traffic growth is expected to be more buoyant than domestic and could grow by 10‐12% as Indian carriers expand and as more bilateral entitlements are expected to be granted to foreign carriers,” the report said.
But here’s the catch: For the first time a foreign carrier, Emirates, claimed the highest market share (over 12%) for traffic to/from India last fiscal, pipping Air India from its historical leadership position. This means even on international traffic, Indian carriers are losing the plot.
“While India’s second largest international carrier, Jet Airways, saw only a marginal increase in traffic as it consolidated its network and dropped services to points such as New York JFK, Milan,Johannesburg and Kuala Lumpur,” the report said.
In contrast, domestic traffic is expected to expand by only 4‐6% in FY14, with most of the growth to occur in the second half of the year, the report said adding that Malaysian budget carrier AirAsia’s possible entry in the second half of this year could spur local demand to some extent.
So national carrier Air India may be left behind in seizing the international opportunity as international operations account for 80% of its losses due to key structural viability issues on its overseas routes due to poor alignment between its fleet structure and route network, and weak commercial capability, particularly in offshore markets.
“The resumption of 787 services will help to improve the situation but huge losses are expected to continue,” says the report.
Meanwhile, Jet is already profitable on international operations and is expected to further strengthen its performance in the coming year as a result of its increasing cooperation with Etihad. IndiGo and SpiceJet are both nearing break‐even on overseas routes, the report observed.
Finally, CAPA thinks direct import of aviation turbine fuel and opportunities to earn revenues from non-ticket or ancillary streams could present a few positives for the troubled airline sector in FY 14.
“CAPA estimates that there is the potential for carriers to generate an additional $500 million per annum through this channel to be developed over the next two years… Low hanging fruit such as charging for premium seats and priority check‐in could generate an additional $10-12 million.”
In contrast to growth in international traffic this fiscal, domestic traffic is expected to expand by only 4‐6% in FY14, with most of the growth to occur in the second half of the year, the report said adding that Malaysian budget carrier AirAsia’s possible entry in the second half of this year could spur local demand to some extent. ends
All Indian airlines except IndiGo flew into red in FY13 - Firstpost (http://www.firstpost.com/business/all-indian-airlines-except-indigo-flew-into-red-in-fy13-823195.html)