Aviation sector continues to struggle with mounting losses

KOCHI: High fuel prices and the depreciation of the rupee continue to push Indian airlines deeper into losses. While IndiGo managed to reduce its losses in the second quarter of the current financial year, the losses of the Air India Group more than doubled. SpiceJet is also facing a crisis due to a severe cash crunch, grounded aircraft and operational challenges. The increase in passenger numbers has failed to bring the expected gains for airlines, mainly due to high aviation fuel prices.

IndiGo, the country's largest airline, reported a loss of Rs 1,879 crore in the second quarter ended September. This was 27 per cent lower than the Rs 2,582 crore loss recorded in the corresponding period last year. Its revenue rose 26 per cent to Rs 23,364 crore. Despite pressure from higher fuel costs and geopolitical tensions, changes in airfares and cost-control measures helped the airline reduce its losses.

Air India group's losses surge

Tata Group-owned Air India Group reportedly posted losses of more than Rs 6,000 crore in the first quarter of the current financial year. This was more than double the loss of over Rs 3,000 crore recorded in the same period last year. Higher fuel costs, the depreciation of the rupee and longer flight routes due to restrictions on airspace have affected the airline's operations. These factors have particularly increased the cost of international services.

Crisis deepens

According to rating agency ICRA, the Indian aviation industry's total losses are expected to reach Rs 36,000 crore to Rs 38,000 crore in the current financial year. Air India and SpiceJet are facing serious challenges. Delays in salary payments, grounded aircraft and disputes with aircraft lessors have affected SpiceJet's operations.

Key challenges

• High aviation fuel prices
• Depreciation of the rupee
• Pressure from aircraft lease costs
• Slowdown in the tourism market

Performance in September

Airline............................Market share
IndiGo............................65.4 per cent
Air India Group..............26.8 per cent
Akasa Air........................5.6 per cent
SpiceJet.........................0.6 per cent