Factbox- India's loss-making airlines sector
Debt-laden Kingfisher Airlines on Friday continued to cut flights just as the country's travel season enters its peak period, catching hundreds of passengers off guard, pushing up spot airfares and putting the spotlight on the loss-making sector.
November 12, 2011 / 12:13 IST
Debt-laden Kingfisher Airlines on Friday continued to cut flights just as the country's travel season enters its peak period, catching hundreds of passengers off guard, pushing up spot airfares and putting the spotlight on the loss-making sector.
Indian carriers have placed orders worth USD 50 billion with Boeing and Airbus for aircraft to be delivered over the next decade, borrowing heavily and causing investors to remain wary of the sector.Here are some facts about India's aviation industry:* The country has six major airlines -- Jet Airways, Kingfisher Airlines, SpiceJet, Indigo Airlines, GoAir and state-run Air India.* With the exception of Indigo, all the airlines are loss making.* The three full service carriers -- Jet Airways, Kingfisher and Air India -- have combined debt of more than USD 13 billion.* India allows foreign investment in the country's carriers to the tune of 49% but foreign airlines are not allowed to invest in them.* Kingfisher and Jet have not been successful in tapping foreign investors in recent years. Billionaire Wilbur Ross invested in and subsequently exited budget airline SpiceJet in 2010, making it the only Indian carrier to get major foreign investment recently.* India's industry secretary said last month that the government was likely to approve a plan to allow foreign airlines to buy stakes in Indian carriers. Aviation Minister Vayalar Ravi also said his ministry was considering such a plan.* Most mergers in the sector have run into problems as witnessed by Kingfisher's acquisition of the country's first low cost carrier Air Deccan in 2008. The combined entity is yet to post a profit.* Air India has also not posted a profit since merging with former state-owned partner Indian Airlines in 2007 and relies on handouts from New Delhi to survive.* In 2007, Jet Airways acquired Sahara Airlines for 14.50 billion rupees (USD 289.3 million) and renamed it JetLite. But both parties have since been engaged in a legal battle over payment issues.* Air India and Kingfisher have both undergone a debt restructuring process. Kingfisher cut its debt by issuing shares to 14 banks. But banks are wary of lending to large carriers.* Indian states heavily tax sales of aviation turbine fuel, the key input for carriers, and ATF prices for domestic operations in India are higher than international benchmarks.* Indian air traffic was growing at close to 19% in the first eight months of the year, according to government data. Analysts expect the pace of growth to continue. * The Centre for Asia Pacific Aviation has forecast a record USD 2.5- USD 3 billion loss for Indian airlines for the year ending March 2012, with Air India alone likely to account for more than half of it. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
