Indian Private Airlines

The private airline strike threat was recently called off after government contemplated action. The pet peeve of the private airlines is the aviation fuel costs (40% of which are taxes) and airport charges. The strike was meant to ask government to reduce both. But reportedly not all private airlines were interested in the strike causing a divide in the full service airlines and low cost ones.

Performance-wise there is a stark contrast between the full service airlines and low cost ones.

The full service airlines are making the most losses. Kingfisher lost Rs 243 crore in the latest quarter ending June 2009, Jet Airways lost Rs 225 crore while budget carrier SpiceJet made Rs 26 crore of profits. As compared to the same period a year ago, Jet's revenue's are down 18 per cent while SpiceJet's are up 15 per cent.

Air India has a passenger load factor of 67.9 per cent, Jet Airways' is around the same and Kingfisher's is 72 per cent - SpiceJet, however, is 77.3, GoAir 85,1 and IndiGo 81.6 per cent (all figures for June 2009). That is, the budget airlines are getting in more passengers per flight. Since they have lower costs of flying, this means their costs per passenger seat are much lower than those of the full-service airline. Even in market share these airlines are doing better. Though Kingfisher and Jet have cut capacity, deferred deliveries, and decreased passenger routes, SpiceJet has done the opposite.

So even though the low cost airlines are facing the same situation as the full service ones, they are faring much better despite the high fuel costs. Also, the other argument of high airport charges doesn’t hold true as India has one of the lowest air port charges in the world.

( Airline related posts: What's happening at Air India)

(Source: Primarily Rediff.com)