India's four leading private airlines Indigo, SpiceJet, GoAir, Jet Airways and JetLite are estimated to have clocked a profit of around Rs 224 crore during the first quarter of this fiscal and are on track to achieve Rs 1,120-crore profit for the full year, according to the latest Centre for Asia Pacific Aviation (Capa) India report. The report does not include the financial performance of Kingfisher as the "uncertainty regarding the scale of the Vijay Mallya-controlled airline's operations means that any outlook for the year's financials is very difficult to estimate and its full-year loss could be higher than expected".
Capa, an aviation industry think tank, has concluded that since most commercial airlines' underlying profits remained modest at best after excluding sale and leaseback of aircraft and other non-operating income during the peak travel quarter (April-June), which saw strong yield improvement, structural imbalances still remain. As a result "sustainable recovery" in the aviation sector "will be challenging".
IndiGo continues to be the lead performer in the market. However, the elevated cost environment in the domestic market has also resulted in a downward impact on its first quarter performance. The impact of international services could be greater than expected and hence IndiGo's net profit for Q1 may be less than Rs 106 crore as estimated by Capa.
Jet Airways continues to face a strategic challenge with respect to its cost strategy, which remains ill-defined despite the fact that its subsidiary Jet Konnect accounts for the majority of the airline's domestic capacity. The confusion is reflected in the fact that certain aircraft operate as full service in one direction and then return as low-cost flights. Jet's revenue growth was surprisingly modest given that the airline was presented with a potentially invaluable opportunity to exploit the difficulties faced by both of its full-service competitors Air India and Kingfisher.
Despite the troubles of its arch-rival Kingfisher, Jet achieved only a modest 8.9 per cent increase in gross revenue per passenger on domestic routes while international gross earnings grew 11.8 per cent, which was again below expectations given that the largest operator Air India was crippled for most of the quarter due to the strike.
The report lists GoAir as the "surprise package performing better than most of its larger competitors". The airline is maintaining stable operations with a high level of customer satisfaction and has achieved the highest gross fares in the market between Rs 5,100 and Rs 5,200 among the low-cost carriers aided by the fact that it operates on several routes on which it faces limited competition.
SpiceJet's financial performance continues to be impacted at a net level by its regional Q400 operations, which are still in the development stage and are yet to turn profitable. The carrier's decision to launch its latest international route to Dubai in the summer, when point-to-point traffic is lowest, is also likely to weigh down its September quarter (Q2) results.
Courtesy: Mail Today