1. Pressure on yields may hit profitability: Jet Airways

Pressure on yields may hit profitability: Jet Airways

Jet Airways on Friday said constant pressure on yields could impact its profitability in future amid enhanced competition and discounted fares.

By: | Published: May 27, 2016 6:32 PM
Jet Airways CFO and acting CEO Amit Agarwal today said a significant portion of the decline in fuel cost has been passed on to the yields. Jet Airways CFO and acting CEO Amit Agarwal today said a significant portion of the decline in fuel cost has been passed on to the yields.

Jet Airways, which has remained profitable for four straight quarters, today said constant pressure on yields could impact its profitability in future amid enhanced competition and discounted fares.

Notwithstanding local carriers offering steep discounts in fares to attract more passengers, Jet Airways indicated that it would not resort to low fare regime and would focus on “bottom line perspective”.

Primarily aided by lower fuel expenses and higher passenger numbers, Jet Airways on Thursday reported a net profit of Rs 426 crore in the three months to March. It also marked the airline remaining profitable for the fourth consecutive quarter.

Jet Airways CFO and acting CEO Amit Agarwal today said a significant portion of the decline in fuel cost has been passed on to the yields.

Yield is the amount a carrier makes from a flight and fare is a major component of it.

“Yields continue to be, especially in the domestic market, under pressure… as a market reality both in the domestic and international fields. That will also play a role in profitability going forward,” Agarwal said during an analysts call to discuss the latest financial numbers.

Acknowledging that there is pressure on yields, Jet Airways Whole Time Director Gaurang Shetty said the airline has decided to utilise its assets more.

“We are trying to ensure that we have high occupancy. More importantly, I think we look at it (ticket prices) from the bottom line perspective so that the revenue that we earn per flight delivers significant returns.

“I think, we will play the game that we believe right for us… than just imitating what everybody else does in the market,” he said.

Further, he stressed that the carrier would manage its flights based on the bottom line perspective.

Noting that crude prices have recently started to increase but are still at reasonable levels, Agarwal said, “We expect travel demand to remain robust albeit lower ticket prices”.

According to the senior Jet Airways officials, there has been significant cost reductions resulting from contract negotiations, fall in fuel prices and other factors.

The airline — which rakes in more than 55 per cent revenues from international operations — has seen improved traffic to ASEAN and other regions.
In 2015-16 fiscal, the number of passengers ferried by Jet Airways rose to 25.8 million.

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