Aviation industry losses may mount to Rs 2,400 cr

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New Delhi, Feb 8: Despite a huge surge in passenger traffic and revenue from ancillary services, the Indian aviation industry is set to post cumulative losses amountingto around $600 million (approximately Rs 2,400 crore) during 2008, analysts from major brokerage houses have said.

According to data from the directorate general of civil aviation (DGCA), the domestic airline industry posted cumulative losses of around $500 million (Rs 2,000 crore) in 2007. This was nearly seven times more than the Rs 301.74 crore losses posted in 2006.

Analysts from brokerage firms like Merrill Lynch, Prabhudas Liladhar, Enam and Angel, among others, all concurred on the figure of $600 million (Rs 2,400 crore).

However, they somewhat differed on the amount each air carrier would contribute to the losses.

“Deccan posted losses of around Rs 600 crore in the first nine months which would go up to around Rs 800 crore for the full year,” an analyst, who did not want to be named, said. “The UB group-promoted Kingfisher should also post around Rs 700 crore losses after posting six month losses of around Rs 450 crore,” he added.

“The other air carriers would contribute to this, bringing the total to around Rs 2,400 crore,” he said.

But another analyst said, “The losses of Deccan-UB (Kingfisher)combined would come to around $350 million (Rs 1,400 crore) for the full year,” adding that “losses from Air India’s domestic operations would be around $150 million (Rs 600 crore) and Jet subsidiary JetLite would post losses of around $60 million (Rs 240 crore) for the full year.”

“SpiceJet and other unlisted air carriers would add another Rs 200 crore,” she added. But the analysts said these fugures could have been worse had the rupee not appreciated as much as it did.

With regard to the country’s largest private carrier,Jet Airways,analysts maintain that it would break-even, thanks to the sale and lease back of aircraft over the past year.

The main costs of airlines were incurred in salaries and other operational matters. Industry estimates point out that the starting salaries of pilots have gone up by as much as 75% in the last one year owing to the launch of more airlines and shortage of skilled workforce. Salaries constitute about 20% of an airline’s cost.