Experts predict good times ahead for private airlines

Losses returned to haunt private sector airlines in the second quarter of the 2012 fiscal, but the strategy of disciplined pricing of fares could see a return to profit in the next half of the fiscal, say industry observers.

During the quarter, the three listed airlines — Jet Airways, SpiceJet and Kingfisher Airlines — posted a combined loss of R1,017.19 crore, as Kingfisher’s loss alone spiralled 61% to R754 crore.

However, the focus on yields and improving passenger traffic trends in the ongoing peak season has led the Centre for Asia Pacific Aviation (CAPA) to estimate that the airline industry (excluding Air India and Kingfisher) will post profit of $120-140 million (R660-700 crore) for the third quarter.

CAPA’s estimates are based on Brent crude oil prices averaging around $110/barrel and exchange rate of R52-54 to the dollar.

“With the onset of the peak season in October, we expect the near-term demand and yield outlook for the industry to be decent,” said Rajani Khetan, an analyst with HSBC Global Research. “Although, fuel prices remain uncomfortably high, we have seen some softening.”

“Airlines maintained pricing discipline and were prepared to sacrifice load factors rather than compromise yields, which were higher than the corresponding period last year,” said CAPA in a note released on October 24.

“The airlines are hoping for a robust second half of the year,” the note added. “The month

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