The lure of foreign skies

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: have been close to the cost of operations in the domestic marketplace, going international, in a sense, helps de-risk an operator's business model. In other words, points out Menon, an operator is not dependent on one segment alone, but a presence across a horizontal rather vertical approach. Says Kaul, “Operators, going forward, will derive 50% revenues from domestic operations and 50% from international operations.”

What makes the international air travel business exciting for domestic full-service carriers is the fact that fuel costs are cheaper abroad. So the cost of operations can come down, almost 30-40%, by some estimates. Says Batra of KPMG, “Aviation turbine fuel (ATF) is a controlled commodity in India. It is not so abroad. It is freely tradeable there. Naturally players flying abroad will stand to gain from this since fuel is a big component of operating cost for an airline. If it comes down, there are significant savings for the carrier.”