Are the rescue plans in the aviation sector working? With losses this financial year estimated to be Rs 10,000 crore, going forward, airlines have more reasons to worry. From April onwards, the chieftains of various airlines will once again have a fresh round of fund raising exercise. Approaching banks for procuring loans and meeting potential private equity players could be the order of the season, with minimal hopes of revival in the short term.
The ensuing financial year could spell worry for the industry in multiple ways. The issues that the sector needs to grapple with abound. From pending dues to the oil companies worth Rs 5,000 crore to paying their airport usage fee of over Rs 4,000 crore to the Airports Authority of India (AAI), the sector needs to clear it all before they see reasons to rejoice.Though the cost of aviation turbine fuel cost is falling to low levels below $53 a barrel compared to $147 a barrel in August 2008, airlines will not be able to pass on the benefits to the end-consumer any time soon. I remember an executive of Jet telling me about the scuffle that his team has had to go through each passing day in such a grim scenario. He said, ?Market dynamics are changing. Travellers want cheap fare even for the business class. If we lower our fares in lieu of the low ATF prices, we will not be able to improve our bottom lines?.
shaheen.mansuri@expressindia.com