The country?s largest private carrier by fleet size and market share Jet Airways could put additional capacity on short-haul international routes instead of domestic sectors with margins remaining negative in the local market.
?Domestic carriers are selling their tickets below the cost. In spite of air traffic growing 15% y-o-y the yield is low. If this continues we could put our aircraft (B737s) on international routes in summer,? Jet Airways COO Nikos Kardassis said.
The international operation offers Indian carriers better margins as they have to pay 30% less for jet fuel, which contributes nearly one-third to their total operating cost. Jet Airways earns 58% of its revenue from its international operations.
Nikos said that domestic airlines are currently selling tickets 15-20% below the cost with some airlines charging R3,500 for certain flights on the Delhi-Mumbai route, nearly half the price a full-service carrier needs to charge to remain profitable. ?Low average air fare is a big concern,? the CEO said.
Some of the airlines recently took up the issue of below-the-cost pricing of air tickets with the PMO. The carriers have argued that the existing fare level in the country is 50% lower compared to countries like Canada and the US for similar distance.
The civil aviation ministry has asked the DGCA to check if the tariff is really low as argued by the airlines. ?We also have the responsibility of ensuring financial health of the industry. In the absence of this airlines may cut on maintenance and safety which could be serious,? a senior aviation ministry official said.
