Indian domestic airline industry deeply affected due to rise of crude oil price

 Thursday, July 19, 2018 


Indian domestic airlinesThe domestic airline industry of  India is expected to post losses to the tune of Rs 3,600 crore in the current fiscal on rise in crude oil prices and falling rupee.



This huge loss would come despite around 15 percent expected average annual growth in passenger traffic over the medium-term due to conducive factors, support from regulatory environment and development of new airports.



The higher crude prices, due to which most airlines saw a decline in their yields during the second half of FY18, resulted in a higher than estimated aggregate loss for the domestic aviation industry to around Rs 2,400-2,500 crore in the previous fiscal, the report said.



According to Icra, the ATF price was 35.4 percent higher as on March 31, 2017, against the March 31, 2016 level, impacting the financial performance of the airlines during the year due to their inability to pass on the increased cost to the customers.



While the jet fuel prices declined by about eight percent to Rs 51,640 per kilo litre (kl) as on September 2017, partly on account of the appreciation of the rupee, it witnessed a significant year-on-year increase of 12.6 percent to Rs 63,162 per kl as on March 2018.




Overall, the average ATF prices during FY18 were higher by 10.4 percent.




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