As the airlines struggle to stay profitable, domestic capacity is rapidly shifting to the low-cost model. But it seems that charging for meals and baggage aren't enough to offset higher fuel prices and a depreciating rupee.
As two foreign airlines girdle up for new launches in India, the five incumbent carriers in the Indian skies are battling tough times. The two biggest carriers by fleet size, Jet Airways and Air India, are bleeding the most. Jet has lost Rs 1,400 crore in the first two quarters of 2013-14, more than it has earned in the past 10 years.
The national carrier, on the other hand, has projected losses of Rs 4,000 crore for the year, while SpiceJet has lost Rs 609 crore in the first six months of the fiscal. The two others, market-leader IndiGo and GoAir, are unlisted and don't report quarterly numbers.
As the airlines struggle to stay profitable, domestic capacity is rapidly shifting to the low-cost model. But it seems that charging for meals and baggage aren't enough to offset higher fuel prices and a depreciating rupee.
The only silver lining: The December quarter is traditionally the best time of the year for airlines. All the five carriers are reporting better revenues and higher margins. Other than GoAir, all the others are launching new foreign routes that will bring in higher dollar earnings. This is good news as it offers a natural hedge against the volatile rupee and fuel is also cheaper overseas.
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