SpiceJet 737-800. Courtesy, Boeing
After five consecutive quarters of losses, India’s second largest low-cost carrier SpiceJet (SG) posted a profit of INR561.2 million ($10.2 million) for the first quarter ended June 30, compared to a loss of INR719.6 million in the year-ago period. Revenue surged 51% to INR14 billion in the period. India’s financial year runs from April 1 to March 31.The turnaround in SG’s performance was mainly due to higher fares. Indian carriers can charge about 30% more for tickets compared to last year after loss-making Kingfisher Airlines cut capacity substantially in its struggle to stay afloat (ATW Daily News, July 4).
In a statement, SG CEO Neil Mills warned of tough market conditions: “While we expand our footprint in domestic as well as international sectors, the excessive taxation on ATF [aviation turbine fuel] in India and the weakening of rupee against the dollar are matters of serious concern. The sharp increase in airport charges and other pass-through levies in various forms increase the cost of air travel to our passengers without bringing any additional revenue to the airline. The need of the hour is for the government of India to intervene proactively and launch initiatives urgently to improve the health of Indian civil aviation.”
Passenger traffic rose 26% in the quarter and average revenue per passenger jumped 24%, Mills said. The results have beaten analysts’ expectations.
Airlines in India collectively lost about $2 billion in 2011 mainly because of high fuel costs and poor margins arising from overcapacity. The improved yields are expected to help the financial position of all Indian carriers; airline stock prices have begun to rise in anticipation of better performance.
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