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| Air passenger numbers rise, yields by far less |
| Mihir Mishra / New Delhi Jul 21, 2010, 01:15 IST |
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Though air passenger numbers showed decent growth in recent months, yields to the airlines are growing at a far lesser pace.
 The passenger numbers have grown at a little over 20 per cent in the past few months. However, “the average fares are still not growing much and the yield of the airlines, in this quarter, may grow only by five-seven per cent,” said the India head of the Centre for Asia Pacific Aviation, Kapil Kaul.
In the first quarter of the last financial year, Jet and Kingfisher registered a decline in yields of 16 and six per cent, respectively. However, the only listed low-cost carrier, SpiceJet, had registered an increase in yield by over 14 per cent.
No fare rise is seen in the near future, as Low-Cost Carriers (LCCs) will not do that and Full-Service Carriers (FSCs) cannot afford to. “The market is essentially low-cost, and the FSCs cannot afford to increase fares. The LCCs also know that they will spoil their market if they raise fares now,” Kaul said.
Still, analysts expect good revenue numbers in the quarter. “The airlines will make profit. With the consistent increase in demand and more than decent occupancy level, the airlines may also see increase in their yields,” said Mahantesh Sabarad, a senior analyst with Fortune Equity Brokers Ltd.
The three listed airlines — Kingfisher Airlines, Jet Airways and SpiceJet — made combined losses of Rs 441 crore in the first quarter of the last financial year. Jet and Kingfisher made losses but SpiceJet made a profit of Rs 26.3 crore.
SpiceJet, for the first time since its inception, ended the last financial year with a profit, of Rs 61.4 crore.
Much to the respite of the airlines, crude oil prices have been under relative control. “The airlines are operating with 20 per cent margin,” said Sabarad. This means crude prices would badly hit their operating costs only if the former surge, which is unlikely at the moment, he said.
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