Indian Aviation Industry is grounded.

Any recovery will take serious effort -BY ANJULI BHARGAVA

 JET AIRWAYS JET

LITE AIR INDIA KINGFISHER & SPICE JET

Holds 75% of market. Combined debt of Rs. 60,000 crore (FY11)

 AIR

INDIA, in national carrier,

With losses several times higher than Jets & KFAs put together.

Low-cost

Airlines Spice jet, owned by Marans of Chennai, is losing money too. This year, with global crude prices rising, even some of the profitable airlines of last year are expecting to make losses.

 Ministry

of Civil Aviation in New Delhi, senior bureaucrats said-Whether the airline was carrying out the required safety checks before flying. FINANCIAL CRUNCH OR NOT, SAFETY REMAINS CARE

SPICEJET Market Share (%) Total Income (Rs. Cr.)* Total Expenditure (Rs.Cr)* Fuel Cost (Rs. Cr) Net Profit/ loss (Rs. Cr)* 13.30 759.03 998.30 478.14 -240.07

JET AIRWAYS 26.10 312.28 3328.75 1491.20 -713.60

KFA 18.80 1528.16 1900.13 816.81 -469.00

One, Air India which enjoys government support cuts fares to fill aircraft and sparks off a price war every few months even though its losses keep mounting. This year in January, it cut fares sharply and everyone had to follow. In April, Jet Airways aware that this would lead to blood on its balance sheet tried to raise fares marginally, but failed. Its loads fell sharply and it had to cut fares again. In the quarter ending 30 September, all airlines in India saw fares decline by 15 per cent while costs rose by 25-30 per cent, largely because of fuel price hikes. The result: combined losses of close to Rs 2,000 crore in a single quarter.

 The

second problem unique to India is that the aviation turbine fuel (ATF) sales tax (which varies across states) is among the highest in the world. No one can make money in India unless these taxes are rationalised, says Kapil Kaul, CEO for South Asia at Centre for Aviation (Capa). Jets Kardassis says the airline would turn profitable instantly if these taxes were removed.

 One

of the things Mallya wants is foreign airline equity to be permitted in airlines flying in India. He has been exhorting the government to allow this for a couple of years now. Go Air is supposed to hold similar views. Meanwhile, most other airlines are opposing the move to allow foreign equity. Jet Airways, IndiGo, SpiceJet none of the three are pushing for this and, in fact, some are lobbying against this, says an aviation ministry official. Air India, too, is not keen on allowing a foreign player as it thinks that a foreign airline combined with one of the stronger domestic players could wipe out whatever little advantage it has.

 Mallya

could take solace from the fact that his two biggest rivals Jet Airways and Air India also have their own set of woes. Go Air and SpiceJet are also in trouble, but their troubles are smaller in magnitude as the airlines are smaller. The airline has no dues with oil vendors beyond the normal credit period but it is exploring whether it can pay right on the due date and secure a discount of 1-1.5 per cent on its total bill.

 Jet

despite trying for the past 5-6 years has not managed to raise funds. But its auditors have asked the airline to somehow raise cash. Industry rumours are that Mukesh Ambani has in the past given cash at different times to Goyal to save the airline. Air India is becoming a bottomless pit for the Indian government. Go Air has also been trying without success to raise funds for the past 3-4 years