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karatecatman


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`Aviation sector losing Rs 2,000 cr annually'
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http://www.thehindubusinessline.com/2006/08/24/stories/2006082404300900.htm
`Aviation sector losing Rs 2,000 cr annually'
Our Bureau


Hyderabad , Aug. 23


The country's aviation industry is losing Rs 2,000 crore annually on account of under-priced tickets and mounting fuel costs. Increased competition has drastically pulled down prices.


"The industry is losing up to Rs 6 crore every day," Mr C. Venkateshwara Prasad, Vice-President of Travel Agents Association of India, said.


He told Business Line that the loss was Rs 1-2 crore last year. But with more players entering the fray and more sectors becoming a reality, the losses were mounting.


Increased competition had forced even the big players to cut tariff by almost 50 per cent on certain sectors. Tariff on certain sectors that were quoting at Rs 12,000 fell almost 50 per cent, while the low-cost carriers were offering tickets on those sectors at just Rs 3,000.


This, he felt, indicated possible consolidation. Quoting surveys, he said only 3-4 players among the full service carriers and an equal number in the low-cost category would remain in the long run. The Jet-Sahara merger bid, though failed, indicated the shape of things to come. Mounting fuel prices too played a major role in the cost under-cutting. Industry cannot withstand this for long. "They (air carriers) are not yet operating on breakeven pricing," he said.



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vivekman


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What else do you expect with airlines offering tickets at Rs 3/- and Rs 500/- ??


This has got to stop or else more than one of them will fold up!!



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the_380


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Tickets sold at Rs 3 and Rs 500 dont make an airline into losses its the load factors they get inspite of such marketing plans...


Just my personal opinion


rgds


the_380



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vivekman


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380, do you think Air Deccan would earn profit on a flight with say four-five tickets at Rs 3/- another five at Rs 500/- and the rest at below market prices?


This would be a loss making flight even with an exceptionally high load factor! There has got to be a correction & rationalization of air-fares. The current trend of slashing fares in an era of rising fuel prices and other expenditure is hurting the profits of most airlines.


the_380 wrote:



Tickets sold at Rs 3 and Rs 500 dont make an airline into losses its the load factors they get inspite of such marketing plans...





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karatecatman


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Every airline will then have to SIMPLIFLY!!!

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Akshay


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In my opinion, the causes for this are:



  1. Too many airlines have started operations.

  2. Low fares offered.

Akshay



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HAWK21M


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The Aviation bubble will burst because of:-


Losses by Airlines [Lower priced tickets & Higher salaries].


Not able to fly minimum required pax per flight to break even.


regds


MEL



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tayara mechanici


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Aviation economics states airlines should be ready to incur losses in the first 2 years of their existence and expect a breakeven on the 3rd year.Their business plan has to reflect this in their cash flow projections. Indian aviation is no diff from rest of the world, wherein airlines are struggling under the pressures of risig cost of fuel, wages, security. The oldest among the start-up is DN which will completed its 3rd year in august. The biggest impediment to profit and growth is the restriction on overseas flts. 9W & S2 are allowed to fly overseas but fear losing domestic marke share due to the excess capacity at home. Infact they are losing in the dom mrkt. The only solu is to allow right to fly intl everywhere possible i.e. ME, SE, EU &US.


Rs3 tiks are a mrkt gimmic and will be here for long.



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