Date:24/08/2006 URL: http://www.thehindubusinessline.com/2006/08/24/stories/2006082404300900.htm

Back `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.