ATF price hike to cost domestic carriers additional $30 million every month: Jet Airways CEO
17 Apr 2008
New Delhi: India's largest private airline, Jet Airways, will incur additional expenditure of about $5-6 million per month on account of the recent hike in aviation turbine fuel (ATF) prices, according to company CEO, Wolfgang Prock-Schauer. He also said that the aviation industry would now pay an additional $30 million every month because of the price hike.
Jet, it is estimated, consumes one-fourth of all the fuel used by airlines in India.
''Last hike in the ATF has led us to carry an additional financial burden of $5-6 million every month. The impact of high jet fuel price would definitely have an impact on our financial results,'' Prock-Schauer said on the sidelines of a seminar on aviation safety.
The rise in global crude oil prices resulted in ATF prices being hiked by 14 per cent early this month. Global crude oil price has already crossed the $115 per barrel mark by now, up by 60% compared to about $65 per barrel last year.
''Some carriers have priced their tickets irrationally to fill additional seats. There is imbalance between input cost and demand, creating too much competition. It's time to reduce input cost. The year 2008-09 is going to be very challenging year for the domestic aviation sector,'' Prock-Schauer added.
According to industry experts, the total combined loss of domestic carriers in 2007-08 will be in the region of $1 billion, mainly on account of high fuel costs. These costs account for almost 40 per cent of an airline's operating cost.
High fuel cost has made operation of bigger aircraft such as Boeing 737 and A320 on smaller routes almost commercially unviable, leading to increased deployment of aircraft such as the ATR series. Jet Airways plans to induct 6 ATR aircraft by December this year which will replace bigger aircraft on short-haul routes.