Global aerospace giant Boeing on Friday predicted that the worst for the Indian civil aviation sector is over and the industry would break even by the end of current fiscal unless somebody commits “harakiri“.
“By the time this fiscal year ends and then next one starts and unless someone does a ‘harakiri’ in lowering their fare, we see a good scenario beginning April onwards,” Boeing India President Dinesh Keskar told PTI in an interview.
In October, the International Air Transport Association (IATA) had projected that the Indian aviation industry is likely to suffer a collective loss of $1.5 billion in 2009.
“By the start of the next fiscal, there are good break-even chances for the domestic carriers in India,” Mr. Keskar said, adding that stabilising jet fuel prices, growth in economy, rational ticket pricing and cutting excess capacities will help the carriers in returning to profitability.
Commenting on the fare wars in the Indian skies, he said carriers have now learnt that it is not the right way to approach the business.
“Airlines are being smart (now). We have not seen any irrational pricing by them. In fact, just before Diwali, yields have started going up,” he said.
“The problem of every body undercutting every body was there. For every passenger that they wanted to fly, there were two or three empty seats because there was too much of capacity that led to the situation,” he said.
Mr. Keskar said the stabilising oil prices will also help the aviation industry recover faster. “The fuel price that went up from $40 (per barrel) to $147 have now come down to $70-80 and we think that it is going to stabilise in that range.”
Stating that the good GDP rate of 7.9 per cent witnessed by the country in the second quarter of this fiscal augured well for the industry, he said it will fuel growth in the sector.
“There is a direct correlation between air travel and GDP growth. It is about one-and-a-half times so if the GDP growth is seven per cent, you will have about 10 per cent natural organic growth,” Mr. Keskar said.
Besides, he said “With the capacities coming down and the demand-supply matching, we think break-even should happen“.