India’s airlines suffer most from the oil price hike

Jet Airways, India's leading carrier

India’s aviation industry has been growing fastest in the world for years. New low-cost carriers enabled more and more new middle-class Indians to afford flying and switch from trains to planes for a more comfortable journey. Safety is also an advantage of air travel in India as the overage railroad infrastructure in addition to overpacked trains are responsible for numerous accidents in recent years. Hundreds of thousands of first-time fliers contributed to an exuberant passenger growth. Furthermore, going by plane is saving time as enormous distances are to be covered while traveling across the country.

But the time of cheap fares might have come to an end as rising fuel costs, increased airport charges, giant losses for the airlines and high taxation hit the Indian airline sector hard. Fuel costs account for more than 50% to the total operating costs of airlines which is very high compared with European and American airlines. The Indian airline industry could face a $2 billion loss unless the government approves hefty subsidies and reduces taxes on aviation fuel. Finally, the consolidation trend has reached India and we are likely to see numerous mergers and acquisitions. Most budget airlines might disappear and for many Indians, their first flight might have been their last flight for quite some time.

http://www.voanews.com/english/2008-06-13-voa7.cfm

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1 Comment

Filed under Economy

One response to “India’s airlines suffer most from the oil price hike

  1. venus

    Oil is a necessity as water, clothes and shelter are.But still prices are increasing a fast speed which is not at all appreciated by the common man.And the main cause is hike in inflation rate. this time petrol prices hiked straight away by Rs.5 which is surely unexpected.Common man is appealing to reduces fuel prices otherwise it will be very difficult in future to afford vehicles.

    http://www.contentmantra.com/mantrablogs/

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