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Aviation sector passing through turbulent times

NEW DELHI: The aviation sector in the country is facing many challenges like  decrease in passenger movement, high fuel costs, high airport charges and inadequate fares recovery due to in

Published: 30th March 2012 02:44 AM  |   Last Updated: 16th May 2012 09:49 PM   |  A+A-

NEW DELHI: The aviation sector in the country is facing many challenges like  decrease in passenger movement, high fuel costs, high airport charges and inadequate fares recovery due to intense competition. Industry sources have placed `26,000 crore as the operational losses for 2007-2010 period and anticipated `10,000 crore for 2011-12 alone.

While the passenger movement has decreased from 16.6 per cent to 9.3 per cent in January-February this year as compared to last year, the aircraft movement reduced from 19.7 per cent to 11.2 per cent.

The setback is largely attributable to high fuel costs.  

The sector had also suffered from inadequate fares recovery due to intense competition. Almost all the airline were operating below the cost-meeting margins, bringing the sector down as a whole.

Alarmed by the sudden losses that all the airline (except Indigo) incurred, the Aviation Ministry woke up to gathering key details. Apart from understanding whether these losses were making airline cut corners and not operate mandatory routes as per the Route Dispersal Guidelines, the ministry also set up an inter-ministerial group to analyse factors causing the problem.

Airline were asked to submit a recovery plan in order to avail further relaxations from banks. Recently, the ministry also gathered data from the airline on the extent of the External Commercial Borrowings that they would want when the sector is opened up.  One airline, Air Asia, had informed about suspension of its services from Mumbai and Delhi.



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