Jet Airways posts Rs. 55.13 crores net loss
The company has recently announced its quarterly results posting a loss of Rs. 55.13 crores for the quarter ended on 30th September 2006, against a profit of Rs. 68.59 crores for the corresponding last quarter. However the net income of the airline was stated to have risen from Rs. 1324.24 crores to Rs. 1821.23 crores for the same period. The management of the company has attributed current quarter’s losses to stiff competition, rising costs, fare discounting and ambitious route expansion. There was an increase in personnel costs involved in international operations; this was also one of the factors responsible for conversion of Jet’s profits into losses. The salaries of pilots, engineers and other technical staff involved in international operations are relatively higher.
The airline had low operating margin of about 5% in quarter ended on 30th September 2006 as compared to about 20 % in the corresponding last quarter. This was due to large amount of fare discounting; about 65% of the Airline’s tickets were sold at discount as compared to 35% in the last quarter. There was also pressure due to increase in fuel cost, the fuel bill was increase by 70% from the corresponding last quarter, this was also because of increase in congestion at the major airports.
The airline will have to reduce its operating costs to compete with low cost air carriers like Air Deccan and new entrants like Spice Jet, Kingfisher and Go Air. If the airline had to sell majority of its tickets at discounts it has to cut down its costs to stay profitable. With continued growth in aviation industry more and more new passengers are switching to air travel and they are being attracted towards low priced tickets offered by new entrants.