Passenger growth, lower fuel prices to boost revenues of airlines

• Posted in Aviation
• on April 13, 2016
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Earnings of Indian carriers are likely to be high in the the March quarter, too, as jet fuel prices are down over 23 per cent from last year. Strong passenger growth will help domestic airlines improve their top line and margins in the March-end quarter, analysts say.
With traffic growing well over 20 per cent and load factors elevated at 85 per cent, airlines are likely to fare well in what is known to be a seasonally weak quarter. Aviation turbine fuel price is 23.7 per cent lower at around Rs 37,900 per kilolitre in January-March 2016 on a year-on-year basis and this could boost airline margins.
According to an analyst poll by Bloomberg, SpiceJet is estimated to show 70 per cent revenue growth on a year-on-year basis while Jet Airways’ revenue, excluding other operating income, is expected to rise 15.5 per cent. IndiGo had earlier indicated its revenue would rise six-eight per cent on a year-on-year basis, but analysts expect it to do better than that on strong demand. Bloomberg has not shared a comparative year-on-year figure for IndiGo.
On the flip side, however, a six per cent depreciation in the rupee and pressure on yields due to softening of fares will impact profitability of carriers. While Jet Airways and SpiceJet are expected to post growth in profitability, IndiGo has warned that its profit will be impacted by the rupee depreciation. 

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