Jet Airways said on Tuesday the Indian aviation industry may incur financial losses of nearly $2 billion in financial year 2008-09 pressured by mounting fuel costs and "irrational pricing".
"While the Indian aviation industry incurred a loss of $1 billion last year, this is expected to double to $2 billion in the current year. Everybody is selling tickets below the cost and at the same time fuel prices continue to rise. Airlines have to increase the fuel surcharge in order to survive. I am not overlooking the possibility of crude oil hitting $200 a barrel," Jet Airways Chairman Naresh Goyal said.
The crude oil rally will impact prices of aviation turbine fuel, which forms 30 per cent of the operating cost for an airline. The company incurred a loss of $23.1 million during the October-December quarter of FY08. This was against a net profit of $9 million during the corresponding quarter of 2006-07.
Goyal was in Berlin to take delivery of the Airbus A330-200 aircraft. The delivery took place in the presence of the Indian Defence Minister A K Antony and the German Chancellor Angela Merkel. Antony and Merkel are the main guest at the ongoing Berlin Airshow.
On consolidation in the domestic aviation industry, Goyal said it was imminent not only in the aviation industry but also in sectors like banks, etc.
"That is why we went for Air-Sahara and more such opportunities will be looked at if it makes sense from the shareholders' perspective."
The aircraft forms part of the $3-billion order for 15 Airbus aircraft placed by Jet between 2005 and 2007.
"While the market conditions in India are bad, we would go ahead with the deliveries of the 15 aircraft for which orders are in place," he said. Jet also has two leased A330-200 aircraft.
Jet Airways is deploying the aircraft on Far Eastern routes to serve Hong Kong and to expand services to Europe and the Middle East. The aircraft has been configures in two classes with a total of 220 seats. Of the 220 seats, 30 are in the premium category.
The airline currently operates A330s between India and Brussels and is studying destinations like Milan and Zurich, he said. Jet currently has 84 aircraft with over 385 daily flights to 60 destinations, including seventeen international ones.
"India is experiencing the world's fastest passenger traffic growth in the near term and we are delighted to be a part of these exiciting times through our partnership with Jet Airways," Airbus President and Chief Executive Officer Tom Enders said.