Fares Going Down

India's aviation sector is down and out. A three-year long run of good times seems to be making way for hardships. The two major airlines - IndiGo and SpiceJet - have reported decline in financial performance while Jet Airways has deferred its first quarter results to an unspecified date. IndiGo's profit tanked 96.6 per cent to Rs 28 crore and SpiceJet registered losses of Rs 38.06 crore in the quarter ending June 2018. There are four culprits, in no particular order: high Aviation Turbine Fuel price, rupee depreciation, rising maintenance costs, and elevated competition.

The biggest agony for airlines is that the first three factors are beyond their control, and as for soaring competition, airline managements hope the current level of fares is unsustainable over a longer period. With most airlines planning to add significant capacity over the next several quarters, downward pressure on fares is likely to continue.

- Manu Kaushik