Friday, 07 November 2008

What happened to the airlines!

The indian aviation sector which was booming just a year or two ago is now in the doldrums. Many domestic airlines have been cancelling/postponing inducting new aircraft orders and there are signs of releasing pilots and crew. The two big rivals, Jet Airways and Kingfisher Airlines are rethinking their routes and international strategies and have even formed an alliance on their ground services to reduce costs. Rising fuel costs are a killer to the airlines especially in India where jet fuel tax is the highest in the world at up to 40%, this is the main reason for the dismal performance in recent times. The resulting ticket price hikes coupled with the global credit crunch have had the effect of declining load factors reported across the aviation industry world wide. Lower revenues and higher operating costs result in reduced profit margins for some... and losses for others.

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