IATA expects India carriers to cut 2010 loss to $400m

The International Air Transport Association forecast Indian carriers to cut their combined losses by more than a quarter to US$400 million in 2010, mainly as passenger and cargo traffic rebounds in an expanding economy and fuel prices remain stable, reported Dow Jones Newswires.

Carriers in India, including Jet Airways, Kingfisher Airlines and Air India, posted a total loss of $1.7 billion in 2009 as higher fuel prices and the global economic slowdown of 2008 and early 2009 crimped demand for air travel.

The fall in passenger traffic led several carriers to either cancel or defer deliveries of new planes and to trim staff.

"The domestic traffic (in India) has grown 20 percent in the past year," Giovanni Bisignani, IATA's director general and chief executive said at a conference. He said carriers in India have started to expand their fleet to tap the growth in air travel.

"Another positive for carriers in 2010 is the price of fuel," said Bisignani. "We haven't had a drastic increase in the component that makes up 25 percent of our costs."

IATA's prediction comes just two days after it revised sharply upward its 2010 global aviation industry outlook because the recovery, according to the trade body, "has been faster and stronger than anyone predicted".

IATA has forecast a profit of $8.9 billion this year for global airlines, compared with an estimate of $2.5 billion it made in June. The figure is expected to drop to $5.3 billion in 2011.

Bisignani didn't say when Indian carriers are expected to turn profitable.

"We have a forecast for the global carriers but we don't have a specific profit target for India," he said.

Bisignani said IATA is concerned about Indian airlines' total debt of $13 billion. The carriers are expected to spend $140 billion over the next two decades to buy new planes.

He said the federal government needs to allow 100 percent foreign direct investment in Indian airlines to ensure the industry's growth. Current regulations only allow up to 49 percent foreign direct investment in a local carrier but overseas airlines are banned from buying any stake in any of the country's airlines.

"India allows 100 percent FDI in transit systems, ports, harbours, hotels, ocean transport and road systems. But airline FDI is restricted to 49 percent," he said.

"Moreover, no foreign airline can invest in an Indian airline. The inconsistency is difficult to understand. The success of India's airlines should not be compromised by an archaic investment policy that isolates them from global trends."
(Source:www.cargonewsasia.com)