Costly oil, weak rupee to hit airline profits

New Delhi,July 14, 2018:  Profits at listed Indian carriers could nosedive in the three months to June due to rising fuel costs, a falling rupee and intensifying competition — factors that would cancel out the impact of 18 per cent on-year traffic growth.

SpiceJet, InterGlobe Aviation and Jet Airways could, cumulatively, report a 70-75 per cent on-year drop in net profit even though revenue may climb about 15-20 per cent , roughly in kilter with the pace of passenger growth for the industry according to

By the end of the June 2018 quarter, Brent crude price soared 13.5 per cent to $78 per barrel and the dollar strengthened 5.3 per cent with respect to the rupee at Rs 68.47. These two variables impact about 40 per cent of a transporter’s costs. Furthermore, stiff competition has prompted companies to lower fares to stay relevant, and the inability to raise fares in lockstep with costs would depress profits.

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