Jet fuel prices could effect airline profits

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Jet Fuel Prices

Jet Fuel Prices

According to Investment Information & Credit Rating Agency (ICRA Ltd.), continuously increasing jet fuel prices and any excess capacity could bring a spark in airline companies mind. They might be of concern for their profits in coming financial quarter and also the running quarter.

India beholds a significant growth in air passenger traffic which is causing frequent moderation. It’s not the only reason to worry about. The aviation turbine fuel (ATF) prices are on a sequential uptrend from this year August 2017 till now October 2017. In this situation, the aviation industries might need to renew or re-invent new strategic plans. They need to work on creating good strategies to handle pricing, customer discounts and most importantly cost effective scenarios.

However, as per ICRA jet fuel prices will not leave any “big impression on profit economy of airline industry”.

But the local passenger traffic numbers might change during the financial year 2018. It might get a reach of approximately 16.2% in first five months of financial year 2018. This number is partially high than last year domestic passenger growth of 15.7% for the month of august 2017.

Despite of being an industry leader, Indigo airlines is still struggling with numbers. Even after achieving average traffic growth, Indigo is worried about this and working hard to seize the opportunity. Apart from technical issues with new Airbus A320 neo aircraft and delays in deliveries of new aircraft, increased focus on international routes is also one of the key reasons for lower than expected domestic capacity deployment by IndiGo. IndiGo’s international capacity has exponentially grown at 71.6% this financial year.

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