Aviation

Muted yields and higher fuel prices to delay smooth landing for airlines

By Livemint

Losses of Indian aviation firms InterGlobe Aviation Ltd and SpiceJet Ltd declined on a sequential basis for the quarter ended December.

InterGlobe runs IndiGo, India’s largest airline by market share. For perspective, IndiGo’s net loss for the December quarter dropped to ₹626 crore from ₹1,195 crore in the September quarter.

During the period under consideration, SpiceJet’s reported net loss declined to around ₹57 crore from ₹113 crore.

Even as traffic recovery is underway, risks loom for the sector. One, analysts do not expect yields to improve meaningfully from a near-term perspective. Yields are a measure of pricing for airlines.

Slow journeyView Full Image
Slow journey

“Yields were pretty much muted in January but improved in February. Now, it all boils down to how March would pan out,” said an analyst, requesting anonymity.

Here, an increasing number of coronavirus cases may play spoilsport on demand too. According to Centrum Broking Ltd, in the December quarter, IndiGo and SpiceJet’s ticket yield declined by 4.6% and 7.1%, respectively, compared to the same quarter in the year-ago period.

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