MUMBAI: Top officials of private airline Jet Airways are expecting further ticket price hikes as well as more consolidation in the beleaguered sector.
In an earnings call with aviation analysts, Wolfgang Prock-Schauer, chief executive officer, said, “We find the necessity to increase the fares by another 10%.”
Officials also indicated that the international scene might see a trimming of capacity, while adding that they are considering deferring the delivery of two Boeing 777 aircraft, which are due next year.
This month, the carrier switched the aircraft on its Brussels flight, flying an Airbus 330, which can carry as many as 335 passengers, from a Boeing 777, which can seat as many as 479, Prock-Schauer said.
To Kuala Lumpur, it will fly a Boeing 737, which can carry a maximum 189 passengers, instead of an Airbus 330, he added.
The Austrian CEO of India’s largest private airline said that while the falling crude prices were helpful, the airline will not rely only on the falling prices to return to operational profitability. “We must make money even on the current levels of fuels prices. It will be an additional benefit if crude goes down,” he said.
He said there could be further structural changes in the industry, while adding that the smaller players who fight bankruptcy and stay in air might not be suitable candidates for acquisitions.
He said, “There are different kinds of consolidation. It can happen through mergers or acquisitions or due to airlines closing down. If you look at the performance of some of the weaker players, funds may dry out for them, forcing closures.”
Saroj Dutta, executive director of the airline, seemed to agree with this view. He said, “If there is an opportunity, Jet will consider it but it would not be for the heck of acquiring another airline.”
An analyst with a foreign brokerage, said, “There is not much appetite in the market for airlines at the moment. Currently what you need is people with different investment horizons and those may be only private equity players. I don’t think even if people close down operations, they will surrender their licenses.”
Jet officials also said that the integration of the erstwhile Air Sahara, has moved on to its final phase.
In August 2009, JetLite will induct 10 new Boeing 737 aircraft, which would replace its ageing current fleet. This, the executives argue, will enhance operational efficiency. Currently, the break even load factor of Jetlite is pegged at an unachievable figure of 111%, compared to the actual load factors of 72.4% in Q1 FY09.
With inputs from Bloomberg
n_john@dnaindia.net
