Higher Fuel Prices May Weigh On Airlines’ Profit In January-March
Domestic traffic growth to boost revenue of Indian carriers in Q4.
A nearly 20 percent rise in domestic passenger traffic is expected to help boost airlines’ revenue growth but higher fuel costs will hurt profit in the three months ended March.
Indian carriers flew more than 100 million passengers in the financial year 2016-17 for the first time ever.
InterGlobe Aviation Ltd., the parent company of IndiGo, is expected to lead the chart as far as revenue growth is concerned at 19.7 percent, according to five analysts tracked by Bloomberg. The country's largest domestic carrier is scheduled to induct two aircraft each month till March 2018, taking its total fleet size to 160.
The country's oldest private carrier Jet Airways Ltd. is expected to post a revenue growth of 18 percent, year-on-year.
The only other listed Indian airline, SpiceJet Ltd., is expected to post a 13 percent revenue growth in the January-March quarter, despite having the highest passenger load factor in the period.
Drag On Profit
Higher aviation fuel costs are expected to weigh on the bottomline of all three listed players.
Threat From New Entrants
Competition from relatively newer airlines like AirAsia India Pvt. and Vistara is also expected to dent profit.
SpiceJet, the only listed Indian carrier which has managed to beat analyst estimates in the past two quarters, is expected to post a profit growth.