Business & Finance

'Airlines can profit despite ATF hike'

 
NEW DELHI : Downplaying the impact of spiralling aviation turbine fuel (ATF) prices on airline operators in India, a global consultancy firm's report today said they still can make profit by improving their efficiency.

 
In the report ~ Indian Aviation: Flying Through Turbulence ~ the firm KPMG said ATF accounts for about 35 per cent of airline operating costs and this expenditure only occurs when a flight is operated, which incidentally is its main revenue generator.

 
Hence, an airline's expenditure on fuel is directly proportional to occupancy and load. ATF cost of an airline has impact only on direct operating costs (35 per cent), leaving the rest (65 per cent) to be slimmed down, it said.

 
"While ATF costs would hurt airline operating costs, it could never be a reason for an airline to fold up," the report said.

 
Since India's aircraft fleet is one of the youngest in the world with new and more efficient engines, airlines gain from low fuel burn and improved operation efficiency, which leads to achieving the break-even level faster, it said. SNS