Airline yields only silver lining in sky

New Delhi: Domestic airlines might be losing passengers, but the recent hikes in fares have come as a blessing in disguise for bleeding carriers in terms of yields. Travel agents are also cheering since their top lines have improved significantly. Yields have increased 30% for airlines in the recent months, industry leaders said.
Explains SpiceJet CFO Partha Sarthi Basu: “The average fare last year in August was about Rs 2,400 while this year it is Rs 4,200. So, even though occupancy has dipped from 74% to 64%, realisation per aircraft (which has been around 189 seats) has gone up by 50%.

The good news, however, stops at improvement in yields. No airline from India is still in a position to make profits and all of them are bleeding. The fare hikes would only help in keeping the losses from increasing further.
For the time being airlines are not really complaining about lower loads. Says marketing head of a Gurgaon-based carrier: “Though load factors have dipped by 10-12%, yields have improved by 25-30%. That doesn’t mean that good fares are not available anymore.” Moreover, the improvement in yields has come at a huge cost—the growth in the market has come to a grinding halt.

Says an Air India spokesperson: "...In the last two months, a right balance has been struck between fares and load factors.”


23/08/08 Vishakha Talreja & Nirbhay Kumar/Economic Times