News / Asia

India’s Second Largest Airline Reports Record Losses

Kingfisher Airlines Chairman Vijay Mallya in Mumbai, India, Nov. 15, 2011.
Kingfisher Airlines Chairman Vijay Mallya in Mumbai, India, Nov. 15, 2011.
Anjana Pasricha

India is among the world’s fastest growing aviation markets, but its airline industry is losing billions of dollars, and its second-largest air carrier, Kingfisher Airlines, his reporting record losses.

Vijay Mallya, chairman of Kingfisher Airlines, said Tuesday the company posted July-to-September quarter losses of about $93 million - double the amount lost in the same period last year.

The cash-strapped company has cancelled hundreds of flights in the last week to reduce costs.

Kingfisher’s debts amount to about $1.5 billion, and the private airline has been late paying staff salaries.

According to Mallya, high fuel prices and other operating costs make for a challenging environment. The cost of aviation fuel in India is about 70 percent higher than the global average because of taxes.

"Other than in 2008, we have never seen fuel prices as high as they are today, and the saddest part is the sales tax levied by various state governments on top of this extraordinarily high aviation turbine fuel price," he said. "This is something that needs serious attention of the state government and the central government. The industry needs this issue to be addressed immediately."

Industry-wide challenges

Kingfisher is not the only airline in financial crisis. The national carrier, Air India, has also amassed huge losses, and it is estimated that this year's combined industry losses could reach $2.5 to 3 billion.

Like many business sectors in India, aviation has also been hurt by a huge rise in interest rates in the last year. But despite the industry-wide financial burdens, passenger traffic is increasing in step with India’s growing economy, and the country is expected to have about 250 million passengers by the end of this decade.

The increased passenger traffic is breeding intense competition, forcing airlines to slash fares and buy planes to accommodate demand.

Kingfisher recently shut down its low-cost airline, a move that Mallya says will allow the company to focus on its high-end service, the so-called "royal treatment" promised to affluent clientele, an increasingly viable demographic in a country seeing unprecedented growth.

"At the top end of the pyramid, you have more tempered competition," he said. "[It's] not the cut-throat competition you have at the bottom end of the market."

Analysts predict Indian aviation will continue to face turbulence for some time, and they argue that government should allow foreign direct investment - an infusion of capital required to meet the needs of a growing country.

Mallya says Kingfisher has not sought a government bailout or additional bank funding, and that he is not worried about the long-term viability of the industry and that the airline will overcome its problems.

You May Like

Video On the Scene: In Gaza, Darkness Brings Dread and Death

Palestinians fear nighttime raids, many feel abandoned by outside world, VOA's Scott Bobb reports More

African Small Farmers Could Be Key to Ending Food Insecurity

Experts say providing access to microloans, crop insurance, better storage facilities, irrigation, road systems and market information could enable greater production More

University of Michigan Wins Solar Car Race

Squad guided its student-designed solar-powered vehicle to fifth consecutive time victory in eight-day bi-annual American Solar Challenge More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid