- Centre for Asia Pacific Aviation (CAPA) has estimated that Indian airline companies are operating on cash on hand, and have in the last 7 years accumulated loses of Rs. 63,300 crore.
- The precarious situation is due to high operating costs and rising interest, in addition to increasing competition that forces discount cuts making them unable to maintain a cash balance.
- Many carriers are sustaining by borrowing from travel agents against future ticketing. The desperate requirement for capital is likely to trigger a battle for fares that would push for deep discounting.
- Compounding the problems is Air Asia’s entry into the market. The Airlines companies would require a fresh funding of Rs.9,600 crore to stabilise their operations and get out of their vicious debt cycle.
- It has also urged the govt to take the aviation sector seriously and reduce the taxes on jet fuel.
- Read at: http://www.thehindu.com/todays-paper/tp-business/cash-crunch-fare-wars-make-airlines-vulnerable-capa/article6156969.ece