GoM meet up to cure sick airlines; Kingfisher Airlines, SpiceJet in spotlight

BusinessBloomberg UTV.Jan 17, 2012, 02:53PM IST

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The GoM will review foreign direct investment norms in the meeting today

The aviation sector is abuzz today, as high profile group of ministers (GoM) have gathered to discuss industry’s demand for allowing direct import of aviation turbine fuel (ATF).

The airline industry has been hit hard by intense competition leading to fare wars, which in turn has hit margins. The rising cost of jet fuel, which comprises a large part of airlines’ expenses, has also hurt all players in the sector.

Here’s a lowdown on government’s aviation rescue plan:

Foreign direct investment norms review
Jet fuel direct import
GoM has been led by Pranab Mukherjee, Ajit Singh, Jaipal Reddy and Anand Sharma.  
Sector demanding nod foreign airline investment

What’s the foriegn airline investment focusing on?

Aviation Ministry has asked govt to allow 24% stake
Department of industrial policy and promotion (DIPP) has recommended nod for 26% stake

Aviation ATF tussle!

Companies demanding to import jet fuel directly
Direct import to save Rs 10,000 crore in fuel costs

The big challenges?

Price war, fuel cost, falling rupee and lack of capital.  

Earnings (June-Sept, 2011):  Losses soar

Jet Airways : Rs 713.6 crore
Kingfisher Airlines: Rs 469 crore
SpiceJet: Rs 240 crore

Debt pile on:

Jet Airways:  Rs 14,123 crore
Kingfisher Airlines: Rs 7,500 crore
SpiceJet: Rs 712 crore

Stocks grounded!

Kingfisher Airlines dropped 68%
Jet Air slumped 76%
SpiceJet nosedived 78%