Rising oil price put dampers on fastest growing aviation companies in India

As the oil price rises above $75 per barrel with fuel cost going up by one-third during the quarter, India’s listed aviation companies lost altitude this month as the quarterly profits had slumped 73 per cent at IndiGo, India’s largest private airline.

Until recently Indian aviation companies have been some of the fastest-growing in the world, with passenger numbers rising 24 per cent in the last year, with Boeing and Airbus having more than 900 aircraft on order. Boeing predicted India would account for 5 per cent of its orders until 2036, while Airbus planned to sell one aircraft a week to India for the next 10 years.

IndiGo accounts for 40 per cent of domestic air travel in India, with full-year pre-tax profit climbed 46 per cent to £341m (Rs31.3bn), the final quarter took a tumble of 73 per cent to £18.5m (Rs1.7bn).

IndiGo’s ticket prices fell 5.5 per cent last year, despite having a difficult year, having had to cancel dozens of flights in March 2018, because of problems with engines made by US-based Pratt & Whitney.

IndiGo’s competitor Jet returned to profit in 2015-16m following years of losses has fallen from 21.7 per cent to 16.7 per cent now.

Of the three India’s listed airlines Spicejet has proved most resilient, with 87 percent of revenues and 95 per cent capacity last month compared with 89 per cent for IndiGo and 86 per cent for Jet.