KPMG report aims to reassure Indian aviation sector

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A report published by consulting firm KPMG’s Indian branch argues that the airline sector in the country can still be profitable despite the high oil prices.

The firm believes that improving airline efficiencies and processes, switching to leaner business models and optimising the costs of business operations should go some way to offsetting high aviation turbine fuel (ATF) costs.

The document – entitled Indian Aviation: Flying Through Turbulence – claims that airline expenditure on fuel is directly linked occupancy and load, and that Indian airlines should thus be focusing on maximising revenue service and constantly strategising to harness the most from maximum yield routes.

Options for improving efficiency include shorter distances between terminals and bays, increased use of two-runway operations, reducing after take-off track out and strict adherence to low runway occupancy time, says KPMG.

“The airline business today is one of the most complex industries” said Rajaeev Batra, executive director for KPMG in India. “Its profitability, revenue and yield are predominately driven by economic and external factors and this makes it most vulnerable to even the slightest variation in economic growth rates, national disasters, epidemic outbreaks, terrorism, war, currency fluctuations and most importantly oil prices.”

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