CAPA cautions pressure on margins
The Centre for Asia Pacific Aviation (CAPA) on Wednesday cautioned that increasing pressure on margins due to higher ‘human resources costs’ pose a major threat to aviation sector.
By TNN |
NEW DELHI: Just a week after Boeing upgraded its long-term aircraft sales forecast for India by 75%, the Centre for Asia Pacific Aviation (CAPA) on Wednesday cautioned that increasing pressure on margins due to higher ‘human resources costs’ pose a major threat to aviation sector.
Citing the Jet Airways example, CAPA said the key problem for the carrier in the domestic market is personnel costs, which more than doubled (despite only a 12.5% increase in staff numbers) to account for 13.2% of total costs in the quarter ending June 2006, compared to 9.3% in the corresponding period last year.
"The pressures from massive wages and overtime increases, fuel and constrained airport infrastructure will provoke significant structural changes in the sector in the next 12 months," the Centre said in a statement.
CAPA also hinted towards possible consolidation that might grip the Indian aviation industry in near future to address overcapacity, skills and airport capacity shortages. "It is quite possible that a full service carrier may acquire an LCC within the next 12 months," it said.
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