With high global crude prices hitting bottomlines of airlines, the industry, including his own carrier, would have to raise fares to stay away from a crisis.
BERLIN: With high global crude prices hitting bottomlines of airlines, Jet Airways chief Naresh Goyal on Tuesday said the industry, including his own carrier, would have to raise fares to stay away from a crisis.
"The aviation industry has to raise the fares as and when the hikes come. I am not in a business where I should only look for capacity. At the end of the day, I will have to work to give profits to my shareholders," he said here.
Crude prices have been on a record run lately and touched 135 dollars a barrel, immensely increasing the cost of jet fuel (ATF).
Goyal was speaking to reporters after taking static delivery of a brand new Airbus A-330-200 at the Berlin Airshow ILA, which started on Tuesday. Jet Airways has placed orders for a total of 10 A-330-200 to operate on long-haul routes.
To questions regarding acquisition of the world's largest airliner A-380, Goyal said: "At the moment, we are not ready but we are studying the proposal."
He said Jet Airways was "seriously studying" Airbus Industrie's A-350 XWB (Extra Wide Body) aircraft whose deliveries would begin from 2013. "We don't place orders just for the sake of it. For us, frequency is important."
The A-350 XWB is a medium capacity long range aircraft. A-350-800 would carry 270 passengers, while A-350-900 would be able to accommodate 314 and A-350-1000 would have a capacity of 350.
Goyal said though Jet had a "good amount of market share, but that does not mean we have room for complacency."
Asked whether Jet Airways would follow the recent practice by some US airlines to charge for check-in of baggages and other such services, Goyal said "all airlines which want to stay in business will have to take such decisions."
He said the airline industry globally was faced with a severe financial crunch primarily due to the major increase in fuel prices, which on an average constitute about 40 per cent of their total operating cost.
Announcing the launch of daily services from Mumbai to San Fransisco via Shanghai from June 14, Goyal frankly said that initially, "we are going to lose money" on this flight. "But this is a calculated risk and we are going to take that risk," he said. The airline will operate a Boeing 777-300 ER on the route.
In this context, the Jet Airways Chairman referred to the India-London route, which also started with losses. "But today we have a share of 35 per cent on this route," he said.
Goyal complimented the government for "creating a brand in Jet Airways as Germany created the Mercedes."
Eulogising Prime Minister Manmohan Singh as the "father of economic reforms", he said the government had taken major steps to develop infrastructure in the country, including in the aviation sector.
Speaking after the formal delivery of the A 330-200 aircraft, Airbus Industrie CEP Tom Enders said "our association with India is over 30 years old and we will continue to contribute to India's rapidly growing aviation market."
He said the A 330-200 were environment-friendly and were more fuel-efficient than other aircraft.
The ceremony took place in the presence of German Chancellor Angela Merkel.
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