Will India's Airlines Ever See Profits? (Answer: It Will Be a While)

Airline Business magazine takes a look at India's airline industry and asks, "What's going wrong in India"? To spare you the 10 minutes of reading the (worthwhile) article, here's the short version: fuel costs & taxes and a miserable infrastructure. While fares have come down and routes have grown - especially in the lowfare sector, which now accounts for about 50% of the traffic in India, none of the airlines are close to turning a profit.

Executives are hopeful that a couple of states have cut the fuel tax and that others may soon follow. Airlines have added fuel surcharges as well to cover the growing costs. Plus, consolidation may finally help to push airfares up to an even close-to-reasonable level.

But the fundamental problems in the industry - too many carriers chasing the same routes - means that prices will stay too low and airlines will slowly bleed away cash. Says Tony Fernandes, the head of successful Malaysian lowfare carrier Air Asia: "I don't think it's a cost problem," he says. "I think they are not following the model. We'll let all the Indian airlines kill each other first. Then we will come in."