ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Can Hedging Fly Airlines to Safety in Volatile ATF Markets?

This article attempts to assess the damaging impact of high volatility in Aviation Turbine Fuel prices on the domestic aviation industry, as well as the main factors that make ATF costly in India. While explaining the intensity of the rise and volatility in the price of aviation fuel, it examines if hedging can be a safe route for the domestic airlines to tide over the turbulent phase of the market, as is the standard practice across the world.

Post-MFA: Making the Textile and Garment Industry Competitive

With the Multi-Fibre Agreement (MFA) coming to an end, competition in the Indian textile and garment industries will increase manifold. One of the main factors determining their competitiveness would be unit cost, where India has fared poorly in the recent past. The unit cost depends upon factor prices and productivity level. The present study attempts to examine these factors in detail for the cotton yarn and garment industries for selected states using panel data analysis for 1989-97. The study suggests that large-scale production should be encouraged in this sector. Disbursement of credit, cheaper raw materials, greater availability of electricity at reasonable rates, promotion of better capacity utilisation and flexible labour laws are some other steps necessary to help the cotton yarn and garment industries become more cost-effective.

Why Is Air Travel So Expensive?

The existing high cost environment in the domestic civil aviation industry restricts the demand for air services and makes it difficult for airlines to register profits. An analysis of the factors contributing to the high cost structure of the existing airlines indicates that appropriate government initiatives can halve the cost of air travel in India.

Indian Airlines, 1964-1999

There are a number of deficiencies in the performance of Indian Airlines, which are subsequently passed on to the consumers in terms of higher fares. In this scenario, when the skies were opened to private schedule operators in 1991, it was believed that the consumers would stand to gain from competition. This paper studies the structure of cost in the Indian Airlines with a view to assessing the scope of unlimited competition in domestic civil aviation industry. The findings suggest a high degree of scale economies in the Indian Airlines, limiting the scope of competition. The results on price and substitution elasticities, technical change and productivity growth indicate that better management of the Indian Airlines would be more helpful than the intense competition.

Productivity and Cost in Indian Airlines, 1964-99

The financial performance of state-owned Indian Airlines has been far from satisfactory since 1989-90. The main reason for this has been the high growth in unit cost. So far no attempt has been made to study whether this was the result of decline in productivity or increase in prices of inputs, or both. The present study attempts to relate unit cost with productivity for the period 1964-99. The results reveal that during 1989-99, when many A-320 aircraft were inducted in the fleet, the productivity of Indian Airlines turned negative and unit cost increased at a much higher rate. Productivity decline was the main reason for a rapid rise in unit cost. The paper suggests that Indian Airlines needs to improve its productivity, and weigh more carefully the impact of inductions of new aircraft on its overall performance.
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