Sensex soars while the Aviation Sector continues Diving…Could open out opportunities

August 18,2009…Private Airlines,members of FIA,have just announced that will not operate nationwide services on this Day…only for the Day…but could even be indefinitely if there is no positive response from the government

This announcement comes on a day when the Sensex has reached the highest level in fourteen months …15670 

The Aviation Sector is facing a survival issue in India…says Naresh Goyal of Jet Airways“ all of us are bleeding…private sector or the public sector”

Vijay Mallya of Kingfisher Airlines cries “we lose money because we are taxed to death”

Jeh Wadia of Go Airways laments that the policy and tax structure continue to create inefficiencies“We are demanding a Transperant Tax Structure…Fuel as a % of Total Cost is 45% in India while everywhere in the world it is 26 %…this is because of higher taxes of @ 27% on ATF..This Tax on ATF should be given a ‘declared goods’ status to bring the taxes down”

The Heavy Depreciation of the Rupee in 2008/9 has also increased the cost of Operations and Maintenance of Airplanes.The Sector should reveal a Rs 10000 crs loss in 2008/9…that’s just over two billion dollars 

The government on the other hand feels that the woes of the Aviation Sector are largely due to the mindless expansion of the Airlines 

Methinks this could open out some opportunities for Investment in selective Aviation Sector scrips if they continue to dive and are avaliable at throwaway prices…on the assumption that a solution will have to be found to resolve critical issues that are threatening this sector and that this sector will not be allowed to crash land

Keeping an Eye on the Skies to grab opportunities if the Price is right…Spicejet,Jet Airways,Kingfisher Airlines…..