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India 's airline sector is expected to report losses of $1bn for the year ended last month - double that of a year earlier, according to the head of one of the country's biggest airlines.
Naresh Goyal, founder and chairman of Jet Airways, said he expected high costs and fierce price wars to prompt more consolidation in the industry and Jet was ready to seize the opportunity to acquire rivals in India and overseas.
"If we find other airlines that make financial sense and if it's good for shareholders, we will keep our mind open," Mr Goyal said in Hong Kong, which became Jet's 16th international destination following the launch of direct services between the territory and Mumbai.
Mr Goyal's forecasts are the most pessimistic yet for an aviation market that is one of the fastest growing in the world but whose tough conditions have already driven some of the weaker carriers into the arms of stronger rivals.
Jet bought domestic budget airline Air Sahara a year ago, while arch-rival Kingfisher acquired another low-cost carrier, Air Deccan, and state-owned Air India merged with its public sector peer Indian Airlines.
India 's air passenger market grew at an annual compound growth rate of 25.5 per cent in the four years ended last March and is expected to grow at 16 per cent in the next two years, according to a report by Ernst & Young.
But the consultancy said it was expecting the aviation industry's losses in the fiscal year ended last month to mount to $700m, compared with about $500m a year earlier.
Aviation fuel prices in India are 60-70 per cent higher than in hubs such as Singapore and Dubai because of what the airlines claim is a stranglehold on the sector by state-owned fuel companies. This is made worse by high government taxes.
Airlines are also competing for market share by slashing fares and lifting capacity, which grew 35 per cent on domestic routes last year, according to Mr Goyal's estimates. Outdated airport infrastructure is adding to costs.
He said Mumbai-listed Jet would report a loss in the fiscal year ending last month, but would break even this fiscal year.
Jet is expected to report revenues of $3.5bn in the March 2009 fiscal year while, Jet Lite is forecast to have sales of $500m.
