Addressing the 14th annual general meeting of shareholders, Jet Airways chairman Naresh Goyal said some airlines are offering seats at prices which do not even cover the cost of operations, resulting in increased losses.

“Various external estimates suggest that airlines in India are expected to post a cumulative loss of close to Rs 2,200 crore during 2006-07. This situation is likely to worsen with five to six new airlines planning to commence operations in the near future,” he added. Jet had posted a loss of Rs 44 crore in the quarter ended June this year. Other airlines like Air Deccan are also making losses. India’s number 1 airline in terms of market share, Jet — which has seen an erosion of more than half of its share value since its listing — is competing with a host of new airlines which are eating into its market market share. No frill airlines are offering seats that are cheaper than railway fares, giving established players like Jet and Indian Airlines a run for their money.

Thus, he said, unless critical issues are addressed, short-term disruptions will be a feature of the domestic aviation industry for the next 12-18 months. “Inevitably, we expect that there will be consolidation in the market, which will help restore stability in the domestic aviation industry,” he said.

The airline, he said, has postponed its $800-million overseas issue due to bad market conditions. The overseas issue was to fund its $2.5-billion capital expenditure plan which included purchase of 30 narrow and wide-bodied aircraft. Instead, the airline has taken short-term borrowings from IDBI, SBI and ICICI to meet pre-delivery payment commitments.