Airlines, medical tourism and more... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Airlines, medical tourism and more...

Aug 19, 2008

Oil nudges higher
The movement of crude oil prices continues to be highly volatile. Fears of the tropical storm Fay hitting the Gulf of Mexico and subsequent evacuation of staff by the oil behemoth Royal Dutch Shell caused crude prices to scale a tad bit higher yesterday. The US dollar slipping against the Euro also helped prop oil prices. Having said that, the US$ 114 a barrel, at which oil prices settled yesterday is still considerably below the high of US$ 147 a barrel that was attained on July 11. Some statements from the OPEC have also helped ease prices. For instance, the organisation expects appetite for oil this year to grow by 1 m barrels a day, a reduction of 30,000 barrels a day from its previous forecast for growth in demand for 2008. It also expects demand to rise by 900,000 barrels a day in 2009, which would be the lowest growth in world demand since 2002.

  • Also read - Oil to hover at US$ 124 per barrel in 2009

    Some breather for airlines?
    The airlines industry in India is in a state of turmoil. Rising crude prices have hiked up the prices of aviation turbine fuel (ATF) and are considerably hurting domestic airline companies. As a consequence, the ministry of civil aviation plans to implement some measures and provide some sort of relief to the beleaguered airline industry. These include looking for foreign airlines' investment in domestic airline companies, relaxation of the current FDI limit of 49% and removal of the five-year mandatory domestic operation clause for a carrier to become eligible to fly overseas.

    Soaring prices of ATF and the inability to pass on the hike proportionately to customers have made airline companies strapped for cash. Thus, investment by foreign airlines in domestic carriers will provide the latter the much needed funds. Rationalisation of taxes is also high on the agenda given that industry losses are expected to swell to a gargantuan Rs 100 bn.

    Globally too, airline companies have been on the receiving end due to spiraling crude oil and jet fuel prices. In fact, the Economist states that seven of America's biggest airlines reported combined losses of US$ 5.9 bn in the second quarter of this year. While oil prices have considerably come off their highs, it remains to be seen whether airlines companies will be able to move back into the positive as a result. While retreating crude prices is certainly a welcome relief, the industry is still saddled with excess capacity. The Economist states that in June 2008, global capacity rose by 5.5% while passenger traffic lagged behind at 3.8%. Whatever the case, given that the movement of oil prices is considerably volatile, both global and domestic airline companies will have to focus on pruning capacity and implement cost effective measures to become leaner and stronger.

  • Also read - Why so many Indians vacation abroad?

    Healthcare goes global
    While rising healthcare costs have spurred the usage of generic drugs, the same is also expected to accentuate medical tourism especially in developing economies including India as patients around the world look to minimise costs. As far as India is concerned, Wockhardt Hospitals states that while medical value travel contributes only 0.9% of the total hospital revenues, the same is expected to touch approximately US$ 1.4 bn and contribute more than 2.5% of the total hospital revenues by 2012.

    Having said that, most of the foreign patients are from developing countries such as Afghanistan, Pakistan, Nepal, Bangladesh and Sri Lanka as these countries lack top-quality hospitals and health professionals. In fact, patients from the US and Europe are relatively few. This could however change going forward, given that a large number of Americans are traveling abroad to get treated. For instance, the Economist states that the consultancy firm Deloitte expects the number of Americans traveling abroad for treatment to soar from 0.8 m last year to 6 m by 2010 and reach 10 m by 2012. This is likely to translate into US$ 21 bn a year to developing countries in around four years and India could also be a beneficiary of the same.

    International patients flock to India largely because of the substantial difference in the cost of high-end surgery and critical care and quicker access to medical care in India vis-a-vis some highly developed countries. To put things into perspective, an open-heart surgery that costs US$ 100,000 in the US, over US$ 40,000 in the UK and US$ 14,250 in Thailand, costs just US$ 4,400 in India.


  • Equitymaster requests your view! Post a comment on "Airlines, medical tourism and more...". Click here!

      

    More Views on News

    BSE Sensex Surges 510 Points; ONGC Among Top Gainers (Market Updates)

    Sep 28, 2020 | Updated on Sep 28, 2020

    The BSE Sensex Surged 510 Points; ONGC Among Top Gainers. Find the latest update, special reports and news on all time high gainers of BSE Sensex at equitymaster.com.

    My Top Pick for 2021 is Not a Stock. It is Something Much More Powerful (Profit Hunter)

    Sep 28, 2020

    My top pick for 2021 is something that has helped me and my subscribers beat the stock market by a factor of 2:1.

    Your Queries on the 8-Year Cycle Answered (Fast Profits Daily)

    Sep 25, 2020

    You've sent in your queries on my videos on the 8-year greed and fear cycle in the market. I'll answer them in this video.

    It's When You Sell that Counts (Profit Hunter)

    Sep 25, 2020

    How I alerted readers to the impending crash last week.

    Can the Nifty Fall to 10,200? (Fast Profits Daily)

    Sep 24, 2020

    The Nifty has reached an important support level today. If it breaks then we could see further downside.

    More Views on News

    Most Popular

    Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

    Sep 17, 2020

    This leading household brand will profit big time in a post covid world.

    My Top Stock to Buy in this Market Selloff (Profit Hunter)

    Sep 22, 2020

    The recent correction offers a great opportunity to buy this high conviction smallcap stock.

    Can the Nifty Fall to 10,200? (Fast Profits Daily)

    Sep 24, 2020

    The Nifty has reached an important support level today. If it breaks then we could see further downside.

    What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

    Sep 18, 2020

    Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

    More

    Covid-19 Proof
    Multibagger Stocks

    Covid19 Proof Multibaggers
    Get this special report, authored by Equitymaster's top analysts now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Sep 28, 2020 02:13 PM

    MARKET STATS