Domestic air traffic falls 5% in June: Portals

Decline on account of 30% rise in airfares since last year, lower capacity, say market players

Higher ticket prices and lower capacity led to a decline in the number of airline passengers in June, according to various online travel portals.

The Directorate General of Civil Aviation (DGCA), which is yet to release the data for June, had said passengers flown by domestic airlines had declined to 5.44 million in May 2012, against 5.49 million in the year-ago period, a fall of one per cent. “Domestic passenger traffic seems to have fallen about five per cent year-on-year because of increased fares, which are 30 per cent higher than last year,” said Sharat Dhall, President (online), Yatra.Com.

Given online travel portals account for 15-18 per cent of total domestic airline ticket sales, the overall fall in airline passenger traffic could be about one per cent, said an aviation expert.

Noel Swain, executive vice-president (supplier relations), Cleartrip.com, said, “On an average, fares have risen 20 per cent, including the service tax. Fares to/from Delhi have risen 26-27 per cent because of the imposition of a user development fee. The industry was expecting four per cent growth in domestic air passenger numbers in the quarter ended June. However, growth would be flat or lower by one to two per cent. Traffic for June would be four-five per cent less.”

Though Dhall did not specify the total number of seats offered by airlines in June compared to seats offered in the year-ago period, according to his estimates, the total supply volume would be about 25 per cent lower.

Vikram Malhi, Expedia’s country head, stated, “Domestic tourism became a collateral beneficiary of the slide in the rupee, and April and May, being the peak season, greatly benefited from this. However, despite the shift in the focus of Indian travelers, compared to May, June saw the number of air travelers fall 12-14 per cent.” This summer, airfares rose 15-20 per cent, he added.

In 2011, the number of domestic passenger rose 16.6 per cent to 60.7 million, averaging 5.1 million passengers a month. This was 74 per cent higher than 2006 levels, according to a Centre for Asia Pacific Aviation (Capa) report released in December 2011. Capa expects domestic passenger traffic would rise eight-10 per cent in 2012-13, while growth in capacity would be seven to eight per cent, against 15.1 per cent in 2011-12.

Kingfisher Airlines has cut its capacity sharply, operating only 12-13 aircraft and 90-100 flights a day in its summer schedule. Last year, the airline operated 66 aircraft. Now, its fleet size is down to 44. Jet Airways, too, is not planning any capacity addition in narrow-bodied aircraft. “The fleet will remain, more or less, the same for the next 12-24 months,” stated a senior Jet executive.

In a research report last month, Rashesh Shah, an ICICI Securities analyst, wrote, “The Indian aviation sector is entering a low-growth phase, with passenger traffic moving into single-digit growth due to higher ticket prices and last year’s high base effect. However, massive reduction by Kingfisher and the ongoing Air India pilots issue continue to aid other private carriers in maintaining healthy load factors over the medium term, despite negative passenger growth in May.”