Domestic air traffic to cross 150 mn on record aircraft induction: CAPA

Collective loss of domestic airlines will be $ 430-460 million

Domestic air traffic will grow 18-20 per cent and cross 150 million in FY 2019 on the back of unprecedented capacity induction, aviation consultancy CAPA said in its outlook on Tuesday.

Yield pressure led by rapid capacity expansion and a spike in crude oil price remain key concerns for profitability and on consolidated basis airlines in India will post $ 430-460 million next fiscal, CAPA said. 

Indian carriers are expected to induct record 124-130 planes in FY 2019 to capitalise on strong domestic passenger growth. In FY 2018 , domestic air traffic will reach 125 million a growth of 18 per cent, CAPA said.

Traffic crossed 100 million in the calendar year 2017, a growth of 17 per cent on a year on year basis.

IndiGo, which is the largest domestic airline with a fleet of over 150 planes, is expected to add 60-62 aircraft in the next fiscal. This would be almost equal to capacity addition by all the main airlines.

The capacity induction will also lead to Indian carriers expanding their international network and CAPA expects 25 narrow body inductions for overseas operations. International air traffic will grow 12 per cent and cross 70-75 million next fiscal.

While low-cost airlines led by IndiGo are expected to post $ 468-515 million profit, full-service airlines will lose $ 900-925 million in next fiscal. CAPA expects average crude oil price at around $ 70. The projections do not factor aspects like compensation received from engine and aircraft manufacturers. 

"The massive capacity expansion will place pressures on fares and airlines will look to grow their ancillary revenue," CAPA South Asia CEO  Kapil Kaul said.