Air traffic holds up in Nov

Jet gains as Kingfisher’s passenger traffic falls to a three-year low.

From mobile phone connections to automobiles, the consumer sector has been showing signs of cooling over the last couple of months. Domestic aviation traffic, has, however, bucked the trend, with no sign of a slowdown in November. Despite a tough economic climate, domestic air traffic has held up, say analysts. Air traffic in November grew 13.4 per cent year-on-year to 5.4 million passengers. While this growth may be slower than the 17-22 per cent seen since June 2011, analysts believe it is still a healthy sign.

Most carriers saw yields increase by an average 20 per cent in the first week of November. With Kingfisher cancelling flights on certain routes, passengers moved to other carriers, which, in turn, not only helped improve their yields, but also kept fares higher.

Due to capacity cuts, Kingfisher Airlines has lost market share worth 270 basis points month-on-month and 550 basis points annually, according to analysts. The airline’s November passenger traffic touched a three-year low of 0.76 million. The biggest beneficiary of this development has been Jet Airways. Channel checks conducted by analysts suggest that Jet has managed to corner a large part of the lucrative corporate travel market from Kingfisher, with a 20 per cent increase in fares furthering the benefits. According to Edelweiss Financial Services, “IndiGo, which became the largest domestic carrier in September, shared the top slot with Jet Airways, (excluding JetLite) with a market share of 19.8 per cent.”

Despite the growth in traffic in November, the airline industry remains on a weak footing in India, with losses mounting to Rs 15,000 crore this year. While analysts are building in a five per cent fall in fuel prices and an equal increase in yields in FY13, the concerns on slowing demand would remain a key overhang for the sector.