Air passenger traffic declines 4%

Air passenger traffic takes a hit on high fares
Anirban Chowdhury / New Delhi July 11, 2008

Dips 4 per cent in July first week for the first time in 3 years.

For the first time in the past three years, the first week of July has seen the domestic air passenger traffic declining by 4 per cent over the year-ago period. After slowing down to a single digit in the past few years, the passenger traffic slipped into the negative zone this month.

"There has been a decrease of 5-6 per cent in the first eight days of July for full-service carriers compared with that in the same period of 2007," said Ankur Bhatia, executive director, Bird Group, which controls Amadeus India, one of the leading technology providers to the Indian travel industry.

Amadeus provides one of the largest ticket reservation platforms for the airline industry in the country.

Apart from full-service carriers, executives of low-cost carriers like JetLite and Simplifly Deccan confirmed that their numbers had gone down. Experts said taking a marginal growth of SpiceJet and IndiGo into account, the overall passenger traffic would go down by close to 4 per cent for the industry in the July.

According to figures released by the civil aviation ministry, the domestic passenger traffic in the country had seen a double-digit growth in the first quarter of 2008.

The growth in the first quarter of this calendar year was 11.12 per cent over the same period last year. The growth fell to a single digit in April compared with 8.65 per cent growth in the same month last year.

The growth in May came down to 2.9 per cent over the previous year's.

The ministry figures for June have not been compiled yet, experts and airline executives said, adding that the negative growth would have started in the last week of June.

The decrease has happened primarily because of two reasons — increase in prices leading to lower load factors and a cut in capacity in the last couple of months.

The average price across airlines and sectors has increased by more than 100 per cent this year over that of 2007. This has led to a significant dip in the average passenger load factor (PLF) to close to 60 per cent for most carriers(compared to an average PLF of 70-75 per cent last year).

Besides, in the last two months, the airline industry has cumulatively cut around 10 per cent of the total domestic capacity deployed in the country by cancelling 160 of a total of around 1,600 daily flights operating in the country.

Taking an average of 100 seats per aircraft, this would mean that around 16,000 daily seats had been taken out of the market. This two-month cut would have offset most of the capacity increase that happened last year.

Source : The Business Standard