Thursday, October 13, 2016

Airlines: Traffic to zoom beyond 100 mn in 2017

With 23 per cent domestic passenger growth in the eight months till August, India has emerged as the fastest growing air travel market in the world, outperforming China, which grew 10 per cent. Brazil and Russia have seen a decline.

What's more, domestic air traffic is poised to grow around 15 per cent in 2017, on the back of low fares, improved regional connectivity and economic growth, say executives and experts.

Low fares have led to a rise in discretionary travel and higher demand for airlines. Sector-wide passenger load factors rose to 83.7 per cent in the eight months of calendar year 2016 from 82.6 per cent in the corresponding period in 2015, and too on increased capacity. The domestic jet fuel price is 10 per cent lower year-on-year, giving airlines the cushion to decrease fares. On an average, fares are 10 per cent lower over last year and in July-September airlines took to last-minute discounting matching Rajdhani air-conditioned 2-tier train ticket fares.

"The healthy growth underlines relatively strong demand from both business as well leisure travellers. Competitive pressures and lower fuel prices have been a facilitator through low fares," said Subrata Ray, group vice-president, corporate sector ratings, ICRA. With induction of new aircraft, airlines are opening direct routes and this, too, is pushing passenger growth. "We expect 15 per cent traffic growth per annum for the next three years. Domestic traffic will exceed 100 million in 2017 and airlines will continue to increase capacity to keep market share," said Boeing's senior vice-president (Asia-Pacific), Dinesh Keskar. He said the regional connectivity scheme (first flight expected in January 2017) will further boost growth.
13/10/16 Aneesh Phadnis/Business Standard

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