Airlines struggle as traffic nosedives

New Delhi: For the first time since the 9/11 US terror attack in 2001, air traffic in India is headed for a yearly decline. Several years of boom are finally giving way to a fall in aggregate traffic in 2008, if market indications are anything to go by.
According to industry experts, with air traffic expected to fall by up to 15%, the January-March quarter could be the worst for airlines. That would put overall growth during this year into negative territory. Till September 2008, air traffic grew 0.7% with 31.5 million passengers being flown. “The fourth quarter of the current year will be the worst negative in terms of demand. Air traffic may dip 8-10% during the October-December period.
The sharp fall in oil prices has definitely been a saviour for airlines, but the severe fall in demand has offset the benefit,” Kapil Kaul, country head of Centre for Asia Pacific Aviation (Capa), said. “Our estimate is that oil prices would have to fall at least by another 20% to really have an immediate impact on the sector.”
Hit by high aviation turbine fuel (ATF) prices and a meltdown in the financial sector, domestic air traffic declined 18% in September this year, the fourth consecutive month of drop since June. Domestic carriers, which together lost nearly $1 billion in 2007, are expected to double the loss figure this year, mainly on account of high jet fuel prices, excess capacity, predatory pricing and underutilisation of resources.
11/11/08 Nirbhay Kumar/Economic Times

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Categories: Indian Aviation- In General Nov 2008