Aviation sector trying to recover from 2008 losses

New Delhi: Spiralling fuel prices pushed the growth in the domestic aviation sector into negative zone in 2008. According to government data,
domestic air traffic fell nearly 5% last calendar year, the first decline after 2001-02 following the 9/11 terrorist attack.
Domestic airlines such as Air India, Kingfisher Airlines and IndiGo flew 40.77 million passengers during this period as compared to 42.85 million passengers in 2007. Low-cost airlines IndiGo and SpiceJet among others, however, defied the recessionary trend for the full year. IndiGo registered a 46.53% jump in its customer base during this period.
Since first quarter this fiscal, the double-digit growth in the aviation sector started fumbling as airfare climbed north as aviation turbine fuel (ATF) price sky-rocketed on the back of increasing global crude prices. In the following months fares on most of the sectors almost witnessed 60% jump, in some cases even doubling.
With consolidation in the domestic skies cheaper fares almost vanished being offered by budget airlines such as SpiceJet, IndiGo and Deccan almost vanished. Mounting losses mainly on account of high fuel price and excess capacity also forced airlines to keep tariff high. Air-carriers also started rationalising their operations by reducing capacity.
"Nearly 23 aircraft operated by scheduled carriers got de-registered from India in 2008. Non-scheduled carriers also sent back their aircraft to the lessors during this period. Country's largest private carrier Jet Airways wet-leased four of its aircraft last year," an official in the directorate general of civil aviation (DGCA), who did not wish to be named, said.
Financial health of domestic carriers has, however, started improving now as fuel prices have come down nearly 54% since September last year. After initial resistance to bring down fare, airlines have now started passing on the benefits of lower fuel price to customers. National carrier Air India slashed its basic fare in the range of 35% to 82% across various domestic sectors. Other airlines such as Kingfisher, SpiceJet and IndiGo also followed suit later.
But airlines are saying that people are not flying even though ticket prices have been cut drastically. Domestic air traffic declined sharply by 17% in December last year to 3.23 million.
13/01/09 Nirbhay Kumar/Economic Times

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Categories: Indian Aviation- In General Jan 2009