Robust growth in India domestic market fails to translate into profits

India’s domestic aviation traffic posted double digit growth of 11.1% in Nov-2011 to reach 5.4 million passengers for the month. Growth has slowed from the 17-22% rates seen since Jun-2011, however India remains one of the fastest growing domestic markets in the world, with growth expected to continue despite the current financial challenges experienced by key players in the Indian aviation market.
In the first 11 months of 2011, domestic passenger numbers increased 17.6% to 55.0 million passengers, averaging out at 5 million passengers per month. India’s domestic market has seen passenger growth now for 30 consecutive months, with 15 consecutive months of double-digit growth. Domestic traffic has increased by 85% in the past five years since Nov-2006, with domestic traffic now 41% above Nov-2007 levels, 80% above Nov-2008 levels and 32% above Nov-2009 levels.
However, growth has failed to translate into profits for India's airline industry, where all the major carriers except IndiGo are believed to be loss-making, as a result of the impact of high jet fuel costs and an inability to raise fares in a competitive market. CAPA estimates Indian carriers combined will lose USD2.5 billion in the 12 months ending 31-Mar-2012.
03/01/12 Centre For Aviation

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Categories: Indian Aviation- In General Jan 2012