Wednesday, February 15, 2017

Number of passengers grew over 22%, thanks to low airfares due to cashban

All thanks to demonetisation , airlines saw a steep decline of 35% in average domestic fares as the cash ban took away their pricing power at a time when they were also adding capacity.

As per the data by Yatra.com , average domestic fares from November 1, 2016 to January 31 this year declined on key domestic routes compared with a year earlier.

The cash ban took out about 85% of the total cash in circulation. This led to consumers holding their hands while spending as ATMs were out of cash. The weak sentiment, airlines said, rubbed off on their performance.

IndiGo , the local market leader, blamed the "impact on consumer spending and behaviour, from demonetisation for the fall in fares.

"The monetisation policy went into effect on November 8 and for the full month of November, our yields were down 20% and in December our yields were down 17%. The situation, though, is improving. In January, the yield decline was smaller at about 10%. "Based on the January 2017 yield forecast, we are hopeful that the effects of demonetisation are largely behind us,” IndiGo chief financial officer Rohit Philip said.
15/02/17 Business Insider India
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