Thursday, January 03, 2019

Airlines hit by weak demand on Mumbai route as passengers snub India's financial hub; whom to blame?

Mumbai: In a shock to the system, airlines like Jet Airways, Indigo, SpiceJet and others' Mumbai flights have seen the heavy demand hit by a slowdown. Yes, a mixed trend is being witnessed in domestic airlines passenger growth and capacity performance over the last two months. What has happened is that the passenger (pax) growth has been significantly below the capacity growth as measured in Available Seat Kilometres (ASK). Simply put, passengers are travelling less with airlines. A data revealed that, top routes were seeing lackluster demand from passengers, especially in India’s financial hub Mumbai which for airlines like Jet Airways, Indigo and SpiceJet is favorite haven. Demand to routes in Mumbai has always been hefty, however, looks like from October - November month it has taken a reverse trend.
During November 2018, domestic aggregate pax growth has been a record ~900 bps lower than the capacity growth (measured in ASK).

Ansuman Deb, analysts at ICICI Securities stated that, if we split the air passenger in November between key routes, there are three key takeaways.

Firstly, there was decline in key metro routes led by Mumbai–Delhi (down 8%), Mumbai-Chennai (down 13%), Mumbai-Hyderabad (down 14%), Bengaluru-Mumbai (down 2%), Mumbai-Goa (down 2.5%), and Delhi-Hyderabad (down 3%) among others.

Secondly, corollary implies that the traffic growth in non-metro routes would continue to have strong traffic growth, more than 20% to come at an aggregate ~11% traffic growth.
03/01/19 ZeeBiz