Mumbai: The aggressive fleet induction by Indian airlines to fill the gap created by Jet Airways’ closure is expected to lead to lower yields, said ICRA in a note.
"With the capacity expansion planned by the various airlines, the industry is likely to start facing pressure on yields and thus profitability,” said Kinjal Shah, vice-president and co-head, corporate sector ratings, ICRA.
Providing an example of the planned capacity expansion, Ms. Shah said while Indigo had announced a 30% increase in its capacity in FY2020 (approximately half of which will be for the domestic operations), SpiceJet had announced an increase of about 80%.As the airlines would continue to expand their fleet, resulting in a gradual correction in the demand-supply imbalance, and it would lead to further moderation in airfares, she said.
Ms. Shah said the domestic passenger traffic growth is expected to continue to increase in the coming period.
During May 2019, all the airlines reported a month-on-month improvement in their passenger load factors (PLFs) while on a Y-o-Y basis, only Air India and GoAir had reported improvement in their PLFs.
21/06/19 The Hindu
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"With the capacity expansion planned by the various airlines, the industry is likely to start facing pressure on yields and thus profitability,” said Kinjal Shah, vice-president and co-head, corporate sector ratings, ICRA.
Providing an example of the planned capacity expansion, Ms. Shah said while Indigo had announced a 30% increase in its capacity in FY2020 (approximately half of which will be for the domestic operations), SpiceJet had announced an increase of about 80%.As the airlines would continue to expand their fleet, resulting in a gradual correction in the demand-supply imbalance, and it would lead to further moderation in airfares, she said.
Ms. Shah said the domestic passenger traffic growth is expected to continue to increase in the coming period.
During May 2019, all the airlines reported a month-on-month improvement in their passenger load factors (PLFs) while on a Y-o-Y basis, only Air India and GoAir had reported improvement in their PLFs.
21/06/19 The Hindu
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