Thursday, September 12, 2019

Airfares set to rise 7-9% as Jet Airways crisis squeezes capacity additions

Mumbai: Air passengers are likely to shell out the highest fares for domestic travel this fiscal with the ticket prices expected to spike 7-9 per cent during the period because of limited capacity additions since the grounding of Jet Airways, rating agency Crisil Research said on Wednesday.

Crisil also forecast domestic passengers traffic to grow 6-8 per cent in FY20, as against a healthy 19 per cent growth registered in the year ended March 2019, on account of non-revival of Jet Airways, which ceased all operations in April due to liquidity crisis and is now under insolvency proceedings.
The 7-9 per cent expected the rise in airfares will be the highest since fiscal 2013, which had seen then Kingfisher Airlines going bust, it said.

"This is way below the 14 per cent growth logged in fiscal 2019 and the compound annual growth rate (CAGR) of 18 per cent was seen in the last five years. Nevertheless, is higher than our earlier estimate of 2 per cent growth and factors an upward revision in capacity addition plans of low cost carriers (LCCs)," Crisil added.

Even if Boeing 737 Max aircraft, which have been grounded globally since March following two fatal crashes, resumes operations post H1FY20, the domestic passenger traffic growth for the industry could grow faster by about 80-100 bps at best to 7-9 per cent it said.
11/09/19 PTI/Business Standard
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