Sunday, September 01, 2019

Jet shutdown effect: Traffic growth lowest in 5 years, more trouble for airlines

Domestic air traffic growth in FY20 so far has been the slowest in the past five years. The passenger traffic, which witnessed high double-digit growth since 2014-15, has expanded at just 1.9% year-on-year in the first four months of FY20, largely due to closure of Jet Airways. As per analysts this muted growth is expected to continue till at least January next year.
“The low traffic growth in July 2019 is largely on account of lower capacity as Jet remains grounded. Additionally, full ramp-up of sales of Jet tickets, which moved to SpiceJet fleet, will take some time,” analysts at ICICI securities noted.  Aviation consultancy firm CAPA India has projected less than 5% y-o-y growth for the domestic market in FY20. However, airlines executives expect traffic growth to increase during the festival season. “July-September is a weak quarter for airlines. The July growth was mainly due to less capacity and fares being higher,” said an executive at a low-cost carrier.
Jet commanded 15% of the domestic market share before the full-service carrier shut down due to liquidity crunch on April 17. Since then, SpiceJet and Vistara have inducted more than 40 aircraft which were earlier operated by Jet. The average domestic fares in FY20 are up 8% y-o-y, according to travel booking portal Cleartrip.
Travel industry executives point out that airlines have added more capacities, measured in terms of available seat kilometres (ASKs) on the international routes, which face less competition as compared to domestic sectors. “The passenger traffic growth requires steady increase in capacities by airlines. The traffic was increasing by 19% in 2018 when overall capacities grew at 21%. In this current financial year, the capacity has grown by only 3% y-o-y.
01/09/19 Financial Express

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